Buddy Technologies, Ltd.
5 Peel Street
Adelaide SA 5000, AUS
+61 1800 831 317
Buddy Technologies, Inc.
217 Pine Street, Suite 700
Seattle, WA 98101, USA
+1 206 899 2525
30 September 2019
Buddy Technologies Limited (“Buddy” or “the Company”) is pleased to attach its audited
Annual Report for the year ended 30 June 2019.
The Company further wishes to highlight and clarify certain differences noted in the
accompanying audited Financial Statements when compared to the unaudited Financial
Statements for the year ended 30 June 2019 lodged with the ASX on 30 August 2019.
These differences relate to the accounting for the acquisition of Lifi Labs, Inc.
(described in the notes to the audited Financial Statements). At the time that the
preliminary financial statements were lodged, the Company had engaged a valuation
firm to provide a Purchase Price Allocation report in relation to Buddy’s acquisition of
the business and assets of Lifi Labs Inc. This engagement was still in progress at 30
August 2019 and the allocation of the purchase price in the preliminary financial
statements was based on estimates provided by the valuation firm at that time. In
addition, the Company reported $50,568,406 of stock and debt issued as part of the
acquisition as both financing and investing activities in the unaudited Statement of Cash
Flows in order to provide the reader with a greater understanding of the “gross”
economic impact of the acquisition.
Based on the final report prepared by the valuation firm, the Company has changed the
estimated values which has resulted in the Company increasing net assets and total
equity by $1,185,700 (increasing total assets by $7,849,000 and total liabilities by
$6,663,300).
The above adjustments have resulted in an overall decrease to the unaudited loss after
tax for the year from $29,306,539 to the audited loss after tax of $28,120,839 and a
decrease in the total comprehensive loss for the year from $28,517,135 to $27,331,435.
This decrease was the result of a reduction of amortisation of $835,000 and a deferred
income tax benefit of $350,000. There was no change to the loss per share of 0.02
cents per share.
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Similarly, in the statement of cash flows, after removing all equity and debt issued to
selling shareholders, investing cash flows increased from ($74,953,349) to
($24,384,943) and financing cash flows decreased from $64,617,662 to $14,049,257.
The Company encourages all shareholders and prospective investors to familiarise
themselves with the audited Annual Report.
On behalf of the Board
David McLauchlan
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
ACN 121 184 316
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2019
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CONTENTS
CORPORATE INFORMATION ............................................................................................................ 1
CHAIRMAN’S REPORT ...................................................................................................................... 2
DIRECTORS’ REPORT ...................................................................................................................... 4
AUDITOR’S INDEPENDENCE DECLARATION .................................................................................... 25
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME .................. 26
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................... 27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................... 28
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................... 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................. 31
DIRECTORS’ DECLARATION ........................................................................................................... 67
INDEPENDENT AUDIT REPORT ...................................................................................................... 68
ASX ADDITIONAL INFORMATION ................................................................................................... 72
This annual report covers the Buddy Technologies Limited Group (previously known as Buddy Platform
Limited), consisting of Buddy Technologies Limited (“Buddy” or the “Company”) and its subsidiaries. The
financial report is presented in Australian dollars.
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
Corporate Information
Directors:
Richard Borenstein
Non-Executive Chairman
David McLauchlan
CEO & Executive Director
John van Ruth
Non-Executive Director
Rosey Batt
Non-Executive Director
Marc Alexander
Executive Director & CTO
Company Secretary:
Stuart Usher
Chief Financial Officer:
Richard Jacroux
Auditors:
Nexia Perth Audit Services Pty Ltd
Level 3
88 William Street
Perth WA 6000
Bankers:
Westpac Banking Corporation
130 Rokeby Road
Subiaco WA 6008
Commonwealth Bank
100 King William Street
Adelaide SA 5000
Website:
www.buddy.com
ASX Code:
BUD (Ordinary Shares)
Registered Office:
Level 1, 5 Peel Street
Adelaide SA 5000
Telephone: 1-800-831-317
Facsimile: + 61 8 8125 5931
Lawyers:
DLA Piper
Level 31, Central Park
152-158 St Georges Terrace
Perth WA 6000
Seattle Office:
217 Pine Street
Seattle, Washington 98101
USA
Telephone: +1 206 899 2525
Adelaide Office:
Level 1, 5 Peel Street
Adelaide SA 5000
Telephone: 1-800-831-317
Facsimile: + 61 8 8125 5931
Home Stock Exchange:
Australian Securities Exchange Limited
Level 40
Central Park
152-158 St George’s Terrace
PERTH WA 6000
Share Registry:
Link Market Services Limited
Level 12, QV1 Building
250 St Georges Terrace
PERTH WA 6000
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CHAIRMAN’S REPORT
Dear Fellow Shareholders,
The Board of Buddy Technologies Limited (Buddy) is pleased to present to our shareholders the Annual
Report for the year ended 30 June 2019 (FY19).
Over the past 12 months, Buddy’s business has evolved and changed in some significant ways. Primary
among them was the acquisition of Lifi Labs Inc. (LIFX) in March 2019 which greatly enhanced Buddy’s
ability to make every space smarter and more efficient.
A propos of our growing family of smart space technologies, we simultaneously changed our company’s
name to Buddy Technologies (from Buddy Platform). We now are pursuing two fundamental market
strategies: 1) build amazing customer products and services that make spaces smarter, more efficient,
and/or more comfortable - like Buddy Ohm and LIFX - and 2) “power” other manufacturers’ products to
do the same - like Airstream’s Smart Control Technology - via our Digital Transformation Services,
powered by the Buddy Cloud.
Buddy Ohm
Buddy Ohm is a monitoring and control platform. The more it monitors or measures, the more valuable
it becomes to customers. Ohm monitors more spaces by connecting to additional sensors and data, even
those not made by Buddy. For instance, the “Works with Ohm” program allows us to seamlessly connect
to a large number of water and gas meters, integrating the data into the Buddy Ohm management
console and dashboard.
This year we also moved to a 3rd party hardware model for monitoring electricity - Wattwatchers. This
allows us to more easily monitor individual electrical circuits and subsystems and begin to layer on
systems control. By working with third parties such as Wattwatchers and our Works with Ohm partners
- we offer deeper data collection functionality at a lower price point, substantially reducing cost of goods
sold (COGS), improving supportability and adding a foundation for systems control.
In addition to utility monitoring, measurement and control, customers and prospects are asking for
sensors to monitor occupancy, motion, ambient light (the amount of sunlight in room), fire, even seismic
activity. Looking to the future, we recognized that we needed to develop a whole suite of sensors that
would satisfy increasingly sophisticated customer demands. We found such a suite, readily available and
capable of being in every room, in the intelligent lights produced and sold by LIFX.
LIFX
On Feb 6, 2019, Buddy announced that we were acquiring LIFX (pronounced “life-x”). LIFX pioneered
the smart light in 2012 with the first Wi-Fi-enabled, multi-coloured LED light controllable via a smart
device. Designed to last over 22 years, LIFX offers the brightest, most flexible smart lighting solutions
for home and office. Continuously developing their own technology and intellectual portfolio, LIFX has
secured a strong position in the smart lighting and smart spaces market with a range of 12 products,
each uniquely delighting customers while costing up to 85% less to operate than comparable
incandescent lighting.
Each of LIFX’s products are capable of reporting their own energy consumption and, with continued
development, capable of acting as a sensing platform for environmental & localised comfort monitoring,
and more. Certain models of LIFX lights contain additional sensors and hardware that facilitate
notification and control by Buddy Ohm of lights, appliances, air conditioning, security apparatus and
other energy needs in an occupied space. LIFX maintains an extensive intellectual property portfolio,
which currently includes 28 patents filed and granted.
Intelligent lighting will form the backbone of intelligent buildings. It is already the #1 connected device
category to voice assistant technology such as Amazon Alexa, Google Assistant, and Apple’s Home. LIFX
is viewed as a market leader in this space, second only to Philips. Initially, Buddy will be focused on
helping LIFX expand production to fill the growing demand for LIFX lights around the world.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CHAIRMAN’S REPORT (CONTINUED)
In time, Buddy will introduce LIFX to new commercial markets and consider the opportunity to deploy
the Buddy Ohm solution via existing installations of LIFX lights in residential spaces.
Digital Transformation Services powered by the Buddy Cloud
At the beginning of the fiscal year, Buddy was proud to announce that Airstream – a wholly owned
subsidiary of Thor Industries – had started shipping their trailers with a new connected experience called
Smart Control Technology, build on and powered by the Buddy Cloud, part of our Digital Transformation
Services offering. The Buddy and Airstream relationship continues to strengthen with enhancements of
the existing technology to offer “best in class” user experience through our Design Led Thinking
approach.
Airstream has a long, strong history of producing high quality recreational vehicles and has plans to
expand their manufacturing capacity. We believe our partnership is solid and likely to grow in the future,
possibly into other Thor recreational vehicle brands.
With LIFX, we acquired technology that easily enables hardware devices of all sorts to be connected to
the internet- whether developed by Buddy or other manufacturers. With our existing hardware module,
ceiling fans, motorized shades or louvers, switches and power points can report their own energy
consumption and be monitored and controlled by smart phone applications or voice-assistants. Buddy’s
Digital Transformation Services leverages our control modules, cloud technologies, and know-how to
quickly enable connectivity of new (or other’s existing) hardware.
Leadership Progression
Turnover in board membership is a natural and necessary part of every corporate board. At the Annual
General Meeting in November 2018, we welcomed Rosemary (Rosey) Batt, a South Australian resident
and experienced legal professional. Rosey has added tremendous value to the board with her 30+ years
of legal and corporate board experience.
In March 2019, we also welcomed Marc Alexander as our new CTO and technology board member.
Marc is the co-founder and Chief Technology Officer at LIFX and we are thrilled to have his leadership as
Buddy enters into this transformational period. Marc takes the place of Alex Gounares who served on
our board since our public floatation and whose contributions to the board and company were extremely
valuable.
Looking to the Future
The acquisition of LIFX, coupled with the organizational streamlining and redirection of our Ohm family
of products positions us for future growth opportunities. We are grateful to our long-term shareholders
who continue to support us in our efforts to grow a great company. Many challenges await us as they
always do. We believe we have put together a supremely capable and highly motivated management
team that will lead us to a successful and profitable future.
I look forward to continuing this journey with you, our shareholders.
Sincerely,
Richard N. Borenstein
Chairman of the Board
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT
Your Directors have pleasure in submitting their report together with the financial statements of the
Company and its subsidiaries it controlled during the period, for the year ended 30 June 2019. In order to
comply with the provisions of the Corporations Act 2001, the Directors report as follows:
DIRECTORS
The Directors in office at the date of this report and at any time during the year are as follows. Directors
were in office for the entire period unless otherwise stated.
Current Directors
Mr David McLauchlan
Mr Marc Alexander
Mr Richard Borenstein
Mr John van Ruth
Mrs Rosey Batt
- CEO & Executive Director
- CTO & Executive Director (Appointed 1 April 2019)
- Non-Executive Chairman
- Non-Executive Director
- Non-Executive Director (Appointed 30 Nov 2018)
Directors who resigned during the year
Mr Alexander Gounares
- Non-Executive Director (Resigned 25 March 2019)
Mr David McLauchlan – CEO & Executive Director
EXPERIENCE AND EXPERTISE
David spent nearly eleven years at Microsoft Corporation (Redmond, WA) before leaving in 2011 to co-
found Buddy Platform, Inc. While at Microsoft, David led business development for Microsoft’s Zune
hardware business, spent many years in Microsoft’s Windows division and prior to that served in the
Server & Tools division working on the Visual C++ product. His international business development
experience is considerable, having closed inbound and outbound licensing deals for Microsoft with global
partners and customers in the consumer, enterprise, B2B and component industries. In addition to his
work in various product groups at Microsoft, David represented the company in several international
standards setting organizations, including the USB Implementers Forum, Consumer Electronics
Association, Digital Living Network Alliance (DLNA), Bluetooth SIG and the IEEE Printer Work Group.
David is the co-founder of TVinteract, LLC which developed software for on-air TV talent to curate and
display social media in real-time, which was acquired in 2014. David has served as a Technology Partner
Network advisor for the Bill & Melinda Gates Foundation for over three years and currently serves as a
mentor for the Australian incubator “Innovyz START” and is an advisor to Melbourne-based “Bluedot
Innovation” and Washington DC-based “Manalto”.
Prior to moving to the United States, David was a management consultant at PricewaterhouseCoopers in
Melbourne, Australia, and prior to that was a professional pianist in Adelaide, Australia.
David holds a Master of Engineering: IT, Telecommunications & Business Management, and a Bachelor of
Electronic Engineering (Hons.) – both from the University of South Australia.
SPECIAL RESPONSIBILITIES
Chief Executive Officer
OTHER CURRENT DIRECTORSHIPS OF LISTED COMPANIES
Nil
OTHER DIRECTORSHIPS HELD IN LISTED COMPANIES IN THE LAST THREE YEARS
Nil
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
Mr Marc Alexander –Executive Director & CTO (Appointed 1 April 2019)
EXPERIENCE AND EXPERTISE
Marc has spent over 6 years at LIFI LABS INC. (“LIFX”), co-founding the organisation and leading the
design and development in that time of LIFX products, team, technology and global business growth.
Marc has extensive experience in consumer, commercial and automotive product enterprises, having
served or founded businesses creating new products and services, bringing them to market, production
and sales channels.
Marc has a background in product design and development, firmware and software engineering,
applications, customer centric design, systems architecture, IoT, business development, startups and
business models, go-to-market strategies and IP.
In addition to his work on consumer, automotive and energy focused business, Marc represented the
company as the chair of the Lighting Working Group of the AllSeen Alliance, a founding group of major
technology companies creating operational standards and code for IoT smart home and smart spaces
platforms.
Marc was the co-founder of Advanced Engine Management, a consumer and commercial automotive
product company, which was acquired in 2007. Marc currently serves as an investor or advisor for global
Australian based technology companies in personalised audio, AI and machine learning space utilisation,
home sports technology and electric transport. Prior, Marc was VP Engineering at the Techlynx
consumer and automotive division, Lead Product Engineer at ACP for General Magic and Apple Computer
projects in California and Australia, and prior to that was Technical Officer at the University of Melbourne
Electrical and Electronic Engineering Department on funded R&D and teaching projects.
He has founded 5 startups and is inventor of a number of granted and pending patents in the lighting,
automotive and smart spaces field.
Marc studied Certificate of Technology in Electronics at Box Hill Institute.
SPECIAL RESPONSIBILITIES
Chief Technology Officer
OTHER CURRENT DIRECTORSHIPS OF LISTED COMPANIES
Nil
OTHER DIRECTORSHIPS HELD IN LISTED COMPANIES IN THE LAST THREE YEARS
Nil
Mr Richard Borenstein – Non-Executive Chairman
EXPERIENCE AND EXPERTISE
Rick Borenstein is a venture investor, advisor and board member with over 40 years of technology
company experience. He currently advises 7 venture-financed companies and sits on several boards. Mr.
Borenstein brings extensive business, finance, accounting and entrepreneurial skills to each company.
Rick co-founded Sequoia Partners in 1988 and currently serves as Chairman. Sequoia Partners is a "sell
side" information technology mergers & acquisitions firm. Sequoia has a long history of executing
premium transactions for venture capital companies and corporate technology investors.
Mr. Borenstein started his entrepreneurial career after Wells Fargo when he conceived, built and sold 3
companies over the course of 4 years. Mr. Borenstein became President of IMSI in 1986, a $50M per year
consumer software products company. During his tenure, he took the company public in 1987 and
initiated their strategy of growth through acquisition. This exposure to software company deal making
convinced him that a small, “virtual”, I.T. focused M&A company could be built successfully.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
Mr Richard Borenstein – Non-Executive Chairman (continued)
Mr. Borenstein’s finance training started at Harvard Business School (M.B.A. 1972) and continued through
White, Weld & Co., Salomon Brothers and Wells Fargo and Co. His early investment banking training
included mergers and acquisitions, leveraged buy-outs, IPOs and off balance sheet financings. At Wells
Fargo, he perfected his accounting skills as Deputy Controller of the Bank; he learned lending and
bank/brokerage company finance while serving as the Bank’s senior brokerage industry banking officer;
and he improved his deal making skills as President of Wells Fargo Investment Company, the Bank’s
venture capital subsidiary. Rick invested in a group of companies that have since gone on to become
some of the best-known names in the Bay Area technology sector.
Mr. Borenstein grew up in New York City, and attended the University of Michigan before going to
Harvard Business School. He has taught entrepreneurship at the Center for Entrepreneurship at the U of
M and at San Quentin Prison (SF Bay Area) as part of The Last Mile program there.
SPECIAL RESPONSIBILITIES
Chairman of the Board
Member of the Audit and Risk Committee
Member of the Remuneration and Nomination Committee
OTHER CURRENT DIRECTORSHIPS OF LISTED COMPANIES
Nil
OTHER DIRECTORSHIPS HELD IN LISTED COMPANIES IN THE LAST THREE YEARS
Nil
Mr John van Ruth – Non-Executive Director
EXPERIENCE AND EXPERTISE
Mr van Ruth is currently Chief Executive Officer of Operation Finders Foundation, and holds a number of
non-executive directorships. Prior to his work in the not for profit sector, he spent four years as Chief
Financial Officer for Coopers Brewery, the largest Australian owned Brewery. Before Coopers Brewery, Mr
van Ruth held a number of senior executive roles with other iconic South Australian companies including
the RAA of SA, Inc., Adelaide Bank and Faulding. His early career was with professional services firms EY,
KPMG and Arthur Andersen with particular focus on strategic advisory services in emerging technologies
in Australia, Netherlands and Canada.
Mr van Ruth’s other non-executive directorships include being a director of HAMBS a technology platform
for private health. He is a director on the Australian Institute of Company Directors (AICD) SA Regional
the Advisory Board
Institution
Council, governor of Wyatt Benevolent
of Leepsheep startup accelerator, and member of Flinders University Finance and Investment Committee.
Inc., member of
SPECIAL RESPONSIBILITIES
Chairman of the Audit and Risk Committee
OTHER CURRENT DIRECTORSHIPS OF LISTED COMPANIES
Nil
OTHER DIRECTORSHIPS HELD IN LISTED COMPANIES IN THE LAST THREE YEARS
Nil
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
Mrs Rosey Batt – Non-Executive Director (Appointed 30 Nov 2018)
EXPERIENCE AND EXPERTISE
Rosey is the CEO of a boutique legal and business consultancy services firm. Prior to establishing her
own business Rosey was an equity partner with Minter Ellison. She has more than 30 years’ experience
in advising Publicly Listed Companies, Private Companies, Incorporated Associations, Public Companies
and Businesses generally on complex transactions, compliance, complex litigation and general
commercial issues. Rosey has extensive non-executive Board experience including as Chair and on
Audit, Risk, Nomination and Investment committees. Her other current non-executive directorships
include ModMed Ltd, Windmill Theatre, the Advisory Board of the Litigation Assistance Fund, the
Advisory Board of Floodlight Media Pty Ltd and as Independent Chair of the MOC for the SA Department
of Health. For the past 15 years her skills in Corporate Governance have been recognised by her
appointment as a facilitator for the Australian Institute of Company Directors in their acclaimed
Company Directors Course both nationally and in recent years internationally. Rosey often consults to
Boards on governance matters. She holds a Masters of Science and Technology Commercialization
(International) from the University of Adelaide and the University of Texas at Austin.
SPECIAL RESPONSIBILITIES
Chair of the Remuneration and Nomination Committee
OTHER CURRENT DIRECTORSHIPS OF LISTED COMPANIES
Nil
OTHER DIRECTORSHIPS HELD IN LISTED COMPANIES IN THE LAST THREE YEARS
Nil
Mr Alexander Gounares– Non-Executive Director (Resigned 25 Mar 2019)
EXPERIENCE AND EXPERTISE
Alex Gounares is the founder and CEO of Polyverse Corporation, the leading provider of moving target
defense based cybersecurity solutions. Previously, Alex led Concurix Corporation, a maker of Node.js
profiling tools. These tools were acquired by Strongloop Inc and integrated into the Strongloop Arc
platform.
Prior to Concurix, Alex served as AOL's Chief Technology Officer. In this role, he led all aspects of AOL's
technology strategy, platform development and external technology partnerships. He was responsible
for all of AOL's global engineering, IT, and operations functions. In addition, he served as a member of
the company's Global Executive Operating Committee.
Alex joined AOL from Microsoft, where he was Corporate Vice President and Chief Technology Officer for
the company's Online Services Division. During his tenure at Microsoft, Gounares led significant strategic
and technical operations for some of the company's most important projects including Microsoft's global
advertising platform, Bing search, MSN and Microsoft Virtual Earth. Alex also served for three years as
Technology Advisor to Microsoft Chairman and founder Bill Gates, as well as Corporate Vice President of
Corporate Strategy in Microsoft's Finance Department.
Prior to joining Microsoft in 1993, Alex worked at Los Alamos National Laboratory. He has founded four
start-ups and is also an inventor on more than 150 U.S. patents filed and pending. Alex holds a
bachelor's degree cum laude in Computer Science from Princeton University.
SPECIAL RESPONSIBILITIES
Chairman of the remuneration and nomination committee
OTHER CURRENT DIRECTORSHIPS OF LISTED COMPANIES
Nil
OTHER DIRECTORSHIPS HELD IN LISTED COMPANIES IN THE LAST THREE YEARS
Nil
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
COMPANY SECRETARY
Mr Stuart Usher
Mr Usher is a CPA and Chartered Company Secretary with 25 years’ extensive experience in the
management and corporate affairs of public listed companies. He holds a Bachelor of Business degree
and an MBA from the University of Western Australia and has extensive experience across many
industries focusing on Corporate & Financial Management, Strategy & Planning, Mergers & Acquisitions,
and Investor Relations & Corporate Governance.
PRINCIPAL ACTIVITIES
Buddy Technologies Limited (ASX: BUD) helps customers of any size “make every space smarter”. Buddy
has two core businesses – its Commercial Business and Consumer Business. Buddy Ohm and Buddy
Managed Services are the company’s core Commercial offerings that empower its customers to fully
leverage digital technologies and their impact in a strategic and sustainable way. Buddy Ohm is a
resource monitoring and analytics solution that provides energy monitoring, reporting and auditing
services for commercial and industrial customers. Buddy Managed Services team licenses Buddy’s
products.
technology
integration
customers
platforms
their
own
into
for
to
Buddy’s Consumer Business trades under the LIFX brand, which was acquired in 2019 and whose results
have been included for accounting purposes from 1 April 2019. LIFX has established a leading market
position as a provider of smart lighting solutions. The company’s suite of Wi-Fi enabled lights are
currently used in nearly one million homes, viewed as second only to lighting giant, Philips Hue. LIFX
products are sold in over 100 countries worldwide, directly and via distribution and sales partnerships
with leading retailers and ecommerce platforms including Amazon, Google, Apple Stores, JB Hi-Fi,
Bunnings, Officeworks, MediaMarkt, Saturn and Best Buy (in both the US and Canada).
RESULTS
The net loss after tax for the year ended 30 June 2019 amounted to $28,120,839 (2018: $13,877,497).
The primary costs for the business are costs of sales, advertising and marketing costs and salaries
expenditure, which is very much in line with the costs expected for a technology company supporting a
product of Buddy Technology’s technical complexity.
DIVIDENDS
There were no dividends paid or declared during the year.
OPERATING AND FINANCIAL REVIEW
This has been a year of some challenges and the opening up of some remarkable new opportunities.
While the Company’s share price performance has been disappointing, I truly believe that the Company
has more opportunities and greater potential than at any time in our history. Following the successful
acquisition of LIFX in March 2019, we now have a consumer business in smart lighting, that is second
only to the number one vendor in the world. Meanwhile, our commercial business – the Buddy Ohm and
Managed Services business – has been realigned after a great deal of learning and market feedback.
The Managed Services business – for the most part today at least, our engagement with Airstream – is
profitable as a stand-alone business and is a template for additional managed services work that the
Company is presently quoting on and seeking to win.
Overview of FY19
The fiscal year just gone has been one of evolution, right-sizing, re-calibration and acquisition. It
became clear to management that our Buddy Ohm product was not selling in the quantities that we had
hoped, and that our sales and distribution partners had believed possible. This was a phenomenon in no
way limited to Buddy Ohm – our distribution and reseller partners have told us that commercial IoT
products in general have been difficult to sell, and that many products were either premature for their
respective markets or product-market fit wasn’t quite reached.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
OPERATING AND FINANCIAL REVIEW (CONTINUED)
As a company, we realised this in FY19, and made very significant changes to the business accordingly.
While we learnt that commercial customers were not buying products like Buddy Ohm to effect energy
savings in their businesses, they were interested in auditing and reporting products, especially in
markets like the United Kingdom, which is introducing new corporate reporting regulations mandating
the publication of information of the kind that Buddy Ohm collects. To respond to this evolution of the
market, we made very significant changes to our business (reduced headcount and dramatically
decreased expenditure), introduced a new hardware partner that allowed us to substantially reduce the
cost of deployment, narrowed our sales focus and installed new leadership – all of which was intended
to put this side of the business on a path to cashflow breakeven.
As it stands today, our commercial Buddy Ohm business remains small but is growing again, and we’re
seeing new customers coming on board with repeat orders and full satisfaction, leading to multi-year
contracts. Our recent deployments of new interfaces and insights within the Buddy Ohm web experience
is expected to help continue the growth, and so I commend our team on innovative work that they’re
doing.
Our Managed Services offerings within the commercial business continue to perform well. Airstream
(known in earlier disclosures as “Thor” – their parent company) is a customer that has spent nearly $5
million with us to date and continues to work very closely with us. Buddy’s commercial team has become
an extension of the Airstream technology team, as we help them build out their connected smart trailer
product range. We’ve proven adept at this work, which is more broadly known as “digital
transformation” in the industry, and with Travis Gerber leading the commercial team, he’s able to bring
a breadth of experience to this role from his many years at Microsoft and in the broader tech industry.
Travis and team and now focussed on growing this business and introducing new commercial customers
where we can deploy our technologies into their products, and help “digitally transform” their formerly
disconnected products into connected, data-driven, voice-aware, contemporary offerings.
A significant opportunity for this business was the addition of the LIFX platform of technologies to our
arsenal. Our Managed Services team is now fully staffed to help customers deploy LIFX technologies
(either white-labeled or branded) into their third party products, with the first two such deals being very
imminent. This will see us deploy LIFX’s smart IoT platform into non-lighting (but powered) products for
the consumer/home market – more details to come.
However, continuing on this theme, clearly the biggest news for FY19 was the Company’s successful
acquisition of the world’s #2 smart lighting platform – LIFX. In completing this transaction, we created
the Company’s first consumer business, one whose products can be found in the world’s major
consumer retailers (such as Apple Stores, Best Buy, JB Hi-Fi, The Home Depot, Bunnings, Beacon
Lighting, FNAC, Curry’s PC World, etc…).
LIFX brings to Buddy a series of products that are consumer-first (ie: designed for the home) and which
already have a considerable footprint in the marketplace. While Buddy’s commercial products were new
inventions creating a new market, over the past 5 years or so, LIFX has sold over 2.2 million smart lights
in well over 100 countries around the world. While this comparative maturity brings some new stability
to the Group, there remains a great deal of growth opportunity in the marketplace, for as a percentage
of global lightbulb sales, 2.2 million is still very much a rounding error. For those who believe that over
the course of time all lighting will become connected – we haven’t even begun to scratch the surface of
potential future scale yet. While it is very true that our largest competitor in this space holds a very
dominant position in major markets like the EU and USA, we have a very comparable market position
with them in Australia. This demonstrates that all things are possible in competing in this space, while
also reaffirming that we have a highly competitive product that can stack up well against any in the
world.
As a snapshot of the opportunity that still remains, I’ve just returned from a trip to Europe to visit with
our major retail partners and potential partners. Europe is the home market for our largest competitor,
and so they hold an overwhelmingly dominant market position there (in excess of 90%). However, this
is also in large part due to the fact that with very few exceptions they are the only smart light vendor
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
OPERATING AND FINANCIAL REVIEW (CONTINUED)
stocked in the major European consumer electronics and DIY store retail channels. In other words, the
market is only really being exposed at scale to one vendor. Retailers never like to see a single vendor
become too dominant lest they start to exert control over the retailer in terms of margins and inventory
flow – and so we are now currently being engaged by those major retailers to bring a formidable
competitor to the European bricks and mortar market.
Estimates have sized the smart lighting consumer market in the EU to be in the order of A$1 to A$1.5
billion, which no party (except perhaps the incumbent) wishes to be a monopoly. Expect to see us work
especially hard to grow our EU business in the coming year in partnership with key retailers in the
region. Our products and our customer experience are both world class, and are more than capable of
earning a slice of that enormous EU market.
Looking Ahead
As we look to the coming year, investors should expect Buddy’s Board of Directors and management to
continue a highly disciplined and cost-down driven approach to our commercial and consumer
businesses. Unlike in previous years, we are now managing debt – but in these financial times, debt is
not expensive, and growth requires capital, so we believe we have taken prudent steps to balance our
growth objectives with our debt load. As a management group, we are keenly aware that reaching
profitability must be (and is) the primary goal of our business, and investors will see us march towards
that milestone with complete resolution. As we’ve demonstrated in the past year, where tough decisions
need to be made, we will make them – and as with any successful tech company in a rapidly moving
market – we will not be afraid to course-correct as necessary.
It is my confidently held view that Buddy Technologies Limited is endowed with a team, a set of
technologies, a customer base and a product range that would be the envy of any early-stage IoT or
even tech company. We have the tools needed to succeed in this market, and with your ongoing
support we look forward to delivering the next stages of that success in FY20.
David McLauchlan
CEO, Buddy Technologies Limited.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
The Company has made price-sensitive announcements since 30 June 2019. A summary of those
announcements follows. The reader is invited to read the entire announcements which are available in
the investor section of the Company’s website at https://buddy.com/asx-announcements/.
On 28 August 2019, the Company executed financing documentation with Scottish Pacific, the largest
independent working capital lender in Australia and New Zealand, for the provision of a A$20 million
working capital facility.
On 11 September 2019, the Company announced:
(a)
(b)
a placement of 305.7 million Shares to institutional and sophisticated investors each at an issue
price of A$0.02 to raise approximately A$6.1 million (before costs) to be completed in two
tranches (being the Tranche 1 Placement and the Tranche 2 Placement); and
that it intends to offer all existing Shareholders with a registered address in Australia and New
Zealand (Eligible Shareholders) the opportunity to subscribe for Shares each at an issue price of
A$0.02 per Share under a Share Purchase Plan (SPP) to raise up to an additional A$5 million
(before costs).
The Company completed the Tranche 1 Placement by issuing a total of 250,641,234 Shares on 19
September 2019. The Company raised a total of approximately A$5.013 million (before costs) pursuant
to the Tranche 1 Placement.
The Company will seek shareholder approval to ratify the Shares issued under the Tranche 1 Placement
and approve the issue of up to 55.2 million Shares to be issued under the Tranche 2 Placement at a
shareholder meeting to be held on 24 October.
The issue of Shares under the SPP is subject to shareholder approval. Refer to the Company's ASX
announcements dated 11 September 2019 and 19 September 2019 for further information.
The funds used from the Placement and SPP will be utilised for operating expenses of the Company and
growth of the Company's Consumer and Commercial Business.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected or may
significantly affect the operations of the Consolidated Entity, the results of those operations or the state
of affairs of the Consolidated Entity, in subsequent financial years.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group that occurred during the
financial period not otherwise disclosed in this report or the financial statements.
ENVIRONMENTAL REGULATION
The Directors believe that the Group has, in all material respects, complied with all particular and
significant environmental regulations relevant to its operations. The Group’s past operations were subject
to various environmental regulations under the Federal and State Laws of Australia and the USA. The
majority of the Group’s past activities involved low level disturbance associated with exploration drilling
programs.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has paid premiums to insure each of the following current and former Directors and
officers against liabilities for costs and expenses incurred by them in defending any legal proceedings
arising out of their conduct while acting in the capacity of Director of the Company, other than conduct
involving a wilful breach of duty in relation to the Company. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium. The Company has not given any
further indemnity or entered into any other agreements to indemnify, or pay or agreed to pay insurance
premiums.
DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the Directors in ordinary shares, listed and unlisted options
of the Company were:
Director
Held Directly
Held Indirectly
Held Directly
Held
Indirectly
Held Directly
Held
Indirectly
Held
Directly
Held
Indirectly
Shares
Performance Shares
Performance Rights
Options
David
McLauchlan
Richard
Borenstein
John van
Ruth
Marc
Alexander
Rosey Batt
131,851,820
-
22,166,667
5,011,121
16,397,547
3,333,333
1,466,667
11,479
833,333
1,628,922
39,159,441
12,000,000
-
-
-
TOTAL
139,958,530
55,568,467
38,333,333
-
-
-
-
-
-
-
-
-
12,000,000
-
12,000,000
-
-
-
-
-
-
-
854
-
-
-
854
-
-
-
-
-
-
MEETINGS OF DIRECTORS
During the financial year, meetings of Directors (including meetings of committees of directors) held
during the year and the number of meetings attended by each director were as follows:
Directors
David McLauchlan
Richard Borenstein
Alexander Gounares
(Resigned 25 Mar 2019)
John van Ruth
Marc Alexander
(Appointed 1 Apr 2019)
Rosey Batt (Appointed 30
Nov 2018)
Directors meetings
Audit committee
meetings
Remuneration and nomination
committee meetings
Meetings
Eligible to
Attend
Meetings
Attended
Meetings
Attended
Meetings
Eligible to
Attend
Meetings
Attended
Meetings
Eligible to
Attend
-
3
3
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
9
4
9
2
7
9
9
4
9
2
7
-
3
3
3
-
-
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and key management
personnel of the Company for the year ended 30 June 2019. The information contained in this report has
been audited as required by Section 308(3C) of the Corporations Act 2001.
The information provided includes remuneration disclosures that are required under Accounting Standard
AASB 124 “Related Party Disclosures”. These disclosures have been transferred from the financial report.
This remuneration report details the remuneration arrangements for key management personnel (“KMP”)
who are defined as those persons having authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group, directly or indirectly, including any director
(whether executive or otherwise) of the parent company, and includes those executives in the Parent and
the Group receiving the highest remuneration.
Key Management Personnel
Mr David McLauchlan
Mr Richard Borenstein
Mr John van Ruth
Mr Marc Alexander
Mrs Rosey Batt
Mr. Richard Jacroux
Mr Alexander Gounares
(Executive Director & CEO)
(Non-executive Chairman)
(Non-executive Director)
(Executive Director & CTO) (Appointed 1 Apr 2019)
(Non-executive Director) (Appointed 30 Nov 2018)
(Chief Financial Officer / Chief Operating Officer)
(Non-executive Director) (Resigned 25 Mar 2019)
Remuneration Policy
Remuneration of Directors and Key Management Personnel (KMP) is determined with regard to the
performance of the Company, the performance and skills and experience of the particular person and
prevailing remuneration expectations in the market. The Board will devote time on an annual basis to
discuss the level and composition of remuneration for the Directors and Key Management Personnel and
will ensure such remuneration is appropriate and not excessive. Details of remuneration of Directors and
Key Management Personnel are disclosed in the Remuneration Report in the Annual Report. The full
Board determines all compensation arrangements for Directors and has a Remuneration Committee to
assist the Board in monitoring and reviewing any matters of significance affecting the remuneration of
the Board and employees of the Company. It is also responsible for setting performance schemes,
superannuation entitlements, retirement and termination entitlements and professional indemnity and
liability insurance cover.
The Remuneration Committee charter is available on the Company’s website at www.buddy.com.
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive Director and
executive remuneration is separate and distinct.
Non-Executive Director Remuneration
The Board policy is to remunerate non-executive Directors at market rates for comparable companies for
time, commitment and responsibilities. The Board determines payments to the non-executive Directors
and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to non-executive Directors is subject to
approval by shareholders at the Annual General Meeting (currently $300,000). It is the policy of the
Company to compensate Directors in share based payments only through the issue of Performance
Shares (subject to any necessary Shareholder and regulatory approvals).
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ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Fees for non-executive Directors are linked to the performance of the Group through the issue of
Performance Shares and Performance Rights. This aligns Directors’ interests with shareholder interests,
the Directors are encouraged to hold shares in the Company and are able to participate in employee
option plans that may exist from time to time.
Executive Remuneration
Executive Remuneration consists of fixed remuneration and variable remuneration (comprising short-term
and long-term incentive schemes). The remuneration of any executive director that may be appointed to
the Board will be fixed by the Board and the remuneration and nomination committee. Executive
Directors are engaged under the terms of individual employment contracts. Such contracts are based
upon standard terms drafted by the Company’s lawyers. Executive Directors do not receive any director’s
fees in addition to their remuneration arrangements.
Fixed Remuneration
All KMP are remunerated based on services provided by each person. The Board will review KMP
packages annually by reference to the Group’s performance, executive performance and comparable
information from industry sectors and other listed companies in similar industries.
Variable Remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and
directors and key management personnel. Currently, this is facilitated through the issue of Performance
Rights and Incentive Rights to key management personnel to encourage the alignment of personal and
shareholder interests. The issue of these securities formed part of the Consideration Securities as a result
of the acquisition of Buddy Inc. The Company believes this policy will be effective in increasing
shareholder wealth.
Principles used to determine the nature and amount of variable remuneration: relationship between
remuneration and company performance
The overall level of executive reward takes into account the performance of the Group over a number of
years, with greater emphasis given to the current and future years. Due to the nature of the Group’s
principal activities the Directors assess the performance of the Group with regard to the price of the
Company’s ordinary shares listed on the ASX, and the market capitalisation of the Group.
Service Contracts
Non-Executive Directors
The key terms of the Non-Executive Director letters of appointment are as follows:
Terms of agreement – ongoing subject to annual review.
Directors’ Fees – the issue of Performance Shares on initial appointment.
There is no notice period stipulated to terminate the contract by either party.
Apart from their duties as Directors, some Non-Executive Directors may undertake work for the
Company over and above the specific duties of a Non-Executive Director.
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ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED)
Executives
Remuneration and other terms of employment for the Executive Director and Chief Executive Officer and
the Chief Financial Officer are formalised in service agreements. Other major provisions of these
agreements are set out below:
Executive Services Agreement - David McLauchlan
The Company and David McLauchlan entered into an Executive Services Agreement for his role as Chief
Executive Officer commencing on the date of settlement of the Company’s acquisition of Buddy
Platform, Inc. being 17 December 2015.
The key terms of the Executive Services Agreement (ESA) are as follows:
(a) Salary: Under the ESA, Mr McLauchlan receives an annual salary of US$250,000.
(b) Performance Bonus: The Company may, at any time, pay Mr McLauchlan, a performance-based
bonus over and above the Salary.
(c) Restraint of Trade: Upon termination of the ESA, Mr McLauchlan will be subject to a restraint of
trade period of up 6 months.
(d) Mr McLauchlan is employed on an at-will employment relationship with the Company which may
be terminated at any time by either Mr McLauchlan or the Company upon notice to the other, for
any or no reason, with or without prior notice or cause. Further, the Company can demote,
transfer, suspend or otherwise discipline him in its sole discretion.
Executive Services Agreement – Richard Jacroux
The Company and Richard Jacroux entered into a Services Agreement (SA) for his role as Chief Financial
Officer and Chief Operating Officer commencing on his date of employment being 3rd October 2016.
The material terms of the SA are as follows:
(a) Salary: Mr. Jacroux receives an annual salary of US$210,000.
(b) Employee Incentive Performance Rights (EIPR): Mr Jacroux received a grant of 8,000,000 EIPR
with standard vesting over four years. In 2019, Mr Jacroux received an additional grant of
2,000,000 EIPR.
(c) Mr Jacroux is employed on an at-will employment relationship with the Company which may be
terminated at any time by either Mr Jacroux or the Company upon notice to the other, for any or
no reason, with or without prior notice or cause. Further, the Company can demote, transfer,
suspend or otherwise discipline him in its sole discretion.
Executive Services Agreement – Marc Alexander
The Company and Marc Alexander entered into a Services Agreement (SA) for his role as Chief
Technology Officer (CTO), which he commenced after the completion of the acquisition of Lifx Labs, Inc
(trading as LIFX) on 29 March 2019, for which he was a co-founder of from 12 November 2012. Mr
Alexander was also appointed to the Board as an executive director on 1 April.
The material terms of the SA are as follows:
(a)
Salary: Mr. Alexander receives an annual salary of US$300,000.
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ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Executive Services Agreement – Marc Alexander (continued)
(b)
Sign-on-bonus: Mr. Alexander received a sign-on-bonus of 2,222,222 Ordinary Shares that were
approved by shareholders at a meeting held 25 March 2019. These shares were issued on 1 April
2019. In addition and subject to Board approval and the creation of a new option plan, the
Company will issue fully vested options with a value of approximately $2,102,481 (the final value
remains subject to the discretion of the Board). This bonus formed part of the consideration for
the acquisition and is accordingly included in Note 4.
(c) Performance Rights: Mr Alexander received a grant of 12,000,000 Performance Rights, approved
by shareholders at a meeting held 25 March 2019, which will vest over a four year period as
follows:
i.
ii.
one-quarter (being, 3,000,000 Performance Rights) one year following
Completion; and
one-sixteenth (being, 750,000 Performance Rights) each quarter thereafter.
If Mr Alexander ceases to be an employee of the Company the Performance Rights will lapse.
(d) Performance Shares: Mr Alexander received a grant of 12,000,000 Performance Shares,
approved by shareholders at a meeting held 25 March 2019, which will vest over a four year
period as follows:
i.
ii.
iii.
4,000,000 Performance Shares that will vest upon LIFX business contributing a
cumulative A$100 million to the Buddy Group in revenues within 18 months
from Completion;
4,000,000 Performance Shares that will vest upon LIFX business contributing a
cumulative A$200 million in revenues to the Buddy Group within 30 months
from Completion; and
4,000,000 Performance Shares that will vest upon LIFX business contributing a
cumulative A$250 million in revenues to the Buddy Group within 36 months
from Completion.
If the milestones are not met within the designated timeframe, or Mr Alexander ceases to be an
employee of the Company the Performance Shares will lapse.
(e) Termination: The Company may at its sole discretion terminate the Employment in the following
manner:
(i)
(ii)
(iii)
by giving not less than three (3) months’ written notice if at any time:
if employment ends due to the position being made redundant, by which a
payment in lieu of notice will be made.
summarily without notice if at any time the Executive is convicted of any major
criminal offence which brings the Company or any of its affiliates into lasting
disrepute, by giving notice effective immediately and without payment of any salary
other than salary accrued to the date of termination or breaches the insider trading
provisions of the Executive Service Agreement; or
(iv)
if the person is or becomes of unsound mind or under the control of any committee
or officer under any law relating to mental health.
Mr Alexander may at his sole discretion terminate the Employment by giving the Company 3
months' written notice.
(f) The Executive Service Agreement contains other standard terms and conditions expected to be
included in contracts of this nature.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Executive Services Agreement – Tim Peters (Resigned 11 August 2019)
The Company and Tim Peters entered into a Services Agreement (SA) for his role as LIFX CEO which he
commenced after the completion of the acquisition of Lifx Labs, Inc (trading as LIFX) on 29 March 2019;
previously he held the role of VP of Product Management and COO at LIFX and then became CEO of
LIFX in January 2018.
The material terms of the SA are as follows:
(c)
Salary: Mr Peters receives an annual salary of US$300,000.
(d)
Sign-on-bonus: Mr. Peters has received a sign-on-bonus of 2,222,222 Ordinary Shares that were
approved by shareholders at a meeting held 25 March 2019. These shares were issued on 1 April
2019. In addition and subject to Board approval and the creation of a new option plan, the
Company will issue fully vested options with a value of approximately $815,323 (the final value
remains subject to the discretion of the Board). This bonus formed part of the consideration for
the acquisition and is accordingly included in Note 4.
(c) Performance Rights: Mr Peters received a grant of 12,000,000 Performance Rights, approved by
shareholders at a meeting held 25 March 2019, which will vest over a four year period as follows:
iii.
iv.
one-quarter (being, 3,000,000 Performance Rights) one year
Completion; and
one-sixteenth (being, 750,000 Performance Rights) each quarter thereafter.
following
Mr Peters ceased to be an employee of the Company on 11 August 2019 and in accordance with
the agreement all the Performance Rights will lapse.
(d) Performance Shares: Mr Peters received a grant of 12,000,000 Performance Shares, approved by
shareholders at a meeting held 25 March 2019, which will vest over a four year period as follows:
iv.
v.
vi.
4,000,000 Performance Shares that will vest upon LIFX business contributing a
cumulative A$100 million to the Buddy Group in revenues within 18 months
from Completion;
4,000,000 Performance Shares that will vest upon LIFX business contributing a
cumulative A$200 million in revenues to the Buddy Group within 30 months
from Completion; and
4,000,000 Performance Shares that will vest upon LIFX business contributing a
cumulative A$250 million in revenues to the Buddy Group within 36 months
from Completion.
If the milestones are not met within the designated timeframe, or Mr Peters ceases to be an
employee of the Company the Performance Shares will lapse. Mr Peters ceased to be an employee
of the Company on 11 August 2019 and, in accordance with the agreement, all the Performance
Shares will lapse.
(e) Termination: Mr Peters is employed on an at-will employment relationship with the Company
which may be terminated at any time by either Mr Peters or the Company upon notice to the
other, for any or no reason, with or without prior notice or cause. Further, the Company can
demote, transfer, suspend or otherwise discipline him in its sole discretion.
(f) The Executive Service Agreement contains other standard terms and conditions expected to be
included in contracts of this nature.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Directors and Executives
Details of the remuneration of the Directors and the key management personnel (as defined in AASB 124
Related Party Disclosures) of Buddy Technologies Limited are set out in the following table:
Key Management Personnel of Buddy Technologies Limited
Post-
Employment
Benefits
Super-
annuation
$
Share Based
Payments
Performance
Shares &
Rights $
Total
$
349,467
-
%
Performance
Related
-
-
-
-
10,736
10,736
100%
-
-
-
-
-
-
-
-
-
10,579
129,573
251,513
-
-
84,485
378,037
-
119,785
10,579
224,794
1,109,538
20%
-
-
52%
22%
-
Short Term Benefits
2019
Key Management
Personnel
David McLauchlan
Richard Borenstein
Alexander Gounares
(Resigned 25 Mar 19)
John van Ruth
Rosey Batt
(Appointed 30 Nov 2018)
Marc Alexander
(Appointed 1 Apr 2019)
Richard Jacroux
Tim Peters
(Appointed 1 Apr 2019)
Salary and
Fees
$
349,467
-
-
-
-
111,361
293,552
119,785
Total
874,165
Bonus
Non-
Monetary
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Key Management Personnel of Buddy Technologies Limited (continued)
2018
Key Management
Personnel
David McLauchlan (2)
Richard Borenstein (2
Alexander Gounares (2)
John van Ruth (2)
Ananda Kathiravelu(1)
Richard Jacroux
Total
(1)
(2)
Short Term Benefits
Salary and
Fees
$
322,,437
-
-
-
-
270,847
593,284
Bonus
Non-
Monetary
$
-
-
-
-
-
-
-
-
-
-
-
-
Post-
Employment
Benefits
Super-
annuation
$
Share Based
Payments
Performance
Shares &
Rights $
Total
$
%
Performance
Related
-
-
-
-
-
-
(405,134)
(82,697)
(60,922)
(60,922)
(12,515)
(12,515)
(15,231)
(15,231)
-
-
159,984
430,831
(333,818)
259,466
490%
100%
100%
100%
-
37%
89%
Resigned 15 May 2018
Reflects the reversal of the cumulative expense recognised in the prior period in respect of the Tranche 3 performance shares as the
vesting conditions for these instruments are not expected to be met.
Shareholdings of Key Management Personnel
The number of ordinary shares of Buddy Technologies Limited held, directly, indirectly or beneficially, by
each Director, including their personally-related entities for the year ended 30 June 2019 is as follows:
Key Management
Personnel
David McLauchlan
Richard Borenstein
Alexander Gounares
(Resigned 25 Mar 2019)
John van Ruth
Rosey Batt
(Appointed 30 Nov 2018)
Marc Alexander
(Appointed 1 Apr 2019)
Tim Peters (Appointed 1
Apr 2019)
Richard Jacroux
Held at
1 July 2018
Movement
During Year
Purchase/
(Sales)
Change due to
appointment/
(resignation)
129,976,820
19,533,668
1,579,242
1,478,146
-
-
-
-
-
-
-
-
-
-
3,000,000
1,500,000(1)
1,875,000
1,875,000
-
-
Held at
30 June 2019
131,851,820
21,408,668
-
-
-
(1,579,242)
-
-
-
1,478,146
-
(600,000)
41,388,363
40,788,363
-
-
16,808,477
16,808,477
-
4,500,000
Total
155,567,876
1,500,000
3,150,000
56,617,598
216,835,474
(1) Conversion of Performance Rights
Key Management
Personnel
David McLauchlan
Richard Borenstein
Alexander Gounares
John van Ruth
Ananda Kathiravelu
Richard Jacroux
Held at
1 July 2017
Movement
During Year
Purchase/
(Sales)
Change due to
appointment/
(resignation)
137,810,154
22,166,666 (1)
(30,000,000)
20,200,334
3,333,334 (1)
(4,000,000)
3,593,322
2,985,920 (1)
(5,000,000)
844,812
106,666
833,334 (1)
(200,000)
-
-
(106,666)
3,000,000 (1)
-
-
-
-
Held at
30 June 2018
129,976,820
19,533,668
1,579,242
1,478,146
-
3,000,000
Total
162,555,288
32,319,254
(39,200,000)
(106,666)
155,567,876
(1) Conversion of Performance Shares 2nd Milestone & Performance Rights
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Option Holdings of Key Management Personnel
The number of options over ordinary shares in Buddy Technologies Limited held, directly, indirectly or
beneficially, by each specified Director and specified executive, including their personally-related entities
for the year ended 30 June 2019 is as follows:
Key Management
Personnel
Richard Borenstein
Alexander Gounares
(Resigned 25 Mar 2019)
Marc Alexander
(Appointed 1 Apr 2019)
Tim Peters (Appointed 1
Apr 2019)
Total
Held at
1 July 2018
Conversion
Expiry of
Options
854
401,625
-
-
402,479
-
-
-
-
-
-
-
-
-
-
Change due to
appointment/
(resignation)
-
Held at
30 June 2019
Vested and
exercisable at 30
June 2019
854
854
(401,625)
-
-
-
-
-
532,765
532,765
532,765
131,140
533,619
533,619
Key Management
Personnel
Richard Borenstein
Alexander Gounares
Total
Held at
1 July 2017
Conversion
Expiry of
Options
854
401,625
402,479
-
-
-
-
-
-
Change due to
appointment/
(resignation)
-
-
-
Held at
30 June 2018
Vested and
exercisable at 30
June 2018
854
854
401,625
326,320
402,479
327,174
Performance Shares of Key Management Personnel
The number of Performance Shares in Buddy Technologies Limited held, directly, indirectly or beneficially,
by each specified Director and specified executive, including their personally-related entities for the year
ended 30 June 2019 is as follows:
Conversion
Change due to
appointment/
(resignation)
Vested and
exercisable at 30
June 2019
Held at
30 June 2019
22,166,666
3,333,334
-
-
Key Management Personnel
David McLauchlan
Richard Borenstein
Alexander Gounares (Resigned
25 Mar 2019)
John van Ruth
Marc Alexander
(Appointed 1 Apr 2019)
Tim Peters
(Appointed 1 Apr 2019)
Total
Held at
1 July 2018
22,166,666
3,333,334
2,500,001
833,333
-
-
28,833,334
-
-
-
-
-
-
-
(2,500,001)
-
-
833,333
12,000,000
12,000,000
12,000,000
12,000,000(1)
21,499,999
50,333,333
-
-
-
-
-
-
-
(1) Subsequent to the year ended 30 June 2019, Tim Peters ceased employment with automatic lapsing of all Performance Shares
Key Management Personnel
David McLauchlan
Richard Borenstein
Alexander Gounares
Held at
1 July 2017
Conversion
44,333,333
(22,166,667)
6,666,667
(3,333,333)
5,000,000
(2,499,999)
John van RuthAppointed
1,666,667
(833,334)
Change due to
appointment/
(resignation)
Held at
30 June 2018
Vested and
exercisable at 30
June 2018 (1)
-
-
-
-
22,166,666
3,333,334
2,500,001
833,333
Total
(1) The vesting conditions of performance shares are not expected to be met, therefore the expenses previously recognised in respect of these
(28,833,333)
28,833,334
57,666,667
-
instruments have been reversed. The expiry date for meeting the vesting conditions is 17 December 2018.
-
-
-
-
-
20
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED) (CONTINUED)
Employee Incentive Performance Rights & Replacement Rights of Key Management Personnel
The number of Performance Rights in Buddy Technologies Limited held, directly, indirectly or beneficially,
by each specified Director and specified executive, including their personally-related entities for the year
ended 30 June 2019 is as follows:
Key Management Personnel
Alexander Gounares
(Resigned 25 Mar 19)
Held at
1 July 2018
Conversion
Change due to
appointment/
(resignation)
Held at
30 June 2019
Vested and
exercisable at 30
June 2019
364,441
-
(364,441)
-
Richard Jacroux
5,000,000
(1,500,000)
-
3,500,000
Marc Alexander
(Appointed 1 Apr 19)
Tim Peters
(Appointed 1 Apr 19)
Total
-
-
-
-
12,000,000
12,000,000
12,000,000
12,000,000(1)
5,364,441
(1,500,000)
23,635,559
27,500,000
(1) Subsequent to the year ended 30 June 2019, Tim Peters ceased employment with automatic lapsing of all Performance Rights.
-
-
-
-
-
Key Management Personnel
Alexander Gounares
Held at
1 July 2017
850,361
Conversion
(485,920)
Richard Jacroux
8,000,000
(3,000,000)
Total
8,850,361
(3,485,920)
Change due to
appointment/
(resignation)
-
-
-
Held at
30 June 2018
364,441
5,000,000
5,364,441
Vested and
exercisable at 30
June 2018
-
-
-
Share-based Compensation
Share-based compensation for the Directors in the current year were issued as Performance Shares,
Performance Rights and Replacement options.
Other Related Party Transactions
Transactions with other related parties are made on normal commercial terms and conditions and at
market rates. Outstanding balances are unsecured and are repayable in cash.
Armada Capital Limited, a company of which Mr Ananda Kathiravelu is Managing Director, was paid for
investor relations and marketing support to the Company on normal commercial terms during the 2018
year for which it received a monthly fee of $4,000 under a marketing and investor relations agreement
with the Company. A summary of the total fees paid to Armada Capital Limited for the year ended 30
June 2018 is as follows:
Consolidated
2019
$
-
-
2018
$
48,000
48,000
Investor relations and marketing support
Total
Loans to Key Management Personnel
Richard Jacroux*
$67,650
$163,981
$163,981
Balance at 30
June 2018
Balance at 30
June 2019
Highest balance
during period
*Relates to an advance made by the Company, the advance was fully repaid on 17 July 2019.
**********END OF AUDITED REMUNERATION REPORT**********
21
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
LIKELY DEVELOPMENTS
Likely developments in the operations of the Group have been disclosed in the Operating and Financial
Review section of the Directors’ Report.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors
of Buddy Technologies Ltd support and have substantially adhered to the best practice recommendations
set by the ASX Corporate Governance Council. For a detailed analysis of the Company’s Corporate
Governance Policies, visit the corporate governance section of our website at www.buddy.com.
AUDITORS INDEPENDENCE DECLARATION
The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 for
the year ended 30 June 2019 has been received and can be found on page 25.
AUDITOR
Nexia Perth Audit Services Pty Ltd continues in office in accordance with Section 327 of the Corporation
Act 2001.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
SHARE OPTIONS
Shares under Option
As at 30 June 2019, there existed the following unlisted options:
Date Granted
1 Apr 2019
1 Apr 2019
17 Dec 2015
Expiry Date
29 Mar 2023
01 Apr 2024
17 Dec 2020
Exercise Price
7.59c
7.59c
10.0c
Number Shares
Under Option
532,765
100,000,000
2,806,647
Vested &
Exercisable
532,765
100,000,000
2,600,245
These options do not entitle the holders to participate in any share issue of the Company or any other
body corporate.
During the year and up to the report date, no options have been exercised and converted to ordinary
shares. Any unvested options due to terminated employees will be cancelled at the next annual
shareholder meeting.
Performance Shares
As at 30 June 2019, the following unlisted Performance Shares were on issue:
Date Granted
Expiry Date
Exercise Price
Number
Vested &
Exercisable
01 Apr 2019
17 Dec 2015
1 Apr 2024
17 Dec 2020
Nil
Nil
24,000,000(2)
31,833,333(1)
-
-
(1) The Performance Shares were to convert upon satisfaction of any one of the following milestones:
22
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
Performance Shares (continued)
(i)
(ii)
(iii)
(A)
(B)
One third (1/3) of all Performance Shares held by the Holder as at the date of issue of the
Performance Shares (Issue Date) shall convert upon Buddy (or its subsidiaries) logging
20,000,000 total discrete connections to any Buddy server or service (Interactions) by any
approved network connected hardware or software application (Device) per day for no less than
3 consecutive weeks within a period of 24 months from the date of completion of the Capital
Raising;
One third (1/3) of all Performance Shares held by the Holder as at the Issue Date shall convert
upon the total number of devices creating an Interaction with a Buddy application that it has not
previously interacted with (New Connection) exceeding 500,000 per week for no less than three
(3) consecutive weeks within a period of 24 months from the date of completion of the Capital
Raising;
One third (1/3) of all Performance Shares held by the Holder as at the Issue Date shall convert
upon Buddy (or its subsidiaries) satisfying the following milestones within a period of 36 months
from the date of completion of the Capital Raising:
total daily device interactions with the Buddy Platform exceed 50,000,000 per day for no less
than 3 consecutive weeks; and
total number of devices creating new connections to Buddy exceeding 1,000,000 per week for no
less than 3 consecutive weeks.
As at the date of this report Milestone 1 and Milestone 2 have been achieved with vesting conditions
satisfied. Milestone 3 was not met. The shares are not expected to be converted and no expense has
been recognised this year. Refer to the remuneration report for further details of the performance
shares of Key Management Personnel.
(2) LIFX Performance Shares are to convert upon satisfaction of any one of the following milestones
which will vest over a four year period as follows:
i.
ii.
iii.
8,000,000 Performance Shares that will vest upon LIFX business contributing a cumulative
A$100 million to the Buddy Group in revenues within 18 months from 29 March 2019;
8,000,000 Performance Shares that will vest upon LIFX business contributing a cumulative
A$200 million in revenues to the Buddy Group within 30 months from 29 March 2019; and
8,000,000 Performance Shares that will vest upon LIFX business contributing a cumulative
A$250 million in revenues to the Buddy Group within 36 months from 29 March 2019.
Performance Rights
As at 30 June 2019, there existed the following unlisted Performance Rights:
Date Granted
Expiry Date
Exercise Price
Number
Vested
1 Apr 2019
17 Dec 2015
1 Apr 2024
17 Dec 2020
Nil
Nil
24,000,000(1)
4,898,503(2)
-
-
(1) The LIFX Performance Rights will vest over a four year period as follows:
- One-quarter (being, 6,000,000 Performance Rights) one year following Completion; and
- one-sixteenth (being, 1,500,000 Performance Rights) each quarter thereafter.
(2) The replacement performance rights shall vest and become exercisable on a quarterly basis in
equal tranches over 4 years from the employee’s commencement date. During the year ended 30
June 2019 none (2018: 1,541,592) of the Performance rights converted into ordinary shares.
23
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ REPORT (CONTINUED)
Employee Incentive Performance Rights
As at 30 June 2019, there existed the following unlisted Employee Incentive Rights.
Outstanding at the
beginning of the year
Granted
Converted to ordinary shares
Forfeited
Outstanding at year-end
Vested and Exercisable*
2019
2018
55,842,716
34,062,917
42,950,000
(17,746,185)
(23,877,444)
57,169,087
-
44,496,000
(16,908,835)
(5,807,366)
55,842,716
-
* The employee incentive performance rights issued were valued based on the following assumptions in the
table below:
Date of grant
31-Jul 2018
30-May 2018
1-Oct 2018
13-Sep 2018
29-Mar 2019
29-Apr 2019
1-May 2019
29-May 2019
Number granted
300,000
5,000,000
500,000
300,000
4,000,000
14,850,000
3,000,000
15,000,000
Underlying share price
$0.08
$0.08
$0.08
$0.08
$0.08
$0.076
$0.076
$0.076
Share exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The Vesting conditions of the EIPRs are 25% vest on the first anniversary from the employee’s
commencement date, with the remainder vesting on a quarterly basis in equal tranches over 4 years from
the employee’s commencement date. Employee Rights will lapse on termination of employment. During
the year ended 30 June 2019, 17,746,185 (30 June 2018: 16,908,835) of the Employee Incentive
Performance Rights converted into ordinary shares.
AUDIT SERVICES
During the year the following fees were paid or payable for services provided by the auditor.
Consolidated
2019
$
2018
$
141,025
149,970
22,210
311,645
73,610
-
-
73,610
Audit Services
Amounts payable to auditor of parent entity
- Audit and review of financial statements
- Non-audit services
Amounts payable to other entities
Signed in accordance with a resolution of the Directors.
David McLauchlan
CEO & Executive Director
Date: 30 September 2019
24
For personal use only
Lead auditor’s independence declaration under Section 307C of the Corporations Act 2001
To the directors of Buddy Technologies Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended
30 June 2019 there have been:
(i) no contraventions of the auditor’s independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
Nexia Perth Audit Services Pty Ltd
TJ Spooner
Director
30 September 2019
Perth
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
Service revenue
Government rebates received
Finance & other income
Cost of sales
Advertising & marketing expenses
Financial, administration, insurance and compliance costs
Depreciation
IT & web costs
Employee benefits expense
Share-based payments
Research & development
Amortisation of intangibles
Costs of acquisition
Restructuring and other one-time costs
Interest costs
Option based payments
Realised foreign currency losses
Note
5
5
5
20
13
16
Consolidated
30 June 2019
$
30 June 2018
$
8,904,895
1,237,502
289,840
(6,856,677)
(2,710,804)
(2,522,143)
(512,669)
(581,974)
(9,314,665)
(1,009,267)
(1,805,160)
(1,670,000)
(3,085,106)
(2,689,129)
(1,113,647)
(4,982,105)
(86,194)
2,083,941
1,563,926
207,636
(1,450,330)
(2,016,669)
(2,207,769)
(145,649)
(654,699)
(6,443,788)
(3,460,854)
(1,353,242)
-
-
-
-
-
-
Profit / (Loss) before income tax expense
(28,507,303)
(13,877,497)
Income tax benefit
Loss for the year
7
386,464
-
(28,120,839)
(13,877,497)
Other Comprehensive Income / (Loss):
Items that will not be reclassified to profit or loss:
Revaluation of investments at fair value through other comprehensive
income (FVOCI)
Foreign currency translation differences for foreign operations
Other comprehensive income / (loss) for the year, net of tax
12
(1,089,876)
1,066,680
1,879,280
789,404
13,983
1,080,663
Total Comprehensive Loss for the year
(27,331,435)
(12,796,834)
Basic & Diluted (Loss) per share - cents per share
6
(0.02)
(0.01)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
26
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Consolidated
Buddy
Technologies
Limited
Buddy
Technologies
Limited
Note
30 June 2019
$
30 June 2018
$
8
9
10
11
12
13
14
21
15
15
7
16
16
2,958,055
4,685,146
12,334,485
22,377,919
1,088,414
662,230
19,977,686
24,128,563
1,095,837
-
88,958,956
90,054,793
321,978
1,497,580
-
1,819,558
110,032,479
25,948,121
11,711,427
513,981
14,731,751
17,240,950
1,667,997
119,329
-
-
44,198,109
1,787,326
6,663,300
6,663,300
-
-
50,861,409
1,787,326
59,171,070
24,160,795
115,298,012
34,033,168
(90,160,110)
58,947,674
27,907,462
(62,694,341)
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Total Current Assets
Non-Current Assets
Property, plant & equipment
Investments
Intangible assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Borrowings
Deferred acquisition consideration
Total Current Liabilities
Non-Current Liabilities
Deferred Taxation
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
Equity attributable to owners of the parent
59,171,070
24,160,795
TOTAL EQUITY
59,171,070
24,160,795
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
27
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
Consolidated 2019
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
Issued
Capital
$
Share and
Option
Reserve
$
Foreign
Currency
Translation
Reserve
$
Total equity at 1 July 2018
58,947,674 26,945,382
(104,600)
Adjustment(s) on initial application of AASB 9
Total Profit / (Loss) for the period
Other Comprehensive Income
Total Comprehensive Income / (Loss) for the year
-
-
-
-
-
-
-
-
-
-
1,879,280
1,879,280
Fair Value
Reserve
$
1,066,680
(655,070)
-
(1,089,876)
(1,744,946)
Accumulated
Losses
$
(62,694,341)
Total
Equity
$
24,160,795
655,070
(28,120,839)
-
(27,465,769)
-
(28,120,839)
789,404
(27,331,435)
Transactions with equity holders:
Shares issued during the year:
Shares and options issued pursuant to acquisition
Shares issued pursuant to capital raising
Costs of capital raising
Share based payments
Option based payments
32,628,491
18,100,000
(1,194,600)
6,816,447
-
-
-
-
1,009,267
4,982,105
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39,444,938
18,100,000
(1,194,600)
1,009,267
4,982,105
Total equity at 30 June 2019
115,298,012 32,936,754
1,774,680
(678,266)
(90,160,110)
59,171,070
28
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
For the year ended 30 June 2018
Consolidated 2018
Issued
Capital
$
Option
Reserve
$
Foreign
Currency
Translation
Reserve
$
Total equity at 1 July 2017
32,090,674 23,484,528
(118,583)
Assets held
for Sale
Reserve
$
-
Accumulated
Losses
$
(48,816,844)
Total
Equity
$
6,639,775
Total Profit / (Loss) for the year
Other Comprehensive Income
Total Comprehensive Income / (Loss) for the year
-
-
-
-
-
-
-
13,983
13,983
-
1,066,680
1,066,680
(13,877,497)
-
(13,877,497)
(13,877,497)
1,080,663
(12,796,834)
Transactions with equity holders:
Shares issued during the year:
Options converted during the year
Shares issued pursuant to capital raising
Costs of capital raising
Share based payments
5,375,000
23,000,000
(1,518,000)
-
-
-
-
3,460,854
-
-
-
-
-
-
-
-
-
-
-
-
5,375,000
23,000,000
(1,518,000)
3,460,854
Total equity at 30 June 2018
58,947,674 26,945,382
(104,600)
1,066,680
(62,694,341)
24,160,795
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
29
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Consolidated
Buddy Technologies
Limited
Buddy Technologies
Limited
Note
30 June 2019
30 June 2018
$
$
5
5
289,840
10,851,981
1,237,502
(2,387,134)
(20,955,647)
190,411
1,679,996
1,563,926
(2,007,941)
(11,752,511)
17
(10,963,458)
(10,326,119)
12
4
11
15
16
15
15
16
407,704
(24,081,744)
(480,494)
(230,409)
(24,384,943)
4,168,388
18,100,000
(6,325,536)
(698,995)
-
(1,194,600)
-
-
(153,248)
(135,300)
(288,548)
-
23,000,000
-
-
5,375,000
(1,518,000)
14,049,257
26,857,000
(21,299,144)
16,242,333
Cash flows from operating activities
Interest received & other income
Receipts from customers
Receipts of Government rebates
Payments for research & development
Payments to suppliers and employees
Net cash flows used in operating
activities
Cash flows from investing activities
Proceeds from sale of listed investment
Payment on acquisition of business
Payments for plant and equipment
Payments for notes receivable
Net cash flows used in investing
activities
Cash flows from financing activities
Proceeds from borrowings
Proceeds from share issue
Repayment of borrowings
Payments of deferred acquisition
consideration
Proceeds from conversion of options
Capital Raising Costs
Net cash flows provided by financing
activities
Net increase/(decrease) in cash and cash
equivalents held
Effect of FX rate changes
1,879,280
13,983
Cash and cash equivalents at the beginning
of the year
Cash and cash equivalents at the end
of the year
22,377,919
6,121,603
8
2,958,055
22,377,919
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
30
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: REPORTING ENTITY
Buddy Technologies Limited (the “Company”) is a company domiciled in Australia and whose shares are
publicly traded on the Australian Securities Exchange (ASX: BUD). The consolidated financial statements
of the Company as at and for the year ended 30 June 2019 comprises the Company and its subsidiaries
(collectively referred to as the “Group”).
A description of the nature of the Group’s operations and its principal activities is included in the review
of operations and activities in the Directors’ Report, which does not form part of this financial report.
NOTE 2: BASIS OF PREPARATION
This general purpose financial report for the year ended 30 June 2019 has been prepared in accordance
with Corporations Act 2001 and Australian Accounting Standards and authoritative pronouncements of
the Australian Accounting Standards Board.
The Consolidated Financial Statements and Notes of the Group comply with International Financial
Reporting Standards (IFRS) and interpretations adopted by the International Accounting Standards
Board.
The financial statements are presented in Australian Dollars. The Group’s functional currencies are US
dollar, Euro and British pound.
This Consolidated Financial Report was approved by the Board of Directors on 30 September 2019.
Historical Cost Convention
These financial statements have been prepared under the historical cost convention, except for available
for sale financial assets which are measured at fair value.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, and have been applied consistently by the Group entities.
Going concern
These financial statements have been prepared on a going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary
course of business.
The Group has reported a net loss for the year of $28,120,839 (2018: $13,877,497) and a cash outflow
from operating activities of $10,963,458 (2018: $10,326,119). The directors carefully manage
expenditure and, subject to being able to raise further finance, are of the view, based on cash flow
forecasts, that the Group will be able to continue its operations as a going concern.
The continuing applicability of the going concern basis of accounting is dependent upon the Group’s
ability to source additional finance. The directors are confident that the Group will be successful in
securing additional funds, should the need arise.
Based on these facts, the directors consider the going concern basis of preparation to be appropriate for
this financial report. Should the Company be unsuccessful in securing additional finance, there is a
material uncertainty which may cast significant doubt whether the entity will be able to continue as a
going concern and therefore, whether it will realise its assets and extinguish its liabilities in the normal
course of business and at the amounts stated in the financial report.
31
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 2: BASIS OF PREPARATION (CONTINUED)
The financial statements do not include any adjustments relative to the recoverability and classification of
recorded asset amounts or, to the amounts and classification of liabilities that might be necessary should
the entity not continue as a going concern.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
A.
Basis of Consolidation
Subsidiaries
The consolidated financial statements comprise the assets and liabilities of Buddy Technologies Limited
and its subsidiaries at 30 June 2019 and the results of all subsidiaries for the year then ended. A
subsidiary is any entity controlled by Buddy Technologies Limited. Subsidiaries are all entities (including
structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The financial statements of subsidiaries are prepared from the same reporting period as the Parent
Company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar
accounting policies that may exist.
All inter-company balances and transactions, including unrealised profits arising from intra-entity
transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be
recovered. Investments in subsidiaries are accounted for at cost in the individual financial statements of
Buddy Technologies Limited.
Subsidiaries are consolidated from the date on which control is obtained by the Group and cease to be
consolidated from the date on which control is transferred out of the Group. Where there is a loss of
control of a subsidiary, the consolidated financial statements include the results for the part of the
reporting period which Buddy Technologies has control.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The
acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the
identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The
identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values
(see note 3(G)).
A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted
for as an equity transaction.
Non-controlling interests are allocated their share of net profit after tax in the statement of
comprehensive income and are presented within equity in the consolidated statement of financial
position, separately from the equity of the owners of the parent.
Losses are attributed to the non-controlling interest even if that results in a deficit balance.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred
in a business combination is measured at fair value, which is calculated as the sum of the
acquisition‑date fair values of assets transferred by the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interest issued by the Group in exchange for control of the
acquiree.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Basis of Consolidation (continued)
Acquisition‑related costs are recognised in profit or loss as incurred. At the acquisition date, the
identifiable assets acquired and the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are
recognised and measured in accordance with IAS 12 Income Taxes and AASB 119 Employee Benefits
respectively;
• liabilities or equity instruments related to share‑based payment arrangements of the acquiree or
share‑based payment arrangements of the Group entered into to replace share‑based payment
arrangements of the acquiree are measured in accordance with AASB 2 Share‑Based Payments at the
acquisition date (see below); and
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non‑current
Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non‑controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net of the acquisition‑date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the net of the acquisition‑date amounts of
the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred,
the amount of any non‑controlling interests in the acquiree and the fair value of the acquirer’s previously
held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
When the consideration transferred by the Group in a business combination includes contingent
consideration arrangement, the contingent consideration is measured at its acquisition‑date fair value
and included as part of the consideration transferred in a business combination. Changes in fair value of
the contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the ‘measurement period’ (which
cannot exceed one year from the acquisition date) about facts and circumstances that existed at the
acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not
qualify as measurement period adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates
and its subsequent settlement is accounted for within equity. Other contingent consideration is
remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit
or loss.
When a business combination is achieved in stages, the Group’s previously held interests in the acquired
entity are remeasured to its acquisition‑date fair value and the resulting gain or loss, if any, is
recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date
that have previously been recognised in other comprehensive income are reclassified to profit or loss,
where such treatment would be appropriate if that interest were disposed of.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Basis of Consolidation (continued)
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or
additional assets or liabilities are recognised, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if known, would have affected the amounts
recognised as of that date.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are
recognised initially at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at
cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible
assets that are acquired separately.
Contingent liabilities acquired in a business combination
Contingent liabilities acquired in a business combination are initially measured at fair value at the
acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at
the higher of the amount that would be recognised in accordance with AASB 137 and the amount
recognised initially less cumulative amount of income recognised in accordance with the principles of
AASB 15.
B.
Segment Reporting
An operating segment is a component of an entity that engages in business activities from which it may
earn revenues and incur expenses (including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly reviewed by the entity's chief
operating decision maker to make decisions about resources to be allocated to the segment and assess
its performance and for which discrete financial information is available. This includes start-up operations
which are yet to earn revenues. Management will also consider other factors in determining operating
segments such as the existence of a line manager and the level of segment information presented to the
board of directors.
Operating segments have been identified based on the information provided to the chief operating
decision makers – being the executive management team.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately
where information about the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative
criteria are combined and disclosed in a separate category for “all other segments”.
C. Income Tax
The income tax expense or benefit for the year is the tax payable on the current year’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.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Income Tax (continued)
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 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.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
The Company and its wholly-owned Australian resident subsidiaries have not formed a tax-consolidated
Group as at balance sheet date.
D. Goods and Services Tax and Similar Taxes
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”),
except; where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authorities, in which case the GST is recognised as part of the cost of acquisition of the asset or as part
of an item of the expense item as applicable and receivables and payables in the balance sheet are
shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Consolidated Statement of Financial Position. Cash flows are included in
the Consolidated Statement of Cash Flows on a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable from, or payable to, the taxation authority
are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
E. Trade and Other Receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the Group provides money, goods or services
directly to a debtor with no intention of selling the receivables. They are included in current assets,
except for those with maturities greater than 12 months after the balance date which were classified as
non-current assets. Trade and other receivables are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method, less any impairment losses.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. Property, Plant and Equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to the items. Repairs and maintenance are charged
to the statement of profit or loss and other comprehensive income during the reporting period in which
they are incurred.
Depreciation is calculated using the straight-line method to allocate asset costs over their estimated
useful lives, as follows:
Computer Equipment
Software
Office Equipment
4 years
3 years
5 years
Immaterial items are depreciated in full in the year of acquisition.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
are included in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
G. Intangible assets and goodwill
(i) Goodwill
Goodwill is initially recognised and measured as set as per note 3A.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose
of impairment testing, goodwill is allocated to each of the Group’s cash‑generating units (or
groups of cash‑generating units) (CGUs) expected to benefit from the synergies of the
combination. CGUs to which goodwill has been allocated are tested for impairment annually,
or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the CGU is less than the carrying amount of the unit, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro‑rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent
period.
On disposal of a cash generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
The Group’s policy for goodwill arising on the acquisition of an associate is described as per
note 3A.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(ii) Research and development
Expenditure on research activities is recognised in profit or loss as incurred.
Development expenditure is capitalised only if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are
probable and the Group intends to and has sufficient resources to complete development
and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred.
Subsequent to initial recognition, development expenditure is measured at cost less
accumulated amortisation and any accumulated impairment losses.
(iii) Other intangible assets
Other intangible assets, including Brand/Intellectual Property, customer relationships,
patents and trademarks that are acquired by the Group and have finite useful lives are
measured at cost less accumulated amortisation and any accumulated impairment losses.
(iv) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including
expenditure on internally generated goodwill and brands, is recognised in profit or loss as
incurred.
(v) Amortisation and useful life
The group amortises intangible assets with a finite useful life using the straight-line method
over the following periods:
Brand/Intellectual Property
5 years
See Note 3I for the Group policy regarding impairment of goodwill.
KEY SOURCES OF ESTIMATION UNCERTAINTY
Following the assessment of the recoverable amount of goodwill allocated to the LIFX acquisition, to
which goodwill of $57,228,956 is allocated, the directors consider the recoverable amount of goodwill
allocated to LIFX to be most sensitive to the achievement of future budgets. Budgets comprise forecasts
of revenue, staff costs and overheads based on current and anticipated market conditions that have
been considered and approved by the Board. Whilst the Group is able to manage most of LIFX's costs,
the revenue projections are inherently uncertain due to the nature of consumer, retailer and competitor
behaviour. Revenue of the CGUs is most sensitive to changes in the technological advancements within
the company’s operating in that marketplace. The market for LIFX products has seen a significant
increase in turnover the past 18 months with the introduction of new products and retailers. The
sensitivity analysis in respect of the recoverable amount of goodwill is presented in Note 13.
H. Investment in Associated Entities
The Group’s investment in its associate is accounted for using the equity method of accounting in the
consolidated financial statements, after initially being recognised at cost.
An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor
a joint venture.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Under the equity method, the investment in the associate is carried in the Consolidated Statement of
Financial Position at cost plus post-acquisition changes in the Group's share of net assets of the
associate. Goodwill relating to an associate is included in the carrying amount of the investment and is
not amortised. After application of the equity method, the Group determines whether it is necessary to
recognise any additional impairment loss with respect to the Group’s net investment in the associate.
Goodwill included in the carrying amount of the investment in an associate is not tested separately,
rather the entire carrying amount of the investment is tested for impairment as a single asset. If an
impairment is recognised, the amount is not allocated to the goodwill of the associate.
The Consolidated Statement of Profit or Loss and Other Comprehensive Income reflects the Group's
share of the results of operations of the associate, and its share of post-acquisition movements in
reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds
its interest in the associate, including any unsecured long-term receivable and loans, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
The balance dates of the associate and the Group are identical and the associate's accounting policies
conform to those used by the Group for like transactions and events in similar circumstances.
I. Impairment
Impairment of Non-Financial Assets
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount.
Where the carrying amount of an asset or cash generating unit exceeds its recoverable amount the asset
or cash generating unit is considered impaired and is written down to its recoverable amount. Goodwill is
tested annually for impairment. For impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the the
cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs
or groups of CGUs that are expected to benefit from the synergies of the combination.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an
individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs
to sell and it does not generate cash inflows that are largely independent of those from other assets or
groups of assets, in which case the recoverable amount is determined for the cash-generating unit
(group of assets) to which the asset belongs. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. An impairment loss is
recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses
are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce te carrying amounts of the other assets in the CGU on a pro
rata basis. An impairment loss in respect of goodwill is not reversed.
Impairment of Non-Derivative Financial Assets
The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at
amortised cost and contract assets.
The Group measures loss allowances at an amount equal to lifetime ECLs. When determining whether the
credit risk of a financial asset has increased significantly since initial recognition and when estimating
ECLs, the Group considers reasonable and supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and qualitative information and analysis based on
the Group’s historical experience and informed credit assessment and including forward-looking
information.
38
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
J. Share-Based Payments
The Group has provided payment to service providers and related parties in the form of share-based
compensation whereby services are rendered in exchange for shares or rights over shares (‘equity-settled
transactions’). The cost of these equity-settled transactions is measured by reference to the fair value at
the date at which they are granted. The fair value is determined using an appropriate valuation model
for services provided by employees or where the fair value of the goods or services received cannot be
reliably estimated.
For goods and services received where the fair value can be determined reliably the goods and services
and the corresponding increase in equity are measured at that fair value. The fair value of the options
granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market
vesting conditions. Non market vesting conditions are included in assumptions about the number of
options that are expected to become exercisable.
At each balance date, the entity revises its estimates of the number of options with non-market vesting
conditions that are expected to become exercisable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance conditions are fulfilled, ending on the date on which the
relevant parties become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in
the opinion of the Directors of the Group, will ultimately vest. This opinion is formed based on the best
available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at
grant date.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if
the terms had not been modified. In addition, an expense is recognised for any increase in the value of
the transaction as a result of the modification, as measured at the date of modification.
K. Cash and Cash Equivalents
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand
and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk
of changes in value.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash
and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an
integral part of the Group’s cash management.
L. Revenue recognition
Revenue from contracts with customers
Revenue is measured based on the consideration specified in a contract with a customer. The Group
recognises revenue when it transfers control over a good or service to a customer.
The specific recognition criteria described below must also be met before revenue is recognised.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
L. Revenue recognition (continued)
Buddy Cloud
Revenue is recognised each month by reference to the stage of completion over the term of the
customer service agreement. Stage of completion is measured by reference to time incurred to date as a
percentage of total time for each service delivery contract.
Revenue from the sale of services is measured at the fair value of the consideration received or
receivable, net of returns and allowances, discounts and volume rebates. The Group does not provide
any extended warranties or maintenance contracts to its customers.
Buddy OHM
The revenue for Buddy OHM is recognised on a monthly basis based on the number of end users using
the Ohm (data monitoring services).
LIFX Products
The Group recognises revenue when it satisfies a performance obligation by transferring a promised
good or service to a customer. An asset is transferred when the customer obtains control of that asset.
Revenue is recognised when the goods are shipped to the customer.
There is no difference to the recognition of revenue for the Group under AASB 15 when compared to
AASB 18.
Research and Development Grants
The Group recognises revenue from research and development grants (R&D) on receipt of the funds.
Finance Income
Finance income comprises interest income on funds invested, gains on disposal of financial assets and
changes in fair value of financial assets held at fair value through profit or loss. Finance expenses
comprise changes in the fair value of financial assets held at fair value through profit or loss and
impairment losses on financial assets.
Interest income is recognised as it accrues in profit or loss, using the effective interest rate method.
M. Issued Capital
Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the
consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity as a reduction of the share proceeds received.
N. Earnings per Share
Basic earnings per share
i)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year.
Diluted earnings per share
ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares.
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
O. Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition.
Trade and other payables are stated at amortised cost, using the effective interest method.
P. Foreign Currency Translation
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain or loss. As at the balance date the assets and
liabilities of this subsidiary is translated into the presentation currency of Buddy Technologies Limited at
the rate of exchange ruling at the balance date and their statements of comprehensive income are
translated at the weighted average exchange rate for the year.
Buddy Technologies Limited has a functional currency of Australian Dollars, Buddy Platform Inc and Lifi
Labs Inc. have a functional currency of USD; Buddy Platform Europe and Lifi Labs (UK) Pty Ltd have a
functional currency of Euro and GBP respectively. The Group has chosen Australian dollars (AUD) as the
presentation currency. The exchange differences arising on the translation are taken directly to a
separate component of equity, being recognised in the foreign currency translation reserve.
Q. Employee benefits
Short-term Employee Benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled within 12 months of the reporting date are recognised in current liabilities in
respect of employees’ services up to the reporting date and are measured at amounts expected to be
paid when liabilities are settled.
Defined Contribution Superannuation Expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
R. Significant Accounting Estimates and Assumptions
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 Directors evaluate estimates and judgements
incorporated into the financial report based on historical knowledge and best available current
information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the Group. The carrying amounts of
certain assets and liabilities are often determined based on estimates and assumptions of future events.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
R. Significant Accounting Estimates and Assumptions (Continued)
Share based payments
The Group measures the cost of equity-settled transactions with management and other parties by
reference to the fair value of the equity instruments at the date at which they are granted. The fair value
is determined by the Board of Directors using either the Binomial or the Black-Scholes valuation methods,
taking into account the terms and conditions upon which the equity instruments were granted. For
instruments with non-market vesting conditions the probability that the instruments will vest has to be
assessed. The assumptions in relation to the valuation of the equity instruments are detailed in Note 20.
The accounting estimates and assumptions relating to equity-settled share-based payments would have
no impact on the carrying amount of assets and liabilities within the next reporting period, but may
impact expenses and equity.
Intangible assets and goodwill
The Group has intangible assets with a carrying amount of $31,730,000 (Note 13) and goodwill with a
carrying amount of $57,228,956 (Note 13), arising through a business combination completed during the
year (Note 4).
Intangible assets and goodwill are regularly reviewed for impairment and whenever there is an indication
that an impairment might exist. Goodwill is subject to impairment testing on, at least, an annual basis.
To assess if there is any impairment, estimates are made of the future cash flows expected to result from
the use of these assets and their eventual disposal. These estimated cash flows are then adjusted to the
present value using an appropriate discount rate that reflects the risks and uncertainties associated with
the forecasted cash flows. Actual outcomes could vary significantly from such estimates of discounted
future cash flows.
The Group applied the following key assumption for the “value in use” calculations used in the
impairment testing of intangible assets and goodwill at year-end:
- discount rate in respect of goodwill and brand/intellectual property intangible asset of 19.0%
Since the cash flows also take into account tax expenses, a post-tax discount rate is used in the
impairment testing.
Management estimates that the use of the post-tax discount rate approximates the results of using a pre-
tax rate applied to pre-tax cash flows.
S. Comparative Information
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
T. Inventory
Inventory is measured at the lower of cost and net reliable value. The cost includes expenditure incurred
in acquiring the inventories and bringing them to their existing condition.
U. Application of New and Revised Accounting Standards
The Group has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (the “AASB”) that are relevant to its operations and effective for
the current year.
42
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AASB 9 Financial Instruments
The Group has adopted AASB 9 from 1 July 2018. The standard introduced new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost if it is
held within a business model whose objective is to hold assets in order to collect contractual cash flows
which arise on specified dates and that are solely principal and interest. A debt investment shall be
measured at fair value through other comprehensive income if it is held within a business model whose
objective is to both hold assets in order to collect contractual cash flows which arise on specified dates
that are solely principal and interest as well as selling the asset on the basis of its fair value. All other
financial assets are classified and measured at fair value through profit or loss unless the entity makes
an irrevocable election on initial recognition to present gains and losses on equity instruments (that are
not held-for-trading or contingent consideration recognised in a business combination) in other
comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably
designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an
accounting mismatch.
For financial liabilities designated at fair value through profit or loss, the standard requires the portion of
the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it
would create an accounting mismatch). New simpler hedge accounting requirements are intended to
more closely align the accounting treatment with the risk management activities of the entity.
New impairment requirements use an ‘expected credit loss’ (“ECL”) model to recognise an allowance.
Impairment is measured using a 12 month ECL method unless the credit risk on a financial instrument
has increased significantly since initial recognition. In which case the lifetime ECL method is adopted.
For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss
allowance is available.
Impact of adoption
The Group has applied AASB 9 retrospectively with the effect of initially applying this standard at the
date of initial application, being 1 July 2018, and has elected not to restate comparative information.
Accordingly, the information presented for 30 June 2018 has not been restated. The following is noted
on the impact of AASB 9:
Investments in listed shares that are not held for trading
On initial application date, an election has been made to designate available-for-sale financial
instruments that are non-derivative equity instruments not held for trading as fair value through other
comprehensive income (FVOCI). Previously recognised impairment losses in profit or loss were
transferred from retained earnings to the fair value reserve as from the initial application date, further
gains or losses (except dividend income) will be recognised in the fair value reserve.
As this is significant to the Group, an adjustment of $655,070 has been made to retained earnings and
fair value reserve as at 1 July 2018 and has been recognised in the Statement of Changes in Equity.
Other than the change disclosed above there were no other material impacts to profit or loss or net
assets on the adoption of AASB 9 in the current or comparative years.
Impairment of financial assets
For trade receivables and contract assets under AASB 15 the Group applies a simplified approach of
recognising lifetime expected credit losses as these items do not have a significant financing
component. The impairment allowance for trade receivables was increased by $2,091 at 1 July 2018.
43
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model
for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to
depict the transfer of promised goods or services to customers at an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. The
standard introduced a new contract-based revenue recognition model with a measurement approach
that is based on an allocation of the transaction price. This is described further in the accounting policies
below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts
with customers are presented in an entity's statement of financial position as a contract liability, a
contract asset, or a receivable, depending on the relationship between the entity's performance and the
customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain
criteria, be capitalised as an asset and amortised over the contract period.
Impact of adoption
AASB 15 was adopted using the modified retrospective approach and as such comparatives have not
been restated.
The adoption of AASB 15 had no impact on opening retained profits as at 1 July 2018.
AASB 16 Leases
The effective date for the Group is 1 July 2019. AASB 16 will cause the majority of leases of an entity to
be brought onto the statement of financial position. There are limited exceptions relating to short-term
leases and low value assets which may remain off-balance sheet.
The calculation of the lease liability
will take into account appropriate discount rates, assumptions about lease term and increases in lease
payments. A corresponding right to use asset will be recognised which will be amortised over the term
of the lease. Rent expense will no longer be shown, the profit and loss impact of the leases will be
through amortisation and interest charges.
Transition and impact
The Group intends to initially apply the new standard using the modified retrospective approach, which
requires no restatement of comparative information. As is permitted by the standard, the Group intends
to recognise the opening balance of right of use assets to be equal to the opening lease liability,
adjusted for any prepayment or accrued lease payments recognised in the financial position prior to
adoption.
The Group will elect to use the exemptions proposed by the standard on lease contracts for which the
lease terms ends within 12 months as of the date of initial application, and lease contracts for which the
underlying asset is of low value.
The Group currently has $170,040 worth of operating leases committed for a period of not longer than 1
year (Note 26) and does not expect that the standard will have a significant impact to the Group’s
financial statements.
44
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 4: BUSINESS COMBINATIONS
On 29 March 2019, the Group acquired 100% of the business and asset of Lifi Labs Inc ("LIFX"), a
manufacturer and seller of Wi-Fi enabled LED lighting products in the United States and internationally.
The acquisition has the group expanding its offering and services as well as providing a platform to
access international markets. For the purposes of these financial statements, the results of LIFX have
been included beginning on 1 April 2019. Details of the purchase consideration, the net assets acquired
and goodwill are as follows:
The assets and liabilities recognised as a result of the acquisition are as follows:
Brand/Intellectual Property
Cash
Inventory
Fixed Assets
Other Assets
Trade Debtors
Trade Payables
Other Liabilities
Workforce
Tax
Deferred tax
Loan
Fair value of assets and liabilities acquired
Add: Goodwill
Net assets acquired
Satisfied by:
Cash paid
Cash payable
Ordinary shares issued (1)
Additional consideration (2)
Total consideration
Net cash outflow arising on acquisition:
Cash paid
Less: Balances acquired
Cash
Net outflow of cash – investing activities
Fair Value
$
33,400,000
316,762
8,303,804
806,034
516,547
5,025,207
(2,141,886)
(343,851)
(482,000)
(28,381)
(7,014,000)
(23,705,376)
14,652,860
57,228,956
71,881,806
21,313,400
17,939,945
31,183,252
1,445,209
71,881,806
21,313,400
(316,762)
(316,762)
20,996,638
(1) The fair value of the 427,167,839 shares issued as part of the consideration transferred to Lifi
Labs Inc amounts to $31,183,252 is based on the closing share price as at 29 March 2019.
(2) 4,444,444 sign-on bonus shares were issued to Marc Alexander and Tim Peters, pursuant to
their employment transferred to the Group. The fair value of the consideration transferred
amounting to AUD$324,444 is based on the 29 March 2019 share price. In addition to the sign-
on bonus shares, 14,586,255 shares and 532,765 options were issued to Tim Peters. The fair
value of the consideration transferred for the shares is $1,096,663 and $24,102 in respect of the
Options. The fair value of the consideration transferred for the shares is based on the 29 March
2019 share price.
45
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 4: BUSINESS COMBINATIONS (CONTINUED)
The fair value of the consideration transferred for the options was valued at $0.045 an option using a
Black-Scholes with the following assumptions:
Total Number Granted
Grant date
Expiry date
Underlying share price
Volatility
532,765
29 Mar 2019
29 Mar 2023
$0.073 per share
87.17%
Earn-out consideration
Subject to LIFX achieving US$70 million in gross revenues during calendar year 2019, US$1 million is
payable as follows:
- US$510,000 payable to Luminous Wide Limited in cash; and
- An issue of fully paid ordinary shares in Buddy equivalent to US$490,000 to the minority
shareholders (in their respective proportions) based on the greater of:
5-day volume weighted average price of shares following 31 December 2019; or
-
- US$0.07.
Based on management’s knowledge of the business and taking into account the likely impact of the
current economic environment, the fair value of the consideration has been estimated as $nil.
Acquisition-related costs
Acquisition-related costs of $3,085,106 that were not directly attributable to the issue of shares are
included in administrative expenses in profit or loss and in investing cash flows in the consolidated
statement of cash flows.
service
revenue and loss for
Revenue and profit contribution
The acquired business contributed revenues of $6,523,425 and a net loss of $4,613,056 to the group for
the period from 1 April to 30 June 2019. If the acquisition had occurred on 1 July 2018, consolidated
June 2019 would have
pro-forma
been $42,980,667 and $39,637,279 respectively. These amounts have been calculated using the
subsidiary’s results and adjusting them for:
(i) differences in the accounting policies between the group and the subsidiary, and
(ii) the additional depreciation and amortisation of $5,010,000 that would have been charged assuming
the fair value adjustments to property, plant and equipment and intangible assets had applied from 1
July 2018, together with the consequential tax benefit of $1,052,100.
the year ended 30
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Intangible assets - Multi-period excess earnings method: The multi-period excess earnings method
considers the present value of net cash flows expected to be generated by the Brand/Intellectual
Property, by excluding any cash flows related to contributory assets; a period of 5 years was used. A
pre-tax discount rate of 19% was used.
NOTE 5: REVENUE
Buddy Ohm and Cloud revenues
LIFX Products revenues
Government rebate received
Interest Income
Other income
Total Revenue
46
Consolidated
2019
$
2,381,470
6,523,425
1,237,502
168,557
121,283
10,432,237
2018
$
2,083,941
-
1,563,926
190,411
17,225
3,855,503
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 6: LOSS PER SHARE
Basic and diluted profit & (loss) per share - cents
Profit/(Loss) used in the calculation of basic and diluted loss per share
Consolidated
2019
$
(0.02)
(28,120,839)
2018
$
(0.01)
(13,877,497)
Weighted average number of ordinary shares outstanding during
the year used in calculation of basic loss per share
1,271,669,718
1,026,016,554
Weighted average number of ordinary shares outstanding during
the year used in calculation of diluted loss per share
1,271,669,718
1,026,016,554
Options are considered anti-dilutive in the current year due to the loss position of the Company and are
not included in the calculation of diluted earnings per share.
NOTE 7: INCOME TAX
Numerical reconciliation between aggregate tax expense recognised in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income and tax expense calculated per the statutory income tax
rate.
A reconciliation between tax expense and the product of accounting profit before income tax multiplied
by the Group’s applicable income tax rate is as follows:
Consolidated
2019
$
(28,507,303)
2018
$
(13,877,497)
Income tax using the domestic corporation tax rate of 30% (2018:30%)
(8,552,191)
(4,163,249)
Expenditure not allowable for tax purposes
Share based payments
Non-Deductible Expenditure
Non-Assessable Income
Research and Development Rebate
Temporary differences
Unrecognised Temporary Differences
Capital raising costs deductible
Unrecognised tax losses
Income tax (expense)/benefit
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following
items:
Deductible temporary differences
Tax losses
Total
47
1,993,933
3,811,449
1,038,256
1,710,284
(360,209)
(469,177)
1,993,683
(242,864)
1,742,663
386,464
53,712
(180,350)
2,010,524
-
Consolidated
2019
$
1,980,112
2,836,125
2018
$
792,111
1,282,132
4,816,237
2,074,243
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 7: INCOME TAX (CONTINUED)
Future availability of the deductible temporary differences and tax losses is dependent on the Group
complying with the relevant legislation. Deferred tax assets have not been recognised in respect of these
items because it is not probable that future taxable profit will be available against which the entity can
utilise the benefits therefrom.
Deferred tax liabilities
Deferred tax liabilities have been recognised in respect of the following
items:
Establishment of non-amortisable intangible assets
Non-deductable amortisation
Total
NOTE 8: CASH AND CASH EQUIVALENTS
Reconciliation to Statement of Financial Position
Cash at bank
Total Cash and Cash Equivalents
Consolidated
2019
$
7,014,000
(350,700)
6,663,300
2018
$
-
-
-
Consolidated
2019
$
2018
$
2,958,055
22,377,919
2,958,055 22,377,919
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Cash at bank is subject to floating interest rates at an effective interest rate of approximately 2% (2018:
2%).
NOTE 9: TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other Receivables (1)
Prepayments & Deposits
Consolidated
2019
$
3,638,965
365,708
680,473
2018
$
533,925
247,865
306,624
Total Current Trade and Other Receivables
4,685,146
1,088,114
(1) Other receivables are non-trade receivables, are non-interest bearing and have an average term
of 3 months and generally receivable from the ATO for GST.
Ageing of receivables past due not impaired
Trade receivables disclosed above include amounts that are past due at the end of the reporting period
for which the Consolidated Entity has not recognised an allowance for doubtful debts because there has
not been a significant change in credit quality and the amounts are still considered receivable. The
aging of receivables and the loss allowance provided on trade receivables can be found in Note 22; this
is the first year that an expected credit loss provision has been recognised.
48
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 10: INVENTORY
Finished goods at cost
Total inventory
2019
$
2018
$
12,334,485
12,334,485
662,230
662,230
The Company acquired $8,303,804 of inventory as a result of the acquisition of LIFX.
NOTE 11: PROPERTY, PLANT & EQUIPMENT
2019
$
2018
$
Computer equipment
Opening balance
Additions
Acquired through acquisition
Disposals
Depreciation
Total office equipment
Furniture & Fittings
Opening balance
Additions
Acquired through acquisition
Disposals
Depreciation
Total office equipment
Office and Testing Equipment
Opening balance
Additions
Acquired through acquisition
Disposals
Depreciation
Total office equipment
In-Store Displays
Opening balance
Additions
Acquired through acquisition
Disposals
Depreciation
Total office equipment
69,527
13,199
101,571
-
(49,555)
134,742
15,225
-
18,342
-
(1,490)
32,077
237,226
20,805
237,640
-
(77,217)
418,454
-
446,490
448,481
-
(384,407)
510,564
106,530
17,531
-
(54,534)
69,527
7,689
10,234
-
-
(2,698)
15,225
200,161
125,482
-
-
(88,417)
237,226
-
-
-
-
-
-
Net Book Value for Property, Plant and Equipment
1,095,837
321,978
49
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 12: OTHER FINANCIAL ASSETS
Financial assets carried at FVOCI(1)
-
Listed shares
Total Other Financial Assets
Opening balance
Revaluation of Weebit Nano Limited
Change in fair value through Other Comprehensive Income
Sale of investment
Closing balance of Other Financial Assets
Consolidated
2019
$
2018
$
-
-
1,497,580
1,497,580
1,497,580
430,900
(1,089,876)
(407,704)
-
1,066,680
-
1,497,580
(1) Other financial assets consist of investments in ordinary shares, and therefore have no fixed maturity
date or coupon rate.
NOTE 13: INTANGIBLE ASSETS AND GOODWILL
Brand/
Intellectual
Property
$
Goodwill
$
Total
$
Balance at 1 July 2018
-
-
-
Acquisition through
business combination (Note 4)
Amortisation
Impairment loss
Year ended 30 June 2019
Year ended 30 June 2018
57,228,956
33,400,000
(1,670,000)
-
-
31,730,000 57,228,956
-
90,628,956
(1,670,000)
-
88,958,956
-
-
-
Amortisation on the brand/intellectual property intangible asset has been recognised since the date of
acquisition on 29 March 2019. The remaining amortisation period at year end is 4.75 years.
The carrying amount of goodwill has been allocated to LiFX products’ cash generating unit (CGU).
The Group tests goodwill annually for impairment, or more frequently if there are indications that
goodwill might be impaired.
LIFX Products
The recoverable amount of the segment as a CGU is determined based on a value in use calculation
which uses cash flow projections based on financial budgets approved by the directors covering a five-
year period and a pre-tax discount rate of 19% per annum (2018:Nil% per annum).
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key
assumptions used to determine the recoverable amount for each of the group of CGUs to which goodwill
is allocated. The directors believe that any reasonably possible change in the key assumptions on which
the recoverable amount of LIFX Products is based would cause the aggregate carrying amount to
exceed the aggregate recoverable amount of the related CGU. An underperformance of gross profit of
greater than 15.3% or, separately, a discount rate of greater than 23% would result in this occurring.
50
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 14: TRADE AND OTHER PAYABLES
Trade payables (1)
Sundry payables and accrued expenses(2)
Total Trade and Other Payables
Consolidated
2019
$
8,500,291
2,911,136
11,711,427
2018
$
1,465,112
202,885
1,667,997
(1) Trade payables are non-interest bearing and are normally settled on 30-day terms.
(2) Other payables are non-trade payables, are non-interest bearing and have an average term of 1
month.
NOTE 15: BORROWINGS AND DEFERRED ACQUISITION CONSIDERATION
CURRENT
Secured Liabilities
Line of Credit
Temporary loan
Total borrowings
Deferred acquisition consideration
Total current
NON-CURRENT
Consolidated
2019
$
2018
$
10,753,913
3,977,838
14,731,751
17,240,950
31,972,701
-
Total Borrowings and Deferred acquisition consideration
31,972,701
As part of the acquisition, the Company has entered into three current obligations as follows:
-
-
-
-
-
-
-
First, a Line of Credit which assumed (on 1 April 2019) the balance of amounts due from LIFX to their
primary manufacturer and majority shareholder. This agreement is secured by all assets of the Company
except trade receivables and inventory, calls for annual interest of 12% and is due in December 2019.
The Directors expect that this obligation will be repaid or replaced with long-term debt.
Second, on 19 April 2019, the Company entered into a temporary loan with a lender with a monthly
interest rate of 1% until June 30 and 2% thereafter. The primary use of funds was to pay down the
Line of Credit. This loan is secured by trade receivables and inventory and is due on 30 September
2019. The Directors expect that this loan will be repaid with the financial close of new trade finance
facilities.
The third agreement is the establishment (on 1 April 2019) of a deferred consideration obligation for
$17,240,950 which represents the unpaid portion of the cash consideration of the acquisition. This
obligation has an annual interest rate of 10% and is due in March 2020. In conjunction with this
obligation, the Company issued 100 million options with an exercise price of $0.0759 and a term of 5
years. The Company engaged a valuation firm who valued the options at $4,982,105 which has been
included in option based payments in the financial statements. While the entire deferred consideration
is classified as current, the Directors expect that the entire balance will be deferred further or replaced
with long-term debt.
Defaults and breaches
During the current and prior year, there were no defaults or breaches on any of the loans.
51
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 15: BORROWINGS AND DEFERRED ACQUISITION CONSIDERATION (CONTINUED)
1 Jul 2018
Cash flows
Non-cash changes
Acquisition Equity-Settled
$
$
$
30 June
2019
$
Exchange
$
(6,816,477) 121,254 10,753,913
3,977,838
$
-
-
(6,134,986) 23,584,122
-
3,977,838
(698,995)
17,240,950
(2,856,143) 41,524,067 (6,816,477) 121,254 31,972,701
17,939,945
-
-
Line of credit
Temporary loan
Deferred acquisition
consideration
Total
-
-
-
-
NOTE 16: SHARE CAPITAL & RESERVES
CONSOLIDATED AND PARENT ENTITY 2019
(a) Issued and Paid Up Capital
Fully paid ordinary shares
(b) Movements in fully paid shares on issue
Opening balance
Capital raising 29 Mar 2019
Other Capital Raising Cost
Employee Incentive Performance Rights Converted net of adjustments (Note 20)
Replacement Performance Rights Converted
Repayment of loan
Consideration shares issued on acquisition of LIFX
Balance as at 30 June 2019
Opening balance 1 July 2017
Capital raising
Other Capital Raising Cost
Options exercised (Note 20)
Replacement Performance Rights Converted (Note 20)
Employee Incentive Performance Rights Converted (Note 20)
Performance Shares Converted (Note 20)
#
Ordinary Shares
$
1,869,320,010
115,298,012
1,091,410,055
226,250,000
-
14,700,044
907,822
89,853,551
446,198,538
58,947,674
18,100,000
(1,194,600)
-
-
6,816,447
32,628,491
1,869,320,010
115,298,012
872,739,954
115,000,000
-
52,500,000
2,427,933
16,908,835
31,833,333
32,090,674
23,000,000
(1,518,000)
5,375,000
-
-
-
Balance as at 30 June 2018
1,091,410,055
58,947,674
(c ) Movements in share based payments reserve:
Opening Balance at the start of the period:
*Expense recognised in relation to Performance Shares
*Expense recognised in respect of Replacement Options
*Expense recognised in respect of Performance Rights
*Expense recognised in respect of Employee Incentive
Performance Rights (EIPR)
Broker Options
Balance at the end of the reporting period:
2019
$
26,945,382
-
2,996
23,787
982,484
2018
$
23,484,528
(581,809)
12,180
100,819
3,929,664
4,982,105
32,936,754
-
26,945,382
* The expense recognised over the vesting period is in accordance with the terms and conditions of the
options. The total expense for the year ended 30 June 2019 was $1,009,267 (2018: $3,460,854). Refer
to Note 20 Share Based Payments for further disclosure.
52
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 16: SHARE CAPITAL & RESERVES (CONTINUED)
Nature and Purpose of Reserves
1)
Share Based Payments Reserve
The options reserve is used to recognise the fair value of all options on issue but not yet exercised.
This reserve is used to record the value of equity benefits provided to employees and Directors as
part of their remuneration. Includes share-based payments used to recognise the value of equity-
settled share-based payments provided to employees, including key management personnel, as
part of their remuneration. Refer to Note 20 for further details of these plans.
2)
Foreign Currency Translation Reserve
The translation reserve comprises all foreign currency differences arising from the translation of
the financial statements of foreign operations.
All other reserves are as stated in the consolidated statement of changes in equity.
NOTE 17: OPERATING CASH FLOW INFORMATION
Reconciliation of cash flow from operations with profit/(loss) after
income tax:
Loss for the year
Add - Noncash items:
Share-based payments
Option based payments
Amortisation of intangibles
Depreciation
Acquisition related expenses
Deferred tax benefit
Changes in assets and liabilities
Movement in inventory
Movement in trade creditors and employee provisions
Movement in other debtors and receivables
Cash flows used in operations
Consolidated
2019
$
2018
$
(28,120,839)
(13,877,497)
1,009,267
4,982,105
1,670,000
512,669
3,085,106
(350,700)
3,460,854
-
-
145,649
-
-
(3,368,451)
7,441,955
2,175,430
(10,963,458)
(555,587)
921,632
(421,170)
(10,326,119)
53
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 18: INTERESTS IN CONTROLLED ENTITIES
The Company has the following subsidiaries:
Country of
Incorporation
USA
Australia
Australia
Ireland
USA
Australia
UK
USA
USA
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Membership interests
Percentage held
2019
100%
100%
100%
100%
100%
100%
100%
-
-
2018
100%
100%
-
100%
-
-
-
100%
100%
Name of Subsidiary
Buddy Platform Inc
Citadel Potash Pty Ltd
Buddy Finance Pty Ltd
Buddy Platform (Europe) Ltd
Lifi Labs Inc 1
Lifi Labs Management Pty Ltd 1
LIFX UK Ltd 1
Citadel Capital Holdings Inc 2
K2O Utah LLC 3
1 Company acquired on 29 March 2019
2 Company dissolved on 23 May 2019
3 Company dissolved on 18 April 2019
NOTE 19: RELATED PARTY TRANSACTIONS
a) Parent and Ultimate Controlling Party
The parent entity and ultimate controlling party is Buddy Technologies Limited.
b) Related Party Compensation
Compensation of key management personnel of the Group
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation paid to key management personnel
2019
$
874,165
10,579
224,794
1,109,538
2018
$
593,284
-
(333,818)
259,466
The amounts disclosed in the table are the amounts recognised as an expense during the period which
related to the compensation key management personnel.
c) Shares and Options held by Directors and Key Management Personnel
Information on remuneration and shares and options held by Directors and Key Management Personnel is
contained in the Remuneration Report within the Directors’ Report.
d) Loans To and From Related Parties
Key management personnel of the Group:
Key management personnel loans *
* The amount is classified as other receivable and the loan was repaid on 17 July 2019
54
Consolidated
2019
$
2018
$
163,981
163,981
67,650
67,650
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 19: RELATED PARTY TRANSACTIONS (CONTINUED)
The ultimate parent
The ultimate parent of the Group is Buddy Technologies Limited and is based and listed on ASX in
Australia. There were no transactions other than inter-company fund transfers to its wholly owned
subsidiary Buddy Platform Inc. based in USA and Europe.
Loans between entities in the wholly owned Group are not interest bearing, unsecured and are payable
upon reasonable notice having regard to the financial stability of the Company.
Transactions with key management personnel
Information on remuneration and shares and options, performance shares, performance rights held by
Directors and Key Management Personnel is contained in the Remuneration Report within the Directors’
Report.
e) Other Related Party Transactions
Transactions with other related parties are made on normal commercial terms and conditions and at
market rates. Outstanding balances are unsecured and are repayable in cash.
Armada Capital Limited, a company of which Mr Ananda Kathiravelu is Managing Director, was paid fees
during the previous reporting period in relation to investor relations and marketing support to the
Company on normal commercial terms during the year.
There were no related party transactions for the year ended 30 June 2019. A summary of the total fees
paid and payable to Armada Capital Limited for the year ended 30 June 2018 were as follows:
Investor relations and marketing support
Total
NOTE 20: SHARE BASED PAYMENTS
Consolidated
2019
$
-
-
2018
$
48,000
48,000
The Company completed the following share-based payment arrangements for the year ended 30 June
2019.
(a) Performance Shares
2019
2018
Outstanding at the beginning of the year 1
29,833,334
63,666,667
Granted
Converted to ordinary shares
Expired
Forfeited
Outstanding at year-end
Total Vested
-
-
-
-
-
(31,833,333)
-
(2,000,000)
29,833,334
29,833,334
-
-
1 Outstanding at the beginning of the year were 29,833,334 Performance Shares, issued when the
Company completed its 100% acquisition of the issued capital of Buddy Platform Inc. and was
completed in accordance with a Prospectus dated 3 November 2015. Shareholder approval was
obtained on 9 November 2015.
55
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: SHARE BASED PAYMENTS (CONTINUED)
The performance shares were valued using the following assumptions:
Performance Shares were deemed to be valued at $0.14 based on the following inputs:
Underlying share price
Share exercise price
Effective date
Share expiry date
$0.139 per share
Nil
17 December 2015
17 December 2020
The issue was made to key management and employees who have an impact on the group’s
performance, and will vest over a period of 5 years subject to meeting performance milestones as listed
below.
The Performance Shares will convert upon satisfaction of any one of the following milestones:
(i) One third (1/3) of all Performance Shares held by the Holder as at the date of issue of the
Performance Shares shall convert upon Buddy (or its subsidiaries) logging 20,000,000 total discrete
connections to any Buddy server or service (Interactions) by any approved network connected
hardware or software application (Device) per day for no less than 3 consecutive weeks within a
period of 24 months from the date of completion of the Capital Raising;
(ii) One third (1/3) of all Performance Shares held by the Holder as at the Issue Date shall convert upon
the total number of devices creating an Interaction with a Buddy application that it has not
previously interacted with (New Connection) exceeding 500,000 per week for no less than three (3)
consecutive weeks within a period of 24 months from the date of completion of the Capital Raising;
(iii) One third (1/3) of all Performance Shares held by the Holder as at the Issue Date shall convert upon
Buddy (or its subsidiaries) satisfying the following milestones within a period of 36 months from the
date of completion of the Capital Raising:
total daily device interactions with the Buddy Platform exceed 50,000,000 per day for no less
than 3 consecutive weeks; and
total number of devices creating new connections to Buddy exceeding 1,000,000 per week for
no less than 3 consecutive weeks.
On July 17 2016, the first milestone was achieved of 20 million discrete connections per day for 3
consecutive weeks. Accordingly the full cost of the share based payment of the first milestone was
recognised in 30 June 2016. During the year ended 30 June 2017, the company successfully completed
the Second Performance Milestone of more than 500,000 New Connections per week for no less than
three (3) consecutive weeks. These shares were converted in October 2017. As at the date of this
report, Milestone 3 was not met. The shares are not expected to be converted and no expense has been
recognised this year.
(b) LIFX Performance Shares
Outstanding at the beginning of the year
Granted 1
Converted to ordinary shares/Expired/Forfeited
Outstanding at year-end*
Total Vested
56
2019
2018
-
24,000,000
-
24,000,000
-
-
-
-
-
-
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: SHARE BASED PAYMENTS (CONTINUED)
(b) LIFX Performance Shares (continued)
1 Performance Shares were issued on 1 April 2019 after the completion of the acquisition of Lifx Labs,
Inc (trading as LIFX) on 29 March 2019. Shareholder approval was received on 25 March 2019.
The performance shares were valued using the following assumptions:
Performance Shares were deemed to be valued at $0.073 based on the following inputs:
Underlying share price
Share exercise price
Effective date
Share expiry date
$0.073 per share
Nil
1 April 2019
1 April 2024
The issue was made to key management and employees who have an impact on the group’s
performance and will vest over a period of 5 years subject to meeting performance milestones as listed
below.
The Performance Shares will vest over a four year period as follows:
i.
8,000,000 Performance Shares that will vest upon LIFX business contributing a cumulative
A$100 million to the Buddy Group in revenues within 18 months from Completion;
ii.
iii.
8,000,000 Performance Shares that will vest upon LIFX business contributing a cumulative
A$200 million in revenues to the Buddy Group within 30 months from Completion; and
8,000,000 Performance Shares that will vest upon LIFX business contributing a cumulative
A$250 million in revenues to the Buddy Group within 36 months from Completion.
Continuing employment service is one of the key terms of the Performance shares. On 11 August 2019,
12,000,000 Performance Shares were forfeited on ceasing employment with the Company.
(c) Share Options
Outstanding at the
beginning of the year 1
Granted 2
Exercised
Expired/forfeited 1
2019
2,806,647
100,000,000
-
(19,886)
Outstanding at year-end
102,786,761
Total Vested
102,786,761
Weighted
Average
Exercise Price
$
0.10
0.08
0.10
0.10
0.10
0.10
2018
55,306,647
-
(52,500,000)
-
2,806,647
2,600,245
Weighted
Average
Exercise Price
$
0.10
-
0.10
-
0.10
0.10
1 Included in the above share options are 2,806,647 of replacement options granted on 17 December
2015. The replacement options shall vest and become exercisable on a quarterly basis in equal tranches
over 4 years from the employee’s commencement date. The options expire on 17 December 2020.
2 On 1 April 2019, 100,000,000 options were granted to secure a financing arrangement.
57
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: SHARE BASED PAYMENTS (CONTINUED)
(c) Share Options (continued)
The options issued on 1 April 2019 were valued at $0.0498 per option based on the following
assumptions:
Total Number Granted
Grant date
Expiry date
Underlying share price
Share exercise price
Volatility
Risk free rate
100,000,000
1 Apr 2019
30 Mar 2024
$0.073 per share
$0.0759
88.56%
1.44%
The remaining weighted average contractual life of the outstanding options is 4.7 years (2018: 2.4
years).
(d) Employee Incentive Performance Rights
The objective of the Employee Incentive Performance Rights Plan (EIPR) is to attract, motivate and
retain key employees and it is considered by the Company that future issues under the plan will provide
selected Directors, and permitted employees and contractors of the Company with the opportunity to
participate in the future growth of the Company. Employee rights granted under the plan will be issued
for nil consideration. The summary of the movements in employee incentive rights is as per the table
below.
Outstanding at the beginning of the year
Granted
Converted to ordinary shares
Forfeited
Outstanding at year-end
Vested and Exercisable
2019
2018
55,842,716
42,950,000
(17,746,185)
(23,877,444)
57,169,087
-
34,062,917
44,496,000
(16,908,835)
(5,807,366)
55,842,716
-
The following EIPRs were granted during the year and valued based on the following assumptions:
Date of grant
Number granted
31-Jul 2018
30-May 2018
1-Oct 2018
13-Sep 2018
29-Mar 2019
29-Apr 2019
1-May 2019*
29-May 2019
300,000
5,000,000
500,000
300,000
4,000,000
14,850,000
3,000,000
15,000,000
Underlying share
price
$0.08
$0.08
$0.08
$0.08
$0.08
$0.076
$0.076
$0.076
Exercise price
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The Vesting conditions of the EIPR’s are that 25% vest on the first anniversary from the employee’s
commencement date, with the remainder vesting on a quarterly basis in equal tranches over 4 years
from the employee’s commencement date. Employee Rights will lapse on termination of employment.
58
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: SHARE BASED PAYMENTS (CONTINUED)
(d) Employee Incentive Performance Rights (continued)
*Further vesting conditions are attached to the 3,000,000 EIPRs granted on 1 May 2019:
• 1,000,000 EIPRs will vest upon LIFX business contributing a cumulative A$100 million to the
Company in revenues within 18 months from completion of the LIFX acquisition;
• 1,000,000 EIPRs will vest upon LIFX business contributing a cumulative A$200 million in revenues
to the Company within 30 months from completion of the LIFX acquisition; and
• 1,000,000 EIPRs will vest upon LIFX business contributing a cumulative A$250 million in revenues
to the Company within 36 months from completion of the LIFX acquisition.
(e) LIFX Incentive Performance Rights
The objective of the LIFX Performance Rights is to motivate and retain two key employees following the
completion of the acquisition of Lifx Labs, Inc (trading as LIFX) on 29 March 2019. Shareholder approval
was received on 25 March 2019. The summary of the movements in incentive performance rights is
summarised below.
2019
2018
Outstanding at the beginning of the year
Granted
Converted to ordinary shares
Forfeited
Outstanding at year-end
Vested and Exercisable*
The Performance Rights have a nil exercise price.
-
24,000,000
-
-
24,000,000
-
-
-
-
-
-
* The performance rights issued on 1 April 2019 were valued based on the following assumptions:
Total Number Granted
Underlying share price
Share exercise price
24,000,000
$0.073 per share
Nil
The LIFX Performance Rights will vest over a four year period as follows:
one-quarter (being, 6,000,000 Performance Rights) one year following Completion; and
one-sixteenth (being, 1,500,000 Performance Rights) each quarter thereafter.
i.
ii.
Continuing employment service is one of the key terms of the Performance Rights. On 11 August 2019,
12,000,000 Performance Rights have been forfeited on ceasing employment with the Company.
(f) Replacement Performance Rights
Outstanding at the beginning of the year
Granted
Converted to ordinary shares
Forfeited
Outstanding at year-end
Vested and Exercisable*
59
2019
2018
5,846,670
-
(907,822)
(96,241)
4,842,607
-
8,274,603
-
(2,427,933)
-
5,846,670
-
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: SHARE BASED PAYMENTS (CONTINUED)
(f) Replacement Performance Rights (continued)
*The replacement rights were issued on 17 December 2015 and shall vest and become exercisable on a
quarterly basis in equal tranches over 4 years from the employee’s commencement date and have a nil
exercise price. At 30 June 2019 the remaining weighted average contractual life of the EIPR's was
1.5 years (2018: 2.5 years).
(g) Repayment shares
On 3 April 2019, 89,853,551 shares were issued at $0.0759 per share to repay $6,816,477 of a loan
facility.
NOTE 21: EMPLOYEE BENEFITS LIABILITY
Annual leave
Current
Annual leave
NOTE 22: AUDITORS’ REMUNERATION
Audit Services
Amounts payable to auditor of parent entity
- Audit-related
- Non-audit services
Amounts payable to other entities
Consolidated
2019
$
2018
$
513,981
119,329
513,981
119,329
141,025
149,970
22,210
311,645
57,950
-
-
57,950
NOTE 23: FINANCIAL RISK MANAGEMENT
The summary of the Group’s financial instruments are disclosed in the table below:
2019
Financial assets:
Investments (FVOCI)
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Borrowings
Deferred acquisition consideration
Non-
Interest
Bearing
$
-
-
4,004,673
4,004,673
(11,711,427)
-
-
(11,711,427)
Floating
Interest Rate
$
Fixed
Interest
Rate
$
Total
$
-
2,958,055
-
2,958,055
-
-
-
-
-
2,958,055
4,004,673
6,962,728
-
-
-
-
-
(14,731,751)
(17,240,950)
(31,972,701)
(11,711,427)
(14,731,751)
(17,240,950)
(43,684,128)
Net financial instruments
(7,706,754)
2,958,055 (31,972,701)
(36,721,400)
60
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 23: FINANCIAL RISK MANAGEMENT (CONTINUED)
2018
Financial assets:
Investments (FVOCI)
Cash and cash equivalents
Trade and other receivables
Financial liabilities:
Trade and other payables
Non-
Interest
Bearing
$
1,497,580
-
781,790
2,279,370
(1,667,997)
(1,667,997)
Floating
Interest
Rate
$
-
22,377,919
-
22,377,919
Fixed
Interest Rate
$
Total
$
-
-
-
-
-
-
-
-
1,497,580
22,377,919
781,790
24,657,289
(1,667,997)
(1,667,997)
Net financial instruments
611,373
22,377,919
-
22,989,292
The Company’s principal financial instruments comprise cash, short-term deposits and borrowings.
The main purpose of these financial instruments is to finance the Group’s operations and the acquisition
of a business during the year. The Group has various other financial assets and liabilities such as trade
receivables and trade payables, which arise directly from its operations. It is, and has been throughout
the entire period under review, the Group’s policy that no trading in financial instruments shall be
undertaken.
The main risk arising from the Group’s interest bearing financial instruments is cash flow interest rate risk
and foreign currency risk. The Board review and agrees policies for managing each of these risks. The
Board provides written principles for overall risk management, as well as policies covering specific areas,
such as mitigating foreign exchange and interest rate and credit risks.
a)
Market Risk
Foreign Currency Risk
As a result of significant operations in the United States, the United Kingdom and Europe, the Group's
statement of financial position can be affected significantly by movements in the USD$/AUD$, £/AUD$
and €/AUD$ exchange rates. The parent Company Buddy Technologies Limited lends money to its US
subsidiary Buddy Platform Inc. During the year, the Company also acquired LIFX via a transaction
denominated in USD$. Approximately USD$12.3 million of deferred consideration remained outstanding
at year end. Two further balances denominated in USD$ totalling USD$10.3 million remained outstanding
at year end. If the USD$/AUD$ exchange rate were to strengthen/weaken by 5%, this would result in a
decrease/increase in profit or loss and equity of AUD$726,000. The Company will be exposed to any
material changes in the value of the AUD compared to the USD. The Group also has transactional
currency exposures. Such exposure arises from sales or purchases by an operating entity in currencies
other than the functional currency.
b)
Credit Risk
Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from receivables from
customers and cash and cash equivalents. All cash balances are held with recognised institutions limiting
the exposure to credit risk. There are no formal credit approval processes in place.
61
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 23: FINANCIAL RISK MANAGEMENT (CONTINUED)
Exposure to credit risk
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables. These provisions are considered representative across all customers of the Group based on
recent sales experience, historical collection rates and forward-looking information that is available.
The ageing of the Consolidated Entity’s trade and other receivables are as follows:
Not past due
Past due 0-30 days
Past due 31-90 days
Past due 90+ days
Total
Less expected credit loss provision
Average age (days)
c)
Liquidity Risk
Consolidated Entity
June 2019
$
2,517,369
1,605,337
427,912
192,736
4,743,353
(1,104,388)
3,638,965
42
June 2018
$
272,813
26,533
31,210
203,370
533,925
-
533,925
49
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate working
capital is maintained for the coming months. Upcoming capital needs and the timing of raisings are
assessed by the Board at each Meeting of Directors.
Excluding trade payables, the contractual maturities of the Group’s financial liabilities as at 30 June 2019
are disclosed in Note 15. In the previous year, the Group did not have any financial liabilities other than
trade payables. The contractual maturities of the Group’s trade payables as at the end of this year and
last year were 2 months or less.
d)
Cash Flow and Interest Rate Risk
The Group is exposed to the risks of changes in market interest rates primarily on the Company’s short-
term deposits with a floating interest rate. These financial assets with variable rates expose the Company
to cash flow interest rate risk. All other financial assets and liabilities in the form of receivables and
payables are non-interest bearing. The Company does not engage in any hedging or derivative
transactions to manage interest rate risk.
In accordance with AASB 7 the following sensitivity analysis has been performed for the Company’s
Interest Rate risk:
Consolidated
Risk Variable
Interest Rate
Sensitivity*
+ 1.00%
- 1.00%
Effect On:
Effect On:
Loss
2019
$
29,581
(29,581)
Loss
2018
$
223,779
(223,779)
Equity
2019
$
29,581
(29,581)
Equity
2018
$
223,779
(223,779)
* It is considered that 100 basis points a ‘reasonably possible’ estimate of the sensitivity in the interest rate.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances are
impacted resulting in a decrease or increase in overall income.
62
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 23: FINANCIAL RISK MANAGEMENT (CONTINUED)
e) Fair values of financial assets
The fair values of all financial assets and liabilities of the Group approximate their carrying values. The
methods and valuation techniques used for the purpose of measuring fair value of the company’s
financial assets are unchanged compared to the previous reporting period.
The levels of the hierarchy are as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
This applies to the financial assets described below.
Investment in Weebit Nano Limited
2019
$
-
2018
$
1,497,580
The Group’s investment in Weebit Nano Limited was classified as a Level 1 financial asset as the
investment was valued based on a quoted price in an active market.
Capital Management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Group’s capital includes ordinary
share capital supported by financial assets.
There were no changes in the Group’s approach to capital management during the year. Neither the
Company nor the Group are subject to externally imposed capital requirements.
NOTE 24: SEGMENT REPORTING
Prior to the acquisition of LIFX, the chief operating decision makers, being the executive management
team & the board, received operating results for the Company as a whole, therefore the Company was
deemed to be one operating segment. The total column in the table below represents this basis of
segmentation. Following the acquisition of LIFX, the Group’s operations changed which resulted in a
new basis of segmentation beginning 1 April 2019.
Beginning with the acquisition of LIFX, the chief operating decision makers received operating results for
the following three segments:
Commercial Business. This segment includes all activities related to Buddy Ohm and Buddy
Managed Services as well as any future products or services sold where the end-customer is a
commercial business.
Consumer Business. This segment includes all activities related to LIFX as well as any future
products or services sold where the end-customer is a consumer whether sold through retailers
or directly.
Corporate. This segment includes the costs and expenses for operating the corporate operating
functions including the corporate-level officers, insurance, ASX/ASIC fees, legal, audit and
professional service fees, etc. It also includes all government rebate revenue, investment gains
and losses, interest income and expense, share and option-based payments and any
amortisation or impairment of intangibles.
63
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 24: SEGMENT REPORTING (CONTINUED)
Selected financial data for operating segments for the year ended 30, June 2019
External revenues
Inter-segment revenue
Total segment revenue
Result from operating
activities
Loss before income tax
Income tax benefit
Loss after income tax
Interest & other income
Interest expense
Segment assets
Capital expenditures
Company prior
to 1 April 2019
Commercial
Business
$
$
Consumer
Business
$
Corporate
$
Total
$
1,825,045
549,759
6,530,091
1,237,502
10,142,397
-
-
-
-
-
1,825,045
549,759
6,530,091
1,237,502
10,142,397
(11,453,736)
(1,643,317)
(3,590,168)
(6,762,976)
(23,450,197)
(11,373,555)
(1,643,317)
(3,590,168)
(12,735,263)
(29,342,303)
-
-
35,764
-
35,764
(11,373,555)
(1,643,317)
(3,554,404)
(12,735,263)
(29,306,539)
157,679
-
-
-
-
-
132,161
289,840
(1,113,647)
(1,113,647)
n/a
2,415,238
18,658,285
81,109,956
102,183,479
(23,792)
(3,903)
(452,799)
-
(480,494)
Segment liabilities
n/a
1,598,015
17,902,696
24,697,398
44,198,109
(79,677)
(25,655)
(407,337)
(2,505,000)
(3,017,669)
-
-
-
-
-
-
-
-
-
427,387
(1,009,267)
(4,982,105)
(4,982,105)
Material non-cash items
Depreciation and
amortisation
Impairment expense
Share based payments
(1,436,654)
Option based payments
-
64
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 25: PARENT ENTITY DISCLOSURES
As at and throughout the financial year ending 30 June 2019 the legal parent company of the Group was
Buddy Technologies Limited.
Results of the Parent Entity
Loss for the year
Other comprehensive income
Total Comprehensive Loss for the year
Financial Position of the Parent Entity at Year End
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Total Liabilities
Total Equity of the Parent Entity comprising of:
Share Capital
Reserves
Retained Losses
Total Equity
2019
$
2018
$
(26,800,961)
-
(26,800,961)
(21,556,164)
-
(21,556,164)
1,188,486
82,608,894
83,797,380
24,626,310
24,626,310
22,553,488
1,644,660
24,198,148
853,140
853,140
115,298,012
33,529,077
(89,656,019)
59,171,070
58,947,674
27,907,462
(63,510,128)
23,345,008
Parent Entity Contingencies
The Directors are not aware of any contingent liabilities that may arise from the Company’s operations as
at 30 June 2019.
NOTE 26: SUBSEQUENT EVENTS
The Company has made price-sensitive announcements since 30 June 2019. A summary of those
announcements follows. The reader is invited to read the entire announcements which are available in
the inventor section of the Company’s website at https://buddy.com/asx-announcements/.
On 28 August 2019, the Company executed financing documentation with Scottish Pacific, the largest
independent working capital lender in Australia and New Zealand, for the provision of a A$20 million
working capital facility.
On 11 September 2019, the Company announced:
(c)
(d)
a placement of 305.7 million Shares to institutional and sophisticated investors each at an issue
price of A$0.02 to raise approximately A$6.1 million (before costs) to be completed in two
tranches (being the Tranche 1 Placement and the Tranche 2 Placement) (Placement); and
that it intends to offer all existing Shareholders with a registered address in Australia and New
Zealand (Eligible Shareholders) the opportunity to subscribe for Shares each at an issue price of
A$0.02 per Share under a share purchase plan to raise up to an additional A$5 million (before
costs) (SPP).
The Company completed the Tranche 1 Placement by issuing a total of 250,641,234 Shares on 19
September 2019. The Company raised a total of approximately A$5.013 million (before costs) pursuant
to the Tranche 1 Placement.
65
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 26: SUBSEQUENT EVENTS (CONTINUED)
The Company will seek shareholder approval to ratify the Shares issued under the Tranche 1 Placement
and approve the issue of up to 55.2 million Shares to be issued under the Tranche 2 Placement at a
shareholder meeting to be held on 24 October.
The issue of Shares under the SPP is subject to shareholder approval. Refer to the Company's ASX
announcements dated 11 September 2019 and 19 September 2019 for further information.
The funds used from the Placement and SPP will be utilised for operating expenses of the Company and
growth of the Company's consumer and commercial business.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected or may
significantly affect the operations of the Consolidated Entity, the results of those operations or the state
of affairs of the Consolidated Entity, in subsequent financial years.
NOTE 27: COMMITMENTS
Rent for leased premises
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
NOTE 28: CONTINGENT LIABILITIES
Consolidated Entity
June
2019
$
170,040
-
-
170,040
June
2018
$
411,031
133,414
-
544,445
The Directors are not aware of any contingent liabilities that may arise from the Group’s operations as at
30 June 2019.
66
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Buddy Technologies Limited, I state that:
a) the financial statements and notes of Buddy Technologies Limited for the financial year ended 30 June
2019 are in accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2019
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards, Corporations Regulations 2001 and other
mandatory professional reporting requirements;
b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable; and
c) the financial statements and notes thereto are in accordance with International Financial Reporting
Standards as disclosed in Note 2.
This declaration is made after receiving the declarations required to be made to the Directors by the
Chief Executive Officer and the Chief Financial Officer in accordance with Section 295A of the
Corporations Act 2001 for the year ended 30 June 2019.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the Board
David McLauchlan
CEO & Executive Director
30 September 2019
67
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Independent Audit Report to the Members of Buddy Technologies Limited
Report on the financial report
Opinion
We have audited the financial report of Buddy Technologies Limited (“the Company”), including its
subsidiaries (“the Group”) which comprises the consolidated statement of financial position as at 30 June
2019, the consolidated statement of 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:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the ‘auditor’s responsibilities for the audit of the financial report’ section
of our report. We are independent of the entity in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty relating to going concern
Without modifying our opinion, we draw attention to Note 2 of the Financial Report, which indicates that the
Group will require further funding in the next twelve months from the date of this report to fund its planned
operating costs. These conditions, along with other matters as set forth in Note 2, indicate the existence of
a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern
and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course
of business.
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.
For personal use only
Key audit matter
How our audit addressed the key audit
matter
Business combination
Our audit procedures included, amongst others:
(Refer to Notes 3A, 3G and 4 of the
financial report)
Measurement of intangible assets acquired as
part of the LIFX business acquisition is a Key
Audit Matter due to:
• the relative size of the acquisition (base
purchase consideration of $72 million); and
• the level of judgement required in evaluating
the purchase price allocation (PPA) against
accounting standards.
The Group engaged an external expert to advise
on the
identification and measurement of
intangible assets in connection with the PPA.
Significant judgement was required by us in
assessing the valuation methodologies applied to
the
into the
valuation, including forecasted revenues and
discount rate.
intangible asset, and
inputs
In assessing this key audit matter, we involved
senior audit team members, including valuation
specialists.
Impairment of the goodwill and intangible
assets
(Refer to notes 3I, 3R and 13 of the
financial report)
Given the constantly changing and competitive
nature of the industry in which the Group
operates as well as net operating losses and net
operating cash outflows in the current and prior
financial years, there is a risk that there could be
a material impairment to goodwill and intangible
asset balances. Determination as to whether or
not there is an impairment relating to an asset or
Cash Generating Unit (CGU) involves significant
judgement about the future cash flows and plans
for these assets and CGUs.
The impairment of the goodwill and intangible
assets was a key audit matter because the model
involved key assumptions and judgements which
had material
impairment
assessments.
impacts on
the
reading the sale and purchase agreement
to understand the key terms and conditions
the
of
the
of
identification
consideration;
to
and measurement
transaction
relating
verifying the balances on the acquisition
date Statement of Financial Position of
LIFX;
assessing the methodology applied for
consistency with industry practices and
criteria in the accounting standards;
assessing the discount rate applied by the
Group using our knowledge of the Group,
its industry and publicly available data of
comparable entities;
evaluating forecast revenues;
assessing the competence, objectivity and
the scope of the external expert; and
assessing the Group’s disclosures in respect
of the acquisition against the accounting
standards.
Our audit procedures included, amongst others:
assessing whether the CGU appropriately
included all directly attributable assets and
liabilities;
assessing the reasonableness of the cash
flow projections used in the impairment
models;
assessing
reasonableness of key
assumptions including the discount rate
and forecast growth assumptions;
the
performing sensitivity analysis by adjusting
flow
the cash
inputs
into
the key
projections; and
having
the
change
determined
in
assumptions individually that would be
required for the CGU to be impaired, we
likelihood of such a
considered
movement
those key assumptions
arising.
the
in
We evaluated the adequacy of the disclosures
included in the financial report.
For personal use only
Other information
The directors are responsible for the other information. The other information comprises the information
in Buddy Technologies Limited annual report for the year ended 30 June 2019, but does not include
the consolidated financial report and the auditor’s report thereon.
Our opinion on the consolidated 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 consolidated 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 the
other information we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the consolidated 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 consolidated 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 entity or
to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibility 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 include
sour 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
Australian
at:
http://www.auasb.gov.au/auditors_files/ar2.pdf. This description forms part of our auditor’s report.
Assurance
Standards
Auditing
website
Board
and
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 21 of the Directors’ Report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Buddy Technologies Limited for the year ended 30 June
2019, complies with Section 300A of the Corporations Act 2001.
For personal use only
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.
Nexia Perth Audit Services Pty Ltd
TJ Spooner
Director
Perth
30 September 2019
For personal use only
BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
ASX ADDITIONAL INFORMATION
Additional information required by the ASX Limited Listing Rules not disclosed elsewhere in this Annual
Report is set out below.
SHAREHOLDINGS
The issued capital of the Company at 20 September 2019 is ordinary fully paid shares. All ordinary shares
carry one vote per share.
QUOTED SECURITIES
ORDINARY FULLY PAID SHARES AS AT 20 SEPTEMBER 2019
TOP 20 SHAREHOLDERS
No. of
Shares Held % Held
8.98
6.06
4.51
4.19
3.90
3.83
3.59
3.20
3.09
2.32
1.83
1.76
1.68
1.55
0.94
0.90
0.88
0.61
0.60
0.58
192,686,449
129,976,820
96,746,958
89,853,551
83,685,064
82,153,991
77,095,658
68,761,598
66,311,829
49,749,850
39,159,441
37,715,507
36,133,335
33,315,448
20,248,692
19,298,431
18,958,544
13,127,630
12,892,784
12,515,860
1,180,387,440
55.02
No. of Holders
362
1,025
731
2,344
1,135
5,597
No. of Shares
169,895
3,261,869
6,008,581
96,046,409
2,039,995,215
2,145,481,969
No. of Holders
5,350
255
5,605
No. of Shares
1,367,417,850
503,523,716
1,870,941,566
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR DAVID PETER MCLAUCHLAN
KING LIFI PTY LTD
SEQUOIA CAPITAL USV XIV HOLDCO LTD
EASTFIELD LIGHTING (HONG KONG) CO LIMITED
MUTUAL TRUST PTY LTD
MR JEFFREY MACDUFF
CITICORP NOMINEES PTY LIMITED
DM CAPITAL MANAGEMENT PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MERRIN ALEXANDER
BRISPOT NOMINEES PTY LTD
UBS NOMINEES PTY LTD
ANFIELD GROUP PTY LTD
FERNSHA PTY LIMITED
MR SHAWN BURKE
TIMOTHY PETERS
EDGEWOOD PARTNERS LLC
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
DISTRIBUTION OF SHAREHOLDINGS
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
2,931
marketable parcel
shareholders holding
less
than a
Shareholders by Location*
Australian holders
Overseas holders
*Based on end of August data
72
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
ASX ADDITIONAL INFORMATION (CONTINUED)
ESCROW SHARES
There are no shares as at the date of this report held in escrow in accordance with ASX requirements of
Reinstatement on the ASX on 30 December 2015.
VOTING RIGHTS
In accordance with the Company’s Constitution, on a show of hands every shareholder present in person
or by proxy, attorney or representative of a shareholder has one vote and on a poll every shareholder
present in person or by proxy, attorney or representative of a shareholder has in respect of fully paid
shares, one vote for every share held. No class of option holder has a right to vote, however the shares
issued upon exercise of options will rank pari passu with the then existing issued fully paid ordinary
shares.
SUBSTANTIAL SHAREHOLDERS AS AT 20 SEPTEMBER 2019
1
2
3
4
5
6
FIL Limited
David McLauchlan
Sequoia Capital
King Lifi Pty Ltd
Clark Lifi Pty Ltd
King Lifi Pty Ltd
UNQUOTED SECURITIES
OPTIONS
No. of
Shares Held % Held
7.86
7.22
6.62
5.37
5.07
5.37
131,300,963
129,976,820
110,606,012
96,746,958
91,282,212
96,746,958
The Company has the following classes of options on issue at 20 September 2019 as detailed below.
Options do not carry any rights to vote.
Class
Terms
No. of
Options
1. Unquoted
(Replacement Options)
Exercisable at 10c expiring 17-Dec 2020
2,806,647
Name
Shawn Burke
Christian Csar
Options
1,461,801
739,143
%
52.06
26.33
2. Unquoted Options
Exercisable at 7.59c expiring 1-Apr 2024
100,000,000
Name
Luminous Wide Ltd
Options
100,000,000
%
100
3. Unquoted Options
Exercisable at 7.59c expiring 29-Mar 2023
532,765
Name
Tim Peters
Options
532,765
%
100
PERFORMANCE RIGHTS
As at 20 September 2019 the Company had 55,897 Performance Rights which do not carry any voting
rights.
Name
Christian Csar
Options
55,897
%
100
73
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BUDDY TECHNOLOGIES LIMITED
ACN: 121 184 316
ASX ADDITIONAL INFORMATION (CONTINUED)
LIFX PERFORMANCE RIGHTS
As at 20 September 2019 the Company had 24,000,000 Performance Rights which do not carry any
voting rights.
Name
Tim Peters
Marc Alexander
Options
12,000,000
12,000,000
%
50
50
PERFORMANCE SHARES
As at 20 September 2019 the Company had 31,833,333 Performance Shares which do not carry any
voting rights.
Name
David McLauchlan
Options
22,166,667
%
69.6
LIFX PERFORMANCE SHARES
As at 20 September 2019 the Company had 24,000,000 Performance Shares which do not carry any
voting rights.
Name
Tim Peters
Marc Alexander
Options
12,000,000
12,000,000
%
50
50
EMPLOYEE INCENTIVE PERFORMANCE RIGHTS
As at 20 September 2019 the Company had 28,594,088 Employee Incentive Performance Rights which
do not carry any voting rights.
Name
Travis Gerber
Charles Eliot
Richard Jacroux
Paul Russell
Options
5,625,000
3,750,000
3,500,000
3,437,500
%
19.67
13.11
12.24
12.02
74
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