Crowd Media Holdings Limited
(ASX:CM8)
For year ended 30 June 2019
1
“
We are extremely excited in being
able to secure Invincible
Investment Consortium (IIC) both
in terms of funding and human
resource. The Consortium
participants are proven
performers who will greatly assist
Crowd with both our existing
operations and, more importantly,
new opportunities that we are
able to capitalise on following the
recent restructure of the
Company.
Domenic Carosa
Chief Executive Officer
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
2
2
Contents
Contents
Corporate Directory
Chairman’s letter
Chief Executive Officer’s report
3
4
5
7
Directors’ report
10
Auditor’s independence declaration
26
Statement of profit or loss and other comprehensive income
27
Statement of financial position
28
Statement of changes in equity
29
Statement of cash flows
30
Notes to the financial statements
31
Directors' declaration
65
Independent auditor’s report to the members of Crowd Media Holdings limited
66
Shareholder information
70
We see key opportunities in leveraging the
technology platforms and reach of our Q&A
and Subscription divisions and our proven
ability to continue growing the Crowd Media
division, as well as the growth prospects that
come with the investment and partnership of
the Invincible Investment Consortium
Crowd Media Holdings Limited - Chairman
“ Theo Hnarakis
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
3
3
Corporate Directory
Directors
Theo Hnarakis - Chairman
Domenic Carosa
Sophie Karzis
Company Secretary
Laura Newell
Registered Office Australia
Level 4
44 Gwynne Street
Cremorne VIC 3121
Europe (Netherlands)
95B Piet Heinkade
1019 GM Amsterdam
Share Registry Boardroom Pty Limited
Level 12
225 George Street
Sydney NSW 2000
Tel: 1300 737 760 (within Australia) +61 (0) 3 9290 9600 (outside Australia)
Fax: +61 (2) 9279 0664
Auditor RSM Australia Partners
Level 21
55 Collins Street
Melbourne VIC 3000
Stock exchange listing Crowd Media Holdings Limited shares are listed on the Australian Securities
Exchange (ASX code: CM8)
Crowd Media Holdings Limited shares are also dual listed on the Frankfurt
Stock Exchange (FWB code: CM3)
Website www.crowdmedia.com
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
4
4
Chairman’s Letter
“Despite regulatory headwinds and
multiple challenges on our journey, my
optimism for growth and delivering
shareholder value has not dissipated”
Dear Shareholders,
Crowd Media achieved revenue of $23.9m in a challenging
2019 financial year. Our investment in our Crowd Media
division continued to gain ground with revenue increasing
232% over 2018, whilst our Q&A and Subscription divisions
had mixed results. After conducting a strategic review, we
have taken aggressive cost-cutting measures to return the
Company to profitable in FY20, while entering into a new
phase with the Invincible Investment Consortium who
recently took a strategic stake in Crowd Media.
The deal leverages the strengths, intellectual property and
know-how of each party, noting that Crowd’s strengths
include its proprietary technology (currently only utilised in
its Q&A and Subscription verticals), social media and digital
marketing; IIC’s strengths include innovative product
development, brand-building, international business
operations, brand positioning and digital media influencer
marketing.
Given the new strategic investor joining, I have decided to
step aside and make way for incoming Chairman Steven
Schapera who comes highly credentialed having exited his
previous company to Estee Lauder for AUD $300 million.
Annual report
I am pleased to present Crowd Media’s 2019 Annual
Report. Although this was again a challenging year, I am
pleased to say that we have completed our strategic review
and are moving into FY20 with a renewed focus and vigour.
Revenue, underlying EBITDA and operating cash flow for
FY19 were approximately $23.9 million, ($2.6 million) and
($2.4 million), respectively. The Crowd Media division saw
significant growth, while the Q&A and Subscription divisions
suffered a drop in revenue.
During FY19, the Company implemented cost-saving
measures with the objective of moving the Company back
to profitability.This included a reduction in 50% of middle
and senior management, which included the COO and
other management positions.
On 29 August 2019 the Company executed a binding
Heads of Agreement with an alliance of strategic investors,
collectively the Invincible Investment Consortium (IIC), to
fund existing Company requirements, as well as develop
new business synergies and joint ventures between Crowd
Media and businesses that the IIC can introduce and
facilitate.
Throughout our history, Crowd Media has always been a
company that innovates, and we now see significant
potential to move further into this growing space. We
believe we have unique skills and expertise in harnessing
the power of social media and digital influencers to
promote global brands, hence why the strategic investment
by Invincible Investment Consortium is so important.
As part of the investment and collaboration under the
agreement, IIC principals Steven Schapera and Robert
Quandt will be joining the Crowd Media Board of Directors
in September 2019.
Crowd Media Agency Division
The Crowd Media division provides brands and digital
influencers with an influencer marketing agency,
underpinned by our proprietary technology which we have
built over the last 5 years.
With millennials quickly becoming the largest population
segment in the world, seismic shifts in the media landscape
are taking place. Millennials watch little TV and typically surf
the web with an adblocker, thus having less exposure to
traditional means of advertising. Crowd Media is built upon
the idea of using people with a substantial following on
social media, or “influencers” to deliver branded content to
their audiences.
At Crowd Media, we see influencers as the future of
advertising. Crowd Media continued its strong growth
trajectory in FY19, with revenues of $1.6 million (FY18:
$0.49m) and a sales pipeline of $1 million. Looking ahead,
we will continue to deliver globally competitive social media
and digital influencer campaigns to clients and generating
materials revenues with strong year on year growth.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
5
5
Chairman’s Letter
Crowd Mobile Division
The Q&A and Subscription divisions experienced material
headwinds in FY19 caused by regulatory changes and
material bad debt provisions. Revenues for the divisions
were $15.9 million and $6.4million, respectively, down 41%
on combined FY18 revenue of $38.1 million.
Headwinds are receding and green shoots are appearing
through new social distribution channels and new
territories. Consumer demand continues for these services
and with the cost saving measures implemented in FY19,
these divisions are expecting to be EBITDA positive again in
FY20.
Fiscal Responsibility
We refinanced our JGB debt in FY19 with BillFront Limited
at improved terms. The maturity date of the debt is 12 April
2021.
In FY19 our operating cash flow was lower due to a
number of one-offs, including redundancy payments as
part of the strategic review that was performed during the
year. Furthermore, the Board and CEO agreed to a salary
reduction program for the period from 1 February 2019 to
30 June 2019.
As a result of these diligent cost-cutting measures the
Company implemented in FY19, we believe this will bring
the Company back to consistent positive EBITDA and
operating cash flow in FY20.
Furthermore, under the agreement executed with the
Invincible Investment Consortium (IIC) on 29 August 2019,
Crowd Media will issue IIC (and/or their nominees) with
convertible notes with a face value of up to $3.7 million in
two tranches. Tranche 1 of $1.7 million will be used to pay
down the convertible notes issued to Obsidian, cover
redundancy costs resulting from the strategic review
performed in FY19 and provide additional working capital.
Tranche 2 of $2.0 million is subject to the parties agreeing
to a business plan which focuses on strategic collaboration
objectives.
Underlying EBITDA Results
Crowd Media reported underlying EBITDA result of ($2.6
million) and ($2.4 million) in operating cashflow for FY19 as
follows:
Net Profit after tax (NPAT)
Add: tax expense/(benefit)
Add: finance costs
Deduct: interest income
Add: depreciation and amortisation
Earnings before interest, tax,
depreciation and amortisation
(‘EBITDA’)
Add: impairment expense
Add: share-based payments expense
(non-cash)
Add: restructuring and refinancing costs
Add: share issuance costs
Effects of exchange rate changes
Underlying EBITDA
(4,795,984)
(1,581,426)
582,894
(1,991)
209,128
(5,587,379)
1,158,485
24,750
1,459,095
131,525
164,915
(2,648,609)
Board, Governance and Management
The Board is committed to ensuring our business is
conducted in accordance with the highest standards of
corporate governance. This, together with strong
management, creates a positive culture for shareholders,
employees and customers.
Outlook
FY19 was a true challenge for the Company, but we have
emerged with a real purpose and drive in FY20.
We see key opportunities in leveraging the technology
platforms and reach of our Q&A and Subscription divisions
and our proven ability to continue growing the Crowd
Media division, as well as the growth prospects that come
with the investment and partnership of the Invincible
Investment Consortium.
On a personal note, I joined the Crowd Mobile team as
Chairman 5 years ago with a sense of optimism that our
company would grow into a leader in our field. Despite
regulatory headwinds and a multitude of challenges on our
journey, my optimism for growth and delivering shareholder
value has not dissipated.
On behalf of the Board, let me close by thanking you, our
shareholders, for your ongoing support. To the Company’s
Board of Directors, CEO and Managing Director, Domenic
Carosa, and his international team, thank you for your
strong and committed effort during the past 12 months and
wish you all the best in the future.
Theo Hnarakis
Crowd Media Holdings Limited - Chairman
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
6
6
Chief Executive Officer’s Report
“As a result of the diligent cost-cutting
measures the Company implemented in
FY19, we believe this will bring the
Company to consistent positive EBITDA
and operating cash flow in FY20”
Dear Shareholders,
We are extremely excited in being able to secure Invincible
Investment Consortium (IIC) both in terms of funding and
human resource. The Consortium participants are proven
performers who will greatly assist Crowd with both our
existing operations and, more importantly, new
opportunities that we are able to capitalise on following the
recent restructure of the Company.
Both our social media and digital marketing capabilities, as
well as our Artificial Intelligence and Subscription
technology platforms, have been substantially enhanced
and refined over the last year and they are now ready to be
more effectively deployed with the assistance of IIC. It will
be a very exciting few months ahead for Crowd as we work
closely with IIC to expand our business capabilities.
Under the agreement executed with the Invincible
Investment Consortium (IIC) on 29 August 2019, Crowd
Media will issue IIC (and/or their nominees) with convertible
notes with a face value of up to $3.7 million in two
tranches. Tranche 1 of $1.7 million will be used to pay
down the convertible notes issued to Obsidian, cover
redundancy costs resulting from the strategic review
performed in FY19 and provide additional working capital.
Tranche 2 of $2.0 million is subject to the parties agreeing
to a business plan which focusses on strategic
collaboration objectives.
Annual review
Crowd Media’s FY19 year was a challenging one for the
Company, especially within the Q&A and Subscription
divisions. Similar to FY19, I expect part of FY20 to be a
year of transition and I ask shareholders for their patience
as we transform to a platform-centric company focused on
marketing, predominately to millennials, through
technology.
We completed our strategic review and identified a number
of improvements and opportunities. We believe we have
some key strengths that we can build on as follows:
1.
2.
3.
Pioneers in social media and influencer marketing
(6+ years)
Millennial and digital in our company DNA
Data-driven culture that leverages Artificial
Intelligence (AI) and Business Intelligence (BI)
technology
4.
Strong depth and breadth in digital marketing in
local markets around the world (30+)
However, we are also committed to growth and evolving
further into a digital media company and to achieve our
goals, a number of fundamental changes needed to be
identified and implemented.
As a result of the diligent cost-cutting measures the
Company implemented in FY19, we believe this will bring
the Company back to consistent positive EBITDA and
operating cashflow in FY20.
Crowd Media
Increasing revenue & sales pipeline
Crowd Media works with brands and digital influencers and
our strong performance has been achieved by accelerating
our ability to capture global growth opportunities in the
digital influencer market space, leveraging the global
distribution and expertise we have built up in the past 7
years in social media marketing with the Q&A division.
In FY19 Crowd Media revenues were $1.6m, up 232%
from $0.49m in FY18, with a current pipeline of $1m+. We
anticipate continuing the material growth within Crowd
Media across all key metrics in FY20.
Crowd Media continues to attract blue chip partners
including Nestle, L’Oréal, Apple Music, Bunq, Coty, Happn,
Oasis, Moroccan Oil and Mandarine Napoleon.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
7
7
Chief Executive Officer’s Report
Crowd Media’s sales have been secured despite
significantly longer sales cycles and therefore the continued
sales growth illustrates good and promising momentum.
The estimated sales cycle is typically around 4-6 months
depending on the size of the deal.
Key Drivers
Social Media & Millennials
Crowd Media is positioned to continue capitalising on the
global shift towards mobile devices and increasing
importance of social media channels. Our target customers
Why is Crowd Media investing in this space? At Crowd
continue to be 16-35 years old with disposable income and
Media, we see social media as the new TV channel and
limited financial commitments.
digital influencers as the new TV commercial. Millennials are
no longer consuming media in traditional ways, so brands
need to be agile and design new methods to reach them.
This is where digital influencers – people with clout on
social media – come in. Research shows that millennials
trust influencers much more than traditional media, making
These millennials are mobile natives and Crowd Media
provides valuable mobile services and entertainment aimed
at them. We have also identified the growing trend of digital
influencers and see this as a key opportunity going forward.
Our product strategy is matched to these demands and
social media an important marketing channel.
trends.
Moving forward, we see opportunities for influencers to
leverage their popularity to sell both physical and digital
products, so we want to empower them to monetise
beyond simply advertising. This is part of the reason why
we believe the IIC deal is so strategic.
Crowd Media
Transition and opportunities
Crowd Media is continuing to explore additional ways to
improve shareholder value. With the significantly reduced
cost base in FY20, we are expecting positive EBITDA and
Backing this all up, we have a global distribution network –
positive operating cashflow.
fifteen years in the making – that is connected to over 220
telcos worldwide. With this vast network in place, we can
bill customer’s mobile phones directly. Currently, we are
executing over 200 influencer campaigns a month, and to
date, we have worked with over 6,000 influencers. We see
this as a lucrative growth opportunity and are very excited
to be in this space.
Crowd Mobile
Strategic review
We are extremely excited in being able to secure IIC both in
terms of funding and human resource. The new Chairman
and Board member (and other Consortium participants) are
proven performers who will greatly assist Crowd with both
our existing operations and, more importantly, new
opportunities that we are able to capitalise on following the
recent restructure of the Company.
I would like to thank our board for their support and our
staff and executive team for their hard work and application
The Q&A and Subscription divisions faced major regulatory
in these trying times.
headwinds and material bad debt expenses in FY19.
Revenue for Q&A in FY19 of $15.9m was down 36% on
FY18 and Subscription revenue of $6.4m was down 52%
on FY18.
I would also like to formally thank our outgoing Chairman,
Theo Hnarakis, for his leadership since listing the Company
in January 2015; his advice and mentorship have been
invaluable.
We proactively took steps to protect the operating margins
by identifying operational efficiencies through the strategic
review and aggressive cost-cutting initiatives.
Finally, I would like to thank all of our shareholders for your
continued support and look forward to sharing our
developments with you all in FY20 and beyond.
Headwinds are now receding, and green shoots are
appearing through new social distribution channels and
new territories.
Domenic Carosa
Chief Executive Officer
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
8
8
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
9
9
Directors’ Report
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Crowd Media Holdings Limited (referred to hereafter as the 'Company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of Crowd Media Holdings Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Theo Hnarakis - Chairman
Domenic Carosa
Sophie Karzis
Principal activities
During the financial year the principal continuing activities of the Group consisted of the sale of information, entertainment
and content and utility services for mobile phones and tablets.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The financial results for the year ended 30 June 2019 and for the prior year ended 30 June 2018, (‘pcp’ or ‘prior year’)
represents those of the Crowd Media operating entities, the Track operating entities, Crowd Media and Crowd Media
Holdings Limited.
Crowd Media earned revenue and other income for the year ended 30 June 2019 of $23,918,776 versus $38,557,609 in
the prior year. The net loss after tax for the year was $4,795,984 compared with a pcp net loss after tax of $26,041,272
The other comprehensive income for the year attributable to the owners of Crowd Media was $511,227 when accounting
for a foreign currency translation loss on foreign operations.
Crowd Media’s net asset position at 30 June 2019 was $948,113, a decrease of 80% over the 30 June 2018 balance of
$4,655,431. This largely reflects the impairment of the Subscription CGU in FY-18 and operational transition and
investment in the Media division.
During the year ended 30 June 2019, Crowd Media performed a strategic review to streamline operations and implement
cost reduction initiatives. These initiatives included redundancies that will save the Company over $1.4m in annualised
costs effective 1 July 2019, with total annualised cost savings of $3.5m realised in FY-19. Employee headcount was
reduced by 34% from 73 in Q1 FY-19 to an expected 48 in Q1 FY-20. As a result of these initiatives and projected growth
in the Media division, the Company is expecting to be earnings before interest, tax, depreciation and amortisation
('EBITDA') positive and operationally cashflow positive in FY-20, with a focus on reducing debt.
Comparison of years ended 30 June 2019 to 30 June 2018
2019
$
2018
$
Increase/
(decrease)
$
Percentage
change
%
Revenue
Other income
Cost of sales
Selling, general and administration expenses
Impairment expense
23,918,776
-
(7,167,258)
(21,180,412)
(1,158,485)
38,552,347
5,262
(9,219,751)
(26,599,387)
(25,913,717)
(14,633,571)
(5,262)
2,052,493
5,418,975
24,755,232
Earnings before interest, tax, depreciation and
amortisation ('EBITDA') Profit / (Loss)
(5,587,379)
(23,175,246)
17,587,867
Interest income
Depreciation and amortisation
Finance costs
Income tax benefit
1,991
(209,128)
(582,894)
1,581,426
2,655
(3,648,101)
(1,528,206)
2,307,626
(664)
3,438,973
945,312
(726,200)
(38%)
(100%)
(22%)
(20%)
(96%)
(76%)
(25%)
(94%)
(62%)
(31%)
Net Profit / (Loss) After Tax ('NPAT')
(4,795,984)
(26,041,272)
21,245,288
(82%)
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
10
10
Directors’ Report
Notably, the Company’s EBITDA and net loss includes impairment expense of $1,158,485, a non-cash share-based
payment charge of $24,750, refinancing and restructuring costs of $1,459,095 and share issuance costs of $131,525.
When adjusting only for these effects (consistent with performance measures reported to shareholders during the year), the
Underlying EBITDA for the financial year is a loss of ($2,648,609) (pcp: $3,579,496), a decrease of 174% versus prior year,
as follows:
Consolidated
2019
$
2018
$
Net profit/loss after tax (NPAT)
(4,795,984)
(26,041,272)
Add back: tax expense/(benefit)
Add back: finance costs
Deduct: interest income
Add back: depreciation and amortisation
EBITDA
Add back: impairment expense
Add back: share-based payments expense
Add back: restructuring and refinancing costs
Add back: share issuance costs
Effects of exchange rate changes
(1,581,426)
582,894
(1,991)
209,128
(5,587,379)
1,158,485
24,750
1,459,095
131,525
164,915
(2,307,626)
1,528,206
(2,655)
3,648,101
(23,175,246)
25,913,717
382,380
70,000
-
388,645
Underlying EBITDA
(2,648,609)
3,579,496
Revenue
2019
$
2018
$
Increase/
(decrease)
$
Percentage
change
%
Revenue
23,918,776
38,552,347
(14,633,571)
(38%)
For FY-19, revenue was represented by Q&A of $15,923,286 (pcp: $24,736,054), Subscription of $6,361,291, (pcp:
$13,323,863) and Media of $1,634,199 (pcp: $492,430).
The Q&A business encountered headwinds and produced softer than expected revenues. The Company continues to
develop its Artificial Intelligence ('AI') and Business Intelligence ('BI') technology to help drive growth.
Billed message volumes slightly decreased from 14.0m to 12.5m year on year. The average revenue per paid message for
the current year was $1.29 compared to $1.72 for the prior year. This reflects the Company’s strategy of growing more
strongly in lower unit economic countries, as well as a depreciating Australian dollar versus the Euro, compared to the
previous corresponding period.
Subscription contributed consolidated revenue of $6,361,291 and the business generally continues to be profitable.
Management has tangible plans to expand the product offering in FY20, adding new and better-quality third-party content
and diversifying revenue. In addition, management performs a strategic review on an ongoing basis and continues to
identify cost savings and operational efficiencies for this business.
Group revenue is expected to stabilise in FY20 as a result of further growth of the Media business, continuous leverage of
existing and new products into existing and new markets in both the Q&A and Subscription businesses and reducing
operating expenses.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
11
11
Directors' Report
Expenses
(i) Cost of sales
For FY-19, the Group’s cost of sales was $7,167,258 or 30% of revenue (pcp: $9,219,751 at 24%) and was represented
by Q&A at $4,327,093 (pcp: $6,015,865), Subscription at $1,796,815 (pcp: $2,768,174) and Media at $1,043,350 (pcp:
$435,712). The margin increase was the result of the decline in Subscription revenue, combined with stable fixed portion of
the cost base and increased compliance cost. An improvement in the Q&A business is derived from the use of AI and BI
solutions. We expect cost of sales as a percentage of revenue to be relatively flat in FY-20.
(ii) Selling, general and administration expense
For FY-19, the 20% decrease in Crowd Media’s selling, general, and administrative expenses (which include Marketing) to
$21,180,412 is mostly due to decrease in marketing and cost saving initiatives. We expect selling, general and
administration expenses to further decrease in line with the additional operational and employee costs savings that will
materialise in FY-20. The Group will continue to invest into high growth business areas, such as digital influencer
commerce.
The larger movements in expenses for FY-19 versus FY-18, were as follows:
2019
$
2018
$
Increase/
(decrease)
$
Percentage
Change
%
Marketing
6,993,715
11,261,186
(4,267,471)
Employee benefits expenses
8,663,575
9,239,409
143,465
24,750
831,494
382,380
(575,834)
(688,029)
(357,630)
1,158,485
25,913,717
(24,755,232)
(38%)
(6%)
(83%)
(94%)
(96%)
Product development
Share-based payment
Impairment expense
Restructuring and finance costs
1,459,095
70,000
1,389,095
1984%
● Marketing: The consolidated marketing expense of $6,993,715 or 29% of revenue for FY-19 was down by
$4,267,471 or 38% versus FY-18: $11,261,186 (29% of revenue). Q&A was $5,250,706 or 33% of revenue for the
year, compared to pcp of $6,015,865, at 24%. The digital influencer and innovation channels produced stable
ROI, which offsets continuous saturation of the Facebook channels. The Subscription expense was $1,587,156 or
25% (pcp: $2,996,103 at 22%). The Media division marketing expense was $155,853 or 10%. Moving forward,
we expect a broadly consistent marketing cost to income ratio.
●
●
●
●
●
Employee benefits expense: The consolidated expense decreased by $575,834, or 6%, for FY-19, mostly due
to a decrease in headcount. Q&A for the period was $6,296,010, almost flat versus the previous corresponding
period of $6,333,887. The Subscription expense was $1,220,657 for the period, a decline of 29% versus the
FY-18 expense of $1,714,798, due to restructuring in FY-18. In addition, the Crowd Media division incurred an
expense of $1,146,908, a decline of 4% versus the previous corresponding period of $1,190,724. At 36% of
Group revenue, the employee benefits expense ratio trended upwards in FY-19 compared to pcp. This ratio is
expected to decrease in FY-20 as a result of the restructuring that occurred in FY-19.
Product development: In FY19, the Company incurred a product development expense of $143,465 (pcp:
$831,494), which related to internal product development costs for our digital influencer CRM and Schumacher
emoji app. These costs were expensed and not capitalised. The decline in FY-19 is the result of the Company’s
strategic plan and operational transition.
Share-based payment: The consolidated expense of $24,750 for FY-19 is a Directors’ and staff incentive
expense and is attributed to the Q&A CGU. The reduction of $357,630, or 94%, reflects the decline in
performance rights in FY-19.
Impairment expense: In FY-19, impairment expense is related to allowance for expected credit losses of
$1,158,485 (pcp: $533,673). In FY-18, management conducted a strategic review and trigger-based impairment
test of the Subscription CGU, resulting in an impairment of $25,380,044, writing the asset down to nil.
Restructuring and refinancing costs: In FY-19, the Company incurred costs for debt refinancing and
restructuring of $1,459,095. In FY-18, restructuring costs totalled $70,000.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
12
12
Directors' Report
(iii) Depreciation and amortisation
2019
$
2018
$
Change
$
Change
%
Depreciation
Amortisation
192,988
16,140
219,474
3,428,627
(26,486)
(3,412,487)
(12%)
(100%)
209,128
3,648,101
(3,438,973)
(94%)
The FY-19 consolidated depreciation and amortisation expense of $209,128 (pcp: $3,648,101) is split between Q&A as
$71,176 (pcp: $125,663), Subscription as $129,612 (pcp: $3,522,438) and Media as $8,340 (pcp: $0). The decrease in
the consolidated depreciation and amortisation charges in FY-19 is due to the impairment taken in FY-18, which resulted in
writing down the Subscription CGU to nil.
(iv) Finance costs
The consolidated finance costs for FY-19 of $582,894 is a decrease of $945,312 or 62% from FY-18. Due to the reduced
debt holdings and refinancing that occurred in FY-19, we expect finance costs to further decline in FY-20.
(v) Income tax expense/(benefit)
The consolidated tax benefit for FY-19 of ($1,581,426) is represented by a Q&A benefit of ($813,042), a Subscription
benefit of ($420,346) and Media benefit of ($348,038). The consolidated tax benefit for FY-18 was ($2,307,626), which was
mainly due to the release of a deferred tax liability of ($2,547,137) related to the impairment of the Subscription division in
FY-18.
Cash flow
The Company’s net cash used in operating activities for the year was ($2,443,352), which was a decrease of $5,082,567
versus the prior period (pcp: $2,639,215). The decline reflects a decrease of receipts from customers which were
$26,868,408 and $41,422,950, respectively. This decline was partially offset by decreased payments to suppliers and
employees of $6,665,361.
Net trading receipts (excluding interest and tax cash flows) for FY-19 was ($2,632,124), which is a 150% decrease over the
prior year of $5,256,697. The net cash flow from investing activities for the period was $120,536, versus ($516,755) in the
prior year, mainly reflecting proceeds from disposal of intangibles and release of security deposits. The net cash flow from
financing activities for the period was $133,264 versus ($4,662,157) in the prior year, comprised of repayments of
borrowings to JGB of $3,287,542, offset by proceeds from issue of shares of $428,957 and combined payments for
borrowings of $2,991,849.
Liquidity and Financial Position
At Crowd Media’s 30 June 2019 reporting date:
Cash and cash equivalents (‘cash’) were $839,462 (30 June 2018: $2,559,776).
●
● Working capital, (defined as current assets less current liabilities) decreased by $1,417,583 to $1,545,624 (30
June 2018: $2,963,207).
Reporting date total current and non-current borrowings (‘debt’) were $2,991,849 (30 June 2018: $3,287,542).
Net debt (debt less cash), at 30 June 2019 was $2,152,387, an increase of $1,424,621 or 196% from $727,766
at 30 June 2018.
Net assets at 30 June 2019 were $948,113 (30 June 2018: $4,655,431).
●
●
●
The financial statements have been prepared on a going concern basis. Refer to Note 2 of the financial statements and the
auditor’s review report attached for further information.
Significant changes in the state of affairs
On 25 July 2018, the Company agreed to issue Performance Rights ('PRs') to employees. The three-year PRs are based
on share price and earnings per share targets and the maximum number of shares that can be issued on conversion is
6,000,000.
On 25 July 2018, the Company cancelled the second issue of PRs. The three-year PRs were issued on 14 July 2017 and
were based on share price and earnings per share targets. The maximum number of shares that could be issued on
conversion was 6,000,000.
On 21 December 2018, following shareholder approval, the Company changed its name from Crowd Mobile Limited to
Crowd Media Holdings Limited. The new name more accurately encompasses the current and future operations of the
Company. The ASX issuer code remained as CM8.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
13
13
Directors' Report
On 12 April 2019, the Company completed its debt refinancing with BillFront Limited, a leading finance provider to the
Media and Technology industries internationally. The debt facility with BillFront was used to redeem the JGB loan in full on
materially improved terms. The debt facility is structured as a two year revolving credit facility, senior secured against all of
the Company’s assets including receivables. The outstanding balance at 30 June 2019 was EUR€1,339,835
(AUD$2,169,032), with an effective annual interest rate of 11.3% and the maturity date is 12 April 2021.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
On 31 July 2019, the Company agreed to issue Performance Rights ('PRs') to employees. The PRs are based on share
price targets and the maximum number of shares that can be issued on conversion is 5,500,000 at two years and
5,500,000 at three years.
On 31 July 2019, the Company agreed not to proceed with the PRs previously agreed to be issued on 25 July 2018. The
three year PRs were based on share price and earnings per share targets and the maximum number of shares that could
be issued on conversion was 6,000,000.
On 29 August 2019, the Company executed a binding Heads of Agreement ('HOA') with an alliance of strategic investors,
collectively the Invincible Investment Consortium ('IIC'), to fund existing Company requirements, as well as develop new
business synergies and joint ventures between Crowd Media and businesses that the IIC can introduce and facilitate.
These would leverage Crowd Media’s well-established technology and digital marketing platforms. Under the agreement,
Crowd Media will issue IIC (and/or their nominees) with convertible notes with a face value of up to $3,700,000 on the
following key terms:
●
●
Tranche 1: $1,700,000 20 month facility with a fixed conversion price of 1.8 cents, of which $1,600,000 has been
received as at 19 September 2019: and
Tranche 2: $2,000,000 24-month facility, to be drawn down in 90 days with a fixed conversion price of 2.0 cents,
subject to the parties agreeing to a business plan which focusses on strategic collaboration objectives.
As part of the investment and collaboration under the agreement, IIC principals Steven Schapera and Robert Quandt will
be joining the Crowd Media Board of Directors in September 2019. Crowd Media’s current Chairman, Theo Hnarakis, will
be retiring from the Board to pursue other opportunities, and Steven Schapera will replace him as new Chairman.
Experience and Expertise of Steven Schapera - Steven is London-based; he co-founded the successful BECCA Cosmetic
brand and, as global CEO, commercialised it into a range of cosmetic products that are distributed throughout Europe,
Asia and North America. Steven guided BECCA, from its infancy through to being a global player in the international luxury
cosmetic space, before exiting the business to Estee Lauder for AUD$300 million. Steven holds a number of Board
positions, including non-exec director of ASX listed OBJ Limited, and has investments in the health, beauty, wellness and
tech spaces.
Experience and Expertise of Robert Quandt - Robert worked for 10 years as a consultant for Booz & Company serving
large corporate clients on strategy, operation and organisation. Subsequently, Robert has worked for Linde AG as the
strategy lead for their EUR 6bn Americas business. Until recently, he has served as Board Director and COO/CFO of
Invincible Brands. Invincible Brands is a Berlin-based Influencer led brand builder. Working alongside the co-founders,
Robert has helped to grow this highly profitable business from EUR 7m revenue in 2016 to around €100m in 2019.
As part of the incoming investment by IIC, current CEO Domenic Carosa has agreed to reduce his remuneration package,
beginning 1 September 2019 to EUR 240,000 per annum with an agreed 3-month notice period.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Directors and management of the Group will focus on targeting growth in the combined business operations, whilst
paying down debt in cash, wherever possible.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
14
14
Directors' Report
Information on directors
Name
Theo Hnarakis
Title
Non-Executive Chairman
Experience and expertise
Theo Hnarakis brings a wealth of experience working in the media industry and scaling
Australian ASX listed technology businesses. He graduated from The University of
South Australia with a Bachelor of Accounting and has held senior roles with News
Corporation, Boral Group, the PMP Communications Group and was the Managing
Director and CEO of Melbourne IT until 2013. He has also held director roles with
Neulevel, a JV with US based listed company, Neustar and with Advantate, a JV with
Fairfax Media.
Other current directorships
Chairman of Dropsuite Ltd (ASX: DSE) (since 28 December 2016), Director of
Farmgate MSU (non-listed)
Former directorships
(last 3 years)
None
Special Responsibilities None
Interests in shares
4,177,650 ordinary shares (held indirectly)
Interests in options None
Interests in rights None
Name
Domenic Carosa
Title
Chief Executive Officer and Executive Director
Qualifications Masters of Entrepreneurship and Innovation (MEI) from Swinburne University
Experience and expertise
Domenic Carosa is Chief Executive Officer (‘CEO’) and Executive Director of Crowd
Media. With over 20 years’ experience in business and technology, Domenic has built
a reputation as a leader in the internet space by building one of Australia’s leading
digital music service providers in the late 90’s, and building from scratch Australia’s
second largest virtual web hosting/communications company which he sold for A$25
million in 2006-07. Domenic was previously the co-founder and Group CEO of
ASX-listed Destra Corporation Ltd which was the largest independent media and
entertainment company in Australia with revenues of over A$100 million. Mr Carosa
was a director of Destra Limited until April 2009. Domenic is past Chairman of the
Internet Industry Association (IIA). Domenic is Non-Executive Chairman of the Future
Capital Development Fund and Non-Executive Chairman of Dominet Digital
Corporation Pty Ltd, an internet investment group.
Other current directorships
None
Former directorships
(last 3 years)
None
Special Responsibilities None
Interests in shares
58,888 ordinary shares (held directly) 24,684,080 ordinary shares (held indirectly)
Interests in options None
Interests in rights None
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
15
15
Directors' Report
Information on directors
Name
Sophie Karzis
Title
Non-Executive Director
Qualifications
Bachelor of Laws Degree from Monash University
Experience and expertise
Sophie is a practising lawyer with over 20 years' experience in corporate law. She is
company secretary and general counsel to a number of listed and unlisted public
companies and private companies and is the principal of Corporate Counsel Pty Ltd, a
business which provides corporate and company secretarial services to Australian
companies.
Other current directorships
Director of Change Up Holdings Limited (non-listed), Director of Collingwood Football
Club Foundation (non-listed – not-for-profit)
Former directorships
(last 3 years)
None
Special Responsibilities
Company secretary
Interests in shares
504,736 ordinary shares (held indirectly)
Interests in options None
Interests in rights None
'Other current directorships' quoted above are current directorships for listed entities and excludes directorships of all other
types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Sophie Karzis was the Company Secretary for the financial year and is a Non-Executive Director. Refer to 'Information
on directors' section above for experience and expertise.
Subsequent to 30 June 2019, Sophie resigned as Company Secretary and was replaced with Laura Newell, however,
Sophie remains on the Board in her existing position as Non-Executive Director.
Laura Newell of Boardroom Pty Limited has worked in multiple Company Secretary roles prior to joining the Group and
brings a significant degree of experience to Crowd Media Holdings Limited.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2019, and
the number of meetings attended by each director were:
Theo Hnarakis
Domenic Carosa
Sophie Karzis
‘Held’ represents the number of meetings held during the time the director held office.
Full Board
Attended
Held
14
14
13
14
14
14
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
16
16
Directors' Report
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders. The Board of Directors ('the Board') ensures that executive reward satisfies the
following key criteria for good reward governance practices
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract,
motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
●
having revenue and economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, and particularly growth in share price, and delivering constant
or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from
independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line
with the market. Non-executive directors may receive share options or other incentives. Fees are reviewed annually and
include superannuation contributions, where required. The non-executive directors do not receive any other benefits.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 9 December 2015, where the
shareholders approved an aggregate remuneration of $500,000.
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
17
17
Directors' Report
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Board, based on individual and business unit performance, the overall performance of the Group and comparable market
remunerations.
The short-term incentives ('STI') program is designed to align the targets of the business units with the targets of those
executives in charge of meeting those targets. STI payments are paid as cash bonuses and are discretionary.
The long-term incentives (‘LTI’) may include equity based payments in the form of shares, performance rights or options.
On 17 December 2014, shareholders approved a Performance Rights Plan ('PR Plan'). Under the PR Plan, selected
employees and Directors may be granted performance rights which will entitle them to receive ordinary shares in the
Company, subject to the Company meeting performance objectives.
On 25 July 2018, the Company agreed to issue Performance Rights to employees. The three-year PRs are based on share
price and earnings per share targets and the maximum number of shares that can be issued on conversion is 6,000,000.
Performance rights may be issued to all employees and Directors of the Company and any Subsidiary. The number of
performance rights (if any) to be offered from time to time to each person shall be determined by the Board in its discretion.
The performance rights in respect of an employee will vest no earlier than on meeting the relevant Performance
Condition(s). Unissued performance rights will be issued pro-rata at the time the relevant Performance Condition is met.
The employee must still be employed by the Company at the time of vesting, unless otherwise agreed by the Board in
limited circumstances. Any performance rights that have been earned but remain unvested will vest in the event of a
takeover or similar event occurring. Should the holder of performance rights resign, all rights not yet vested will be forfeited.
The Company established an employee option plan in 2015 called the Crowd Mobile Limited Executive Option Plan
(‘Option Plan’), which replaces the former Q Limited Incentive Option Scheme. The Group may, at the discretion of the
Board, grant options over ordinary shares in the Company to certain key management personnel (and Directors) of the
Group. The options are issued for nil consideration and are granted in accordance with performance guidelines established
by the Board.
As a legacy tool, the Company has so far maintained, though not activated, The Q Limited Share Plan (‘Q Plan’) which was
established in 2011 fiscal year as part of the then remuneration strategy and the Q Plan currently holds a minor
shareholding in the Company.
All LTI incentives are designed and used specifically to align management and shareholder’s interests and to assist the
Company in the attraction, motivation and retention of appropriately skilled staff. In particular, the plans are designed to
provide relevant executives with an incentive for future performance and typically include vesting conditions under the
plans.
Group performance and link to remuneration
Remuneration for key management personnel is not directly linked to performance of the Group.
Use of remuneration consultants
During the financial year ended 30 June 2019, the Company did not engage remuneration consultants to review its existing
remuneration policies or provide recommendations on how to improve incentive programs.
Voting and comments made at the Company's 2018 Annual General Meeting ('AGM')
At the 28 November 2018 AGM, 80.97% of the votes received supported the adoption of the remuneration report for the
year ended 30 June 2018. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
18
18
Directors' Report
Details of remuneration
The key management personnel of the Group consisted of the directors of Crowd Media Holdings Limited and the
following persons:
●
●
●
●
Antoaneta Ignatovska - Chief Financial Officer (resigned 1 June 2019, effective 31 July 2019);
Michel de Jong - Chief Operating Officer (made redundant, effective 30 September 2019);
Gregor Cooney - General Manager - Q&A (resigned, effective 31 December 2018); and
Melanie Mouldenhauer – Chief Financial Officer (appointed 1 June 2019).
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
Cash
bonus
Non-
monetary
Termination
payments
Super-
annuation
Leave
benefits
Equity
settled
$
$
$
$
$
$
$
2019
Non-Executive
Directors
T Hnarakis
S Karzis
Executive
Directors
D Carosa*
Other Key
Management
Personnel
144,318
119,449
581,232
A Ignatovska
288,826
M de Jong
339,626
15,787
G Cooney**
127,671
M Mouldenhauer***
16,269
-
-
-
-
-
-
-
-
2,587
1,149
6,733
1,432
-
-
-
-
-
-
-
-
13,710
-
5,700
-
-
-
-
-
-
-
-
-
-
-
Total
$
158,028
119,449
589,519
289,975
362,146
129,103
16,269
-
-
-
-
-
-
-
1,617,391
15,787
11,901
-
19,410
-
-
1,664,489
* D Carosa remuneration includes mobility premium for secondment to The Netherlands of $209,350 (effective date 1 July 2016)
** Remuneration is for the period from 1 July to date of resignation or termination as a director or key management personnel
*** Remuneration is for the period from appointment as a director or key management personnel
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
19
19
Directors' Report
2018
Non-Executive
Directors
T Hnarakis
S Karzis
Executive
Directors
D Carosa*
Other Key
Management
Personnel
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
Cash
bonus (a)
Non-
monetary
Termination
payments
Super-
annuation
Leave
benefits
Equity
settled (b)
$
$
$
$
$
$
$
Total
$
150,000
109,307
-
-
-
-
584,816
29,326
3,050
-
-
-
-
14,250
-
5,700
-
-
-
-
-
-
-
-
53,269
217,519
23,557
132,864
145,577
768,469
-
69,398
23,329
588,685
-
78,468
13,858
309,930
A Ignatovska **
53,490
15,720
188
C Shaw ***
344,739
34,633
-
153,765
32,219
M de Jong **
76,806
-
1,662
G Cooney
243,598
45,925
6,549
-
-
-
-
1,562,756
125,604
11,449
153,765
52,169
-
259,590
2,165,333
* D Carosa remuneration includes mobility premium for secondment to The Netherlands of $210,790 (effective date 1 July 2016)
** Remuneration is for the period from appointment as director or key management personnel
*** Remuneration is for the period from 1 July to date of resignation or termination as director or key management personnel
(a) Cash bonus relates to prior period targets.
(b) The Company cancelled all Director options in FY-18, hence there was nil financial benefit to the Directors.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
20
20
Directors' Report
The proportion of remuneration linked to performance and the fixed proportion are as follows
Fixed remuneration
At risk - STI
At risk - LTI
2019
2018
2019
2018
2019
2018
Name
Non-Executive Directors
T Hnarakis
S Karzis
100%
100%
76%
82%
Executive Directors
D Carosa
100%
77%
Other Key Management
Personnel
A Ignatovska
C Shaw
M de Jong
G Cooney
M Mouldenhauer
100%
-
96%
100%
100%
77%
90%
98%
79%
-
-
-
-
-
-
4%
-
-
-
-
4%
23%
6%
2%
17%
-
-
-
-
-
-
-
-
-
24%
18%
19%
-
4%
-
4%
-
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name
Domenic Carosa
Title
Executive Director and Chief Executive Officer
Agreement commenced
13 January 2015
Term of agreement Ongoing
Details
Base annual package*, performance based, ‘at-risk’ STI and discretionary share based
LTI remuneration, subject to annual performance review. 12 month termination notice
by either party. 6 month non-solicitation clause after termination. The Company may
terminate the agreement with cause in certain circumstances such as gross
misconduct.
* Base annual package - Netherlands annual package €350,000 per annum (reduced to €315,000 per
annum for the period from 1 February 2019 to 30 June 2019 and to €240,000 effective 1 September 2019)
plus statutory social security, plus Australian Director Fees of $60,000 per annum plus statutory
superannuation
Name
Antoaneta Ignatovska
Title
Chief Financial Officer (resigned 1 June 2019, effective 31 July 2019)
Agreement commenced
27 April 2018
Term of agreement Ongoing
Details
Base annual package, performance based, ‘at-risk’ STI and discretionary share based
LTI remuneration, subject to annual performance review. 4 months termination by
employer, 2 months by executive. The Company may terminate the agreement with
cause in certain circumstances such as gross misconduct.
* Base annual package - €180,000 plus statutory social security
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
21
21
Directors' Report
Name Michel de Jong
Title
Chief Operating Officer (made redundant, effective 30 September 2019)
Agreement commenced
27 April 2018
Term of agreement Ongoing
Details
Base annual package, performance based, ‘at-risk’ STI and discretionary share based
LTI remuneration, subject to annual performance review. 4 months termination by
employer, 2 months by executive. The Company may terminate the agreement with
cause in certain circumstances such as gross misconduct.
* Base annual package - €214,256 plus statutory social security
Name Gregor Cooney
Title General Manager – Q&A (resigned, effective 31 December 2018)
Agreement commenced
1 February 2016
Term of agreement Ongoing
Details
Base annual package, performance based, ‘at-risk’ STI and discretionary share based
LTI remuneration, subject to annual performance review. 4 months termination by
employer, 2 months by executive. The Company may terminate the agreement with
cause in certain circumstances such as gross misconduct.
* Base annual package - €158,000 plus statutory social security
Name Melanie Mouldenhauer
Title
Chief Financial Officer
Agreement commenced
1 June 2019
Term of agreement Ongoing
Details
Base annual package, performance based, ‘at-risk’ STI and discretionary share based
LTI remuneration, subject to annual performance review. 2 months termination by
employer, 1 month by executive. The Company may terminate the agreement with
cause in certain circumstances such as gross misconduct.
* Base annual package - €115,800 plus statutory social security
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2019.
There were no other options over ordinary shares granted to or vested in directors and other key management personnel
as part of compensation during the year ended 30 June 2019.
Performance rights
There were no performance rights over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2019.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
22
22
Directors' Report
Additional information
The earnings of the Group for the four years to 30 June 2019 are summarised below:
2019
$
2018
$
2017
$
2016
$
Sales revenue
EBITDA
23,918.776
38,552,347
43,887,388
36,994,826
(5,587,380)
(23,157,246)
9,407,765
6,315,439
Total comprehensive income for the year
attributable to the owners of Crowd Media
Holdings Limited
(4,284,757)
(25,640,051)
(251,234)
379,882
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share
(cents per share)
Diluted earnings per share
(cents per share)
2019
2018
2017
2016
0.01
(2.10)
0.04
(11.71)
0.14
(0.05)
(2.10)
(11.71)
(0.05)
0.16
0.56
0.47
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals /
other
Balance at the
end of the year
Ordinary shares
T Hnarakis
D Carosa
S Karzis
G Cooney
2,782,914
22,004,529
110,000
333,334
25,230,777
-
-
-
-
-
1,394,736
2,738,439
394,736
-
4,527,911
-
-
-
-
-
4,177,650
24,742,968
504,736
333,334
29,758,688
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
23
23
Directors' Report
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Balance at the
start of the year
Granted
Exercised
Expired /
forfeited / other
Balance at the
end of the year
Options over ordinary
shares
T Hnarakis
D Carosa
S Karzis
All options lapsed during the year.
211,012
781,250
10,000
1,002,262
-
-
-
-
-
-
-
-
(211,012)
(781,250)
(10,000)
(1,002,262)
-
-
-
-
Performance rights holding
The number of performance rights over ordinary shares in the Company held during the financial year by each director and
other members of key management personnel of the Group, including their personally related parties, is set out below:
Balance at the
start of the year
Granted
Vested
Expired /
forfeited / other
Balance at the
end of the year
Performance rights
over ordinary shares
D Carosa
G Cooney
1,250,000
666,666
1,916,666
-
-
-
-
-
-
(1,250,000)
(666,666)
(1,916,666)
-
-
-
All performance rights lapsed during the year.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Crowd Media Holdings Limited under option at the date of this report are as follows:
Grant Date
2 April 2019
Expiry Date
Exercise price
Number under option
2 April 2022
$0.050
2,000,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
Shares under performance rights
Unissued ordinary shares of Crowd Media Holdings Limited under performance rights at the date of this report are as
follows:
Grant Date
31 July 2019
Expiry Date
31 July 2022
Number under rights
11,000,000
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate
in any share issue of the Company or of any other body corporate.
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
24
24
Directors' Report
Shares issued on the exercise of options
There were no ordinary shares of Crowd Media Holdings Limited issued on the exercise of options during the year ended
30 June 2019 and up to the date of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of Crowd Media Holdings Limited issued on the exercise of performance rights during the
year ended 30 June 2019 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the Company who are former partners of RSM Australia Partners
There are no officers of the Company who are former partners of RSM Australia Partners.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
Theo Hnarakis
Crowd Media Holdings Limited - Chairman
19 September 2019
Melbourne
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
25
25
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Crowd Mobile Limited for the year ended 30 June 2019, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
J S CROALL
Partner
Dated: 19 September 2019
Melbourne, Victoria
26
Statement of profit or loss and other comprehensive income For the year ended 30 June 2019
Consolidated
2019
$
2018
$
23,918,776
-
23,918,776
(7,167,258)
38,552,347
5,262
38,557,609
(9,219,751)
16,751,518
29,337,858
106,902
1,991
(6,993,715)
(2,774,060)
(2,280,087)
(209,128)
(8,663,575)
(407,662)
(143,465)
(24,750)
(1,158,485)
-
(582,894)
-
2,655
(11,261,186)
(2,538,566)
(1,462,798)
(3,648,101)
(9,239,409)
(883,554)
(831,494)
(382,380)
(533,673)
(25,380,044)
(1,528,206)
(6,377,410)
(23,348,898)
1,581,426
2,307,626
(4,795,984)
(26,041,272)
Notes
5
6
6
13
6
7
23
Revenue
Revenue from continuing operations
Other income
Cost of sales
Gross profit
Net fair value gain on financial assets
Interest revenue calculated using the effective interest method
Expenses
Marketing
Administration and other expenses
Consultants
Depreciation and amortisation expense
Employee benefits expense
Travel and accommodation
Product development
Share-based payment
Allowance for expected credit losses
Impairment of intangibles
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit for the year attributable to
the owners of Crowd Media Holdings Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
511,227
401,221
Other comprehensive income for the year, net of tax
511,227
401,221
Total comprehensive income for the year attributable to the
owners of Crowd Media Holdings Limited
(4,284,757)
(25,640,051)
Basic earnings per share
Diluted earnings per share
34
34
Cents
(2.10)
(2.10)
Cents
(11.71)
(11.71)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
27
27
Statement of financial position As at 30 June 2019
Consolidated
Notes
2019
$
2018
$
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Accrued income
Income tax receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred revenue
Borrowings
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
839,462
2,170,127
2,752,300
334,075
316,424
2,559,776
2,392,305
5,427,467
343,949
495,149
6,412,388
11,218,646
352,892
613,994
1,579,919
2,546,805
498,368
713,888
479,968
1,692,224
8,959,193
12,910,870
4,093,412
176,345
-
46,098
550,909
4,866,764
2,991,849
152,467
3,144,316
4,780,392
105,101
3,287,542
82,404
-
8,255,439
-
-
-
8,011,080
8,255,439
948,113
4,655,431
28,720,072
5,062,673
(32,834,632)
28,167,383
4,739,547
(28,251,499)
948,113
4,655,431
The above statement of financial position should be read in conjunction with the accompanying notes
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
28
28
Statement of changes in equity For the year ended 30 June 2019
Foreign
currency
reserve
$
Share-
based
payments
reserve
$
Convertible
note
optionality
reserve
$
Issued
Capital
$
Accumulated
losses
$
Total equity
$
Consolidated
Balance at 1 July 2017
28,165,539
(663,174)
4,406,269
212,851
(2,210,227)
29,911,258
Loss after income tax benefit
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
-
-
-
-
401,221
401.221
Contributions of equity, net
of transaction costs (note 21)
100,000
Share-based payment (note
35)
-
Share buy-back (note 21)
(98,156)
-
-
-
-
-
-
-
382,380
-
-
-
-
-
-
-
(26,041,272)
(26,041,272)
-
401,221
(26,041,272)
(25,640,051)
-
-
-
100,000
382,380
(98,156)
Balance at 30 June 2018
28,167,383
(261,953)
4,788,649
212,851
(28,251,499)
4,655,431
Foreign
currency
reserve
$
Share-
based
payments
reserve
$
Convertible
note
optionality
reserve
$
Issued
Capital
$
Accumulated
losses
$
Total equity
$
Consolidated
Balance at 1 July 2018
28,167,383
(261,953)
4,788,649
212,851
(28,251,499)
4,655,431
Loss after income tax benefit
for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
-
-
-
-
511,227
511,227
Contributions of equity, net
of transaction costs (note 21)
552,689
Share-based payment (note
35)
Transfers
-
-
-
-
-
-
-
-
-
24,750
-
-
-
-
-
(4,795,984)
(4,795,984)
-
511,227
(4,795,984)
(4,284,757)
-
-
552,689
24,750
-
(212,851)
212,851
-
Balance at 30 June 2019
28,720,072
249,274
4,813,399
-
(32,834,632)
948,113
The above statement of changes in equity should be read in conjunction with the accompanying notes
9
9
1
1
0
0
2
2
t
t
r
r
o
o
p
p
e
e
R
R
l
l
a
a
u
u
n
n
n
n
A
A
29
29
Statement of cash flows For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Interest and other finance costs paid
Income taxes refunded
Income taxes paid
Net cash from/(used in) operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of intangibles
Proceeds from release of security deposits
Net cash from/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for share buy-backs
Proceeds from borrowings - Obsidian
Proceeds from borrowings - NTH Mobile Limited
Proceeds from borrowings - BillFront
Repayment of borrowings - JGB
Repayment of borrowings - other
Consolidated
Notes
2019
$
2018
$
26,868,408
(29,500,532)
20,948
106,902
(430,427)
491,349
-
41,422,590
(36,165,893)
2,655
-
(1,528,206)
-
(1,091,931)
(2,443,352)
2,639,215
(14,352)
(51,826)
6,505
137,904
42,305
120,536
428,957
-
404,420
418,397
2,169,032
(3,287,542)
-
(342,163)
(175,823)
-
-
1,231
(516,755)
100,000
(98,156)
-
-
-
(4,636,305)
(27,696)
33
12
13
21
21
Net cash from/(used in) financing activities
133,264
(4,662,157)
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial
year
Effects of exchange rate changes on cash and cash
equivalents
(2,189,552)
2,559,776
(2,539,697)
5,200,089
469,238
(100,616)
Cash and cash equivalents at the end of the financial year
8
839,462
2,559,776
The above statement of cash flows should be read in conjunction with the accompanying notes
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
30
30
Notes to the financial statements 30 June 2019
Note 1. General information
The financial statements cover Crowd Media Holdings Limited as a consolidated entity consisting of Crowd Media Holdings
Limited (referred to as 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year (referred to
as the 'Group'). The financial statements are presented in Australian dollars, which is Crowd Media Holdings Limited's
functional and presentation currency.
Crowd Media Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Level 4
44 Gwynne Street
Cremorne VIC 3121
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 19 September 2019. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these
Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the
Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
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.
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 9 and AASB 15 were adopted using the modified retrospective approach and as such comparatives have not been
restated. There was no impact of the adoption on opening retained earnings as at 1 July 2018.
AASB 15 uses the term 'contract assets' and 'contract liabilities'. To maintain consistency in presentation with prior periods,
the Group has retained the use of 'accrued revenue' and 'deferred revenue', respectively.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
31
31
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business
activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements the Group incurred a loss of $4,795,984 (30 June 2018: loss of $26,041,272) and
had negative operating cash flows of $2,443,352 (30 June 2018: positive cashflows $2,639,215).
The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and that it is
appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following
factors:
●
The Group expects to achieve profitability by completing its cost saving measures and utilising growth opportunities
from its media business in the next year; and
The Group’s proven record of being able to raise funds to support its business plan, which includes receiving an
additional $1,600,000 of funding through a convertible loan note facility (refer to note 36).
●
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements 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 areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 31.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Crowd Media Holdings
Limited as at 30 June 2019 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those 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 de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the
fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Crowd Media Holdings Limited's functional and
presentation currency.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
32
32
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be
delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer
to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed
price or an hourly rate.
Grant income
Grant income is recognised when it is received or when the right to receive payment is established.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
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.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
33
33
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is
yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment
purposes. The financial statements include the recognition of accrued revenue which is used to refer to a class of contract
assets.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at
either amortised cost or fair value depending on their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of
recovering part or all of a financial asset, it's carrying value is written off.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has
increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
34
34
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it
is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within
other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
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 acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Plant and equipment
1.5 - 5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation
surplus reserve relating to the item disposed of is transferred directly to retained profits.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks
and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the
present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life & the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently
reversed.
Intellectual property
Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period of
their expected benefit, being their finite life of 5 years.
Distribution network
Significant investments in relation to distribution networks and messaging systems are capitalised as an asset and amortised
on a straight-line basis over the period of their expected benefit, being their finite useful life of 4.7 years.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
35
35
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 5 - 6 years.
Databases
Costs in relation to databases are capitalised as an asset and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 5 - 6 years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other
non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer. These financial statements
include the recognition of deferred revenue which is a term used to refer to a class of contract liabilities.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
The component of the convertible notes that exhibit characteristics of a liability is recognised as a liability in the statement of
financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability using the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance
cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders
equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not
remeasured in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee benefits expected to be settled within 12 months of the reporting date
are measured at the amounts expected to be paid when the liabilities are settled.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
36
36
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting date on high-quality corporate bonds with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, performance rights or options over shares, that are provided to employees
in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where
the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not
determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of
any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best
estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by
the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of
the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, they are treated as they had vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
37
37
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Crowd Media Holdings Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2019. The Group's assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out
below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a
'right-of-use' asset and lease liability are recognised at the commencement of the lease. The right-of-use asset is
recognised at an amount that is equivalent to the initial measurement of the lease liability, adjusted by the amount of any
prepaid or accrued lease payments previously recognised in the statement of financial position in relation the lease and an
estimate of any future restoration, removal or dismantling costs. The lease liability is recognised at the present value of future
lease payments comprising fixed lease payments less incentives, variable lease payments, residual guarantees payable,
payment of purchase options where exercise is reasonably certain, and any anticipated termination penalties. The lease
payments are discounted at the entity’s incremental borrowing rate. The exceptions relate to short-term leases of 12 months
or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy
choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as
incurred. Under the new standard, the previous straight-line operating lease expense recognition will be replaced with a
depreciation charge of the right-of-use asset (classified as operating costs) together with an interest expense on the
recognised lease liability (classified as finance costs). In the earlier periods of the lease, the expenses associated with the
lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings
Before Interest, Tax, Depreciation and Amortisation) results will improve as the operating expense is replaced by interest and
depreciation expenses in profit or loss under AASB 16.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
38
38
Notes to the financial statements 30 June 2019
Note 2. Significant accounting policies (continued)
For classification within the statement of cash flows, under AASB 16, the lease payments will be separated and reclassified
as payment of principal (financing activities) and interest (either operating or financing activities). For lessor accounting, the
standard does not substantially change how a lessor accounts for leases.
Given the limited number of operating leases the Group has on hand with its properties, there will be no material impact on
the statement of financial position. A right of use asset and lease liability will be recognised, estimated to be approximately
$0.65m. There will be no material impact on a net basis.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual reporting
periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have public
accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit entities
that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which will impact
for-profit private sector entities. The application of new definition and recognition criteria as well as new guidance on
measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to
Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1 January 2020, includes
such amendments. Where the Group has relied on the conceptual framework in determining its accounting policies for
transactions, events or conditions that are not otherwise dealt with under Australian Accounting Standards, the Group may
need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess
its impact.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 35 for details of
inputs utilised in calculating the fair value of the equity instrument.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written
down.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions, including estimated pre-tax discount rates based on the current cost of capital
and growth rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each
reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or
value-in-use calculations, which incorporate a number of key estimates and assumptions.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
39
39
Notes to the financial statements 30 June 2019
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining
the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of
business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues
based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from
the carrying amounts, such differences will impact the current & deferred tax provisions in the period in which such
determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into three operating segments: Mobile Content - Q & A (‘Q&A’), Mobile Content - Subscription
(‘Subscription’) and Crowd Media ('Crowd Media'). The Company operates mobile content businesses globally but
predominantly in Europe and Australasia. These operating segments are based on the internal reports that are reviewed and
used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing
performance and in determining the allocation of resources. There is no aggregation of operating segments.
The Q&A operating segment recognises all corporate costs including public company costs, acquisition costs, share based
payments expense and restructure costs.
For operating segment performance, the CODM reviews EBITDA (earnings before interest, tax, depreciation and
amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the
financial statements.
The information reported to the CODM is on at least a monthly basis.
Types of products and services
The principal products and services of each of these operating segments are as follows:
Mobile Content
Q&A
Crowd Mobile proprietary Q&A micro job platform technology that facilitates Q&A
entertainment products via various Direct Carrier Billing, SMS and App product
offerings.
Mobile Content
Subscription
Crowd Mobile subscription based, broad content offering of products such as mobile
security, games and video portals via an m-payments network.
Crowd Media
Crowd Media works with brands and digital influencers to provide social media
marketing, digital influencer advertising and commerce platform and 3rd party affiliate
revenues.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable
that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are
eliminated on consolidation.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
40
40
Notes to the financial statements 30 June 2019
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2019
Revenue
Q&A*
$
Subscription
Crowd Media
$
$
Total
$
Sales to external customers
15,923,286
6,361,291
1,634,199
23,918,776
Interest income
Total revenue
1,991
-
-
1,991
15,925,277
6,361,291
1,634,199
23,920,767
EBITDA
Depreciation and amortisation
Allowance for expected credit losses
Interest income
Finance costs
(3,299,165)
(71,176)
(978,258)
1,991
427,500
(129,612)
(147,338)
-
1,799,374
(2,376,698)
Other non-cash expenses
106,903
-
(1,664,132)
(4,535,797)
(8,340)
(32,889)
-
(5,570)
-
(209,128)
(1,158,485)
1,991
(582,894)
106,903
Loss before income tax benefit
(2,440,331)
(2,226,148)
(1,710,931)
(6,377,410)
Income tax benefit
Loss after income tax benefit
1,581,426
(4,795,984)
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
5,320,341
3,385,513
253,339
8,959,193
8,959,193
5,605,533
1,994,227
411,320
8,011,080
8,011,080
* Q&A segment includes Group Corporate costs
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
41
41
Notes to the financial statements 30 June 2019
Note 4. Operating segments (continued)
Consolidated - 2018
Revenue
Q&A*
$
Subscription
Crowd Media
$
$
Total
$
Sales to external customers
24,736,054
13,323,863
492,430
38,552,347
Other revenue
Interest income
Total revenue
EBITDA
Depreciation and amortisation
Impairment of assets
Finance costs
Other non-cash expenses
5,262
2,655
-
-
-
-
5,262
2,655
25,743,971
13,323,863
492,430
38,560,264
3,021,051
(2,558,683)
2,661,138
(125,663)
(3,522,438)
-
(25,913,717)
(1,528,206)
(382,380)
-
-
3,123,506
(3,648,101)
(25,913,717)
(1,528,206)
(382,380)
-
-
-
-
Profit/(Loss) before income tax benefit
624,889
(26,415,104)
(2,558,683)
(28,348,898)
Income tax benefit
Loss after income tax benefit
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
* Q&A segment includes Group Corporate costs
Geographical information
6,902,832
6,008,038
(9,070,676)
17,326,115
2,307,626
(26,041,272)
12,910,870
12,910,870
8,255,439
8,255,439
-
-
Australasia
Europe
Latin America
Other
Revenue
Geographical non-current assets
2019
$
2018
$
2019
$
2018
$
776,353
4,574,281
20,692,287
31,458,934
1,773,305
676,831
1,936,733
582,399
597,714
369,173
-
-
681,007
531,250
-
-
23,918,776
38,552,347
966,887
1,212,257
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets,
post-employment benefits assets and rights under insurance contracts
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
42
42
Notes to the financial statements 30 June 2019
Note 5. Revenue
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated - 2019
Major product lines
Information
Entertainment and content
Marketing agency
Geographical regions
Australasia
Europe
Latin America
Other
Q&A*
$
Subscription
Crowd Media
$
$
Total
$
15,923,286
-
-
-
6,361,291
-
-
-
1,634,199
15,923,286
6,361,291
1,634,199
15,923,286
6,361,291
1,634,199
23,918,776
534,639
14,131,857
1,251,064
5,726
241,714
5,372,447
522,241
224,889
-
1,187,983
-
446,216
776,353
20,692,287
1,773,305
676,831
15,923,286
6,361,291
1,634,199
23,918,776
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
15,923,286
-
6,361,291
-
-
1,634,199
22,284,577
1,634,199
15,923,286
6,361,291
1,634,199
23,918,776
Disaggregation of revenue disclosure are required by AASB 15. As AASB 15 was adopted using the modified retrospective
approach, comparatives have not been provided.
Note 6. Expenses
Loss before income tax includes the following specific expenses:
Consolidated
2019
$
2018
$
Depreciation
Property, plant and equipment (note 12)
Amortisation
Intangibles (note 13)
Total depreciation and amortisation
Impairment
Impairment of intangibles (note 13)
Allowance for expected credit losses
Total impairment
Finance costs
Interests and finance charges paid
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
192,988
16,140
209,128
-
1,158,485
1,158,485
582,894
407,815
62,263
24,750
219,474
3,428,627
3,648,101
25,380,044
533,673
25,913,717
1,528,206
492,642
110,957
382,380
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
43
43
Notes to the financial statements 30 June 2019
Note 7. Income tax benefit
Income tax benefit
Current tax
Deferred tax - origination and reversal of temporary differences
Consolidated
2019
$
2018
$
(25,761)
(1,555,665)
(38,775)
(2,268,851)
Aggregate income tax benefit
(1,581,426)
(2,307,626)
Deferred tax included in income tax benefit comprises
Decrease/(increase) in deferred tax assets (note 14)
Decrease in deferred tax liabilities
(1,555,665)
-
278,286
(2,547,137)
Deferred tax - origination and reversal of temporary differences
(1,555,665)
(2,268,851)
Numerical reconciliation of income tax benefit and tax at the
statutory rate
Loss before income tax benefit
(6,377,410)
(28,348,898)
Tax at the statutory tax rate of 30%
(1,913,223)
(8,504,669)
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income
Entertainment expenses
Track impairment
Share-based payments
Employee entitlement accruals
Interest expense (JGB Optionality)
Other items (net)
Differences in overseas tax rates
3,331
-
7,425
9,258
9,824
14,621
(1,868,764)
287,338
18,320
7,614,013
114,714
3,620
29,472
(83,530)
(808,060)
(1,499,566)
Income tax benefit
(1,581,426)
(2,307,626)
Amounts charged directly to equity
Deferred tax assets (note 14)
Note 8. Current assets - cash and cash equivalents
Consolidated
2019
$
2018
$
455,714
-
Consolidated
2019
$
2018
$
Cash at Bank
839,462
2,559,776
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
44
44
Notes to the financial statements 30 June 2019
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
(2018: Provision for impairment of receivables)
Aggregate income tax benefit
Other receivables
Interest receivable
Consolidated
2019
$
2018
$
3,903,833
(1,792,223)
2,111,610
811
57,706
2,947,400
(633,742)
2,313,658
1,984
76,663
2,170,127
2,392,305
Allowance for expected credit losses
The Group has recognised a loss of $1,158,485 in profit or loss in respect of the expected credit losses for the year ended
30 June 2019.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated - 2019
Not overdue
0 to 3 months overdue
3 to 6 months overdue
6 to 9 months overdue
Over 9 months overdue
Expected credit loss rate
Carrying amount
Allowance for expected
credit losses
2019
%
2019
$
2019
$
5%
13%
69%
91%
100%
1,606,562
565,988
73,428
727,263
930,592
3,903,833
75,578
73,578
50,665
661,810
930,592
1,792,223
Past due but not impaired
The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and
impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled, with the terms
and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past
due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specific
circumstances indicating that the debt may not be fully repaid to the Group. The balances of receivables that remain within
initial trade terms (as detailed in the table) are considered to be of high credit quality.
Consolidated
2018
Within initial
trade terms
<30 days
overdue
30-60 days
overdue
>60 days
overdue
Past due and
impaired
$
$
$
$
$
Total
$
Trade receivables
Accrued income
Other receivables
Interest receivables
1,597,948
5,427,467
1,984
76,663
293,686
-
-
-
114,371
-
-
-
307,653
-
-
-
633,742
-
-
-
2,947,400
5,427,467
1,984
76,663
7,104,062
293,686
114,371
307,653
633,742
8,453,514
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
45
45
Notes to the financial statements 30 June 2019
Note 10. Current assets - accrued income
Accrued income
2,752,300
5,427,467
AASB 15 uses the term ‘contract assets’ and ‘contract liabilities’ to maintain consistency in presentation with prior periods,
the Group has retained the use of ‘accrued income’ and ‘deferred revenue’, respectively.
Consolidated
2019
$
2018
$
Note 11. Current assets - other
Prepayments
Security deposits
Other deposits
Note 12. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: accumulated depreciation
Consolidated
2019
$
2018
$
241,327
8,098
66,999
316,424
419,336
50,403
25,410
495,149
Consolidated
2019
$
2018
$
983,954
(631,062)
352,892
1,408,846
(910,478)
498,368
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Plant and equipment
$
400,397
342,163
(24,718)
(219,474)
498,368
14,352
(6,505)
39,665
(192,988)
352,892
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
46
46
Notes to the financial statements 30 June 2019
Note 13. Non-current assets - intangibles
Goodwill after impairment
317,214
317,214
Consolidated
2019
$
2018
$
Intellectual property
Less: Accumulated amortisation
Distribution network - at cost
Less: Accumulated amortisation
Less: Impairment
Software - at cost
Less: Accumulated amortisation
Less: Impairment
Databases - at cost
Less: Accumulated amortisation
Website and other intangibles - at cost
Less: Accumulated amortisation
2,714,980
(2,616,054)
2,714,828
(2,614,786)
98,926
100,042
13,600,006
(8,191,809)
(5,408,197)
13,206,293
(7,948,401)
(5,251,603)
-
6,289
3,085,181
(969,293)
(2,114,833)
3,014,833
(955,515)
(2,053,598)
1,055
5,720
621,900
(456,899)
165,001
36,892
(5,094)
31,798
621,900
(456,899)
165,001
120,864
(1,242)
119,622
613,994
713,888
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
47
47
Notes to the financial statements 30 June 2019
Note 13. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Goodwill
Intellectual
property
Distribution
network
Software
Databases
Website and
other
intangibles
$
$
$
$
$
$
Balance: 1/07/2017
Additions
Disposals
Exchange differences
Impairment of assets
Amortisation expense
Balance: 30/06/2018
Additions
Disposals
Exchange differences
Amortisation expense
17,538,217
-
-
853,840
(18,074,843)
-
317,214
-
-
-
-
46,759
55,380
-
(2,097)
-
-
100,042
-
-
99
(1,215)
8,405,717
-
-
259,452
(5,251,603)
(3,407,277)
1,958,467
-
(25,245)
120,901
(2,053,598)
5,195
6,289
-
-
154
(6,443)
5,720
-
-
-
(4,665)
190,304
-
-
-
-
(25,303)
165,001
-
-
-
-
-
120,864
-
-
-
(1,242)
119,622
51,826
(137,904)
2,071
(3,817)
Total
$
28,139,464
176,244
(25,245)
1,232,096
(25,380,044)
(3,428,627)
713,888
51,826
(137,904)
2,324
(16,140)
Balance: 30/06/2019
317,214
98,926
-
1,055
165,001
31,798
613,994
Goodwill acquired through business combinations is allocated to cash generating units, as follows:
Cash generating unit
Q&A
Bongo IP Ltd
Global AQA IP Pty Ltd
Buddy IP Pty Ltd
Consolidated
2019
$
2018
$
230,774
64,393
22,047
317,214
230,774
64,393
22,047
317,214
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
48
48
Notes to the financial statements 30 June 2019
Note 14. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Tax losses
Employee benefits
Transaction fees (blackhole expenditure)
Provisions
Other
Amounts recognised in equity:
Foreign exchange revaluation
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss (note 7)
Charged to equity (note 7)
Closing balance
Note 15. Current liabilities - trade and other payables
Trade payables
Accrued expenses and other payables
Refer to note 25 for further information on financial instruments.
Note 16. Current liabilities - deferred revenue
Consolidated
2019
$
2018
$
1,326,003
8,979
341,521
352,015
7,115
2,035,633
(455,714)
1,579,919
479,968
1,555,665
(455,714)
1,579,919
-
11,791
455,637
-
12,540
479,968
-
479,968
758,254
(278,286)
-
479,968
Consolidated
2019
$
2018
$
1,921,970
2,171,442
4,093,412
2,568,426
2,211,966
4,780,392
Consolidated
2019
$
2018
$
Deferred revenue
176,345
105,101
AASB 15 uses the term ‘contract assets’ and ‘contract liabilities’. To maintain consistency in presentation with prior periods,
the Group has retained the use of ‘accrued income’ and ‘deferred revenue’, respectively.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
49
49
Notes to the financial statements 30 June 2019
Note 17. Current liabilities - borrowings
Consolidated
2019
$
2018
$
Convertible notes payable - JGB
-
3,287,542
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
●
●
●
The JGB convertible note balance was paid in full upon refinancing with BillFront on 12 April 2019
Refer to note 19 for further information on assets pledged as security.
Refer to note 25 for further information on financial instruments
Note 18. Current liabilities - employee benefits
Consolidated
Employee benefits
Note 19. Non-current liabilities - borrowings
Consolidated
Loans payable - NTH Mobile Limited
Loans payable - BillFront
Convertible notes payable - Obsidian
2019
$
2019
$
2018
$
46,098
82,404
2018
$
-
-
-
-
418,397
2,169,032
404,420
2,991,849
Refer to note 25 for further information on financial instruments
Loans payable – NTH Mobile Limited
The NTH Mobile Limited balance date debt is EUR€261,500. The principal balance and interest, payable at a fixed annual
rate of 3.99%, is due upon maturity at 25 September 2020.
Loans payable – BillFront
The BillFront note balance date debt is EUR€1,339,835. The note is a two-year revolving credit facility with a maximum
aggregate outstanding amount of EUR€1,750,000. It is senior secured against all of the Company's assets, including
receivables. The effective annual interest rate is 11.3% and the maturity date is 12 April 2021.
Convertible notes payable – Obsidian
On 6 June 2019, the Company entered into a Convertible Securities Agreement with Obsidian Global Partners, LLC
('Obsidian'), pursuant to which Obsidian may invest up to AUD$1,500,000 in cash across two tranches in return for
convertible notes in the Company. The first tranche was executed on 12 June 2019, pursuant to which the Company raised
AUD$750,000 (less associated fees and costs) and issued 5,259 convertible notes with a face value of USD$120 each. On
28 June 2019, Obsidian converted 500 notes to shares. As the transaction did not meet the fixed-for-fixed test, the
conversion option is recorded as a derivative liability and measured at fair value (refer note 20).
The second tranche, in which Obsidian may invest a further AUD$750,000 in the Company, is intended to occur no earlier
than 90 days after the date of the first tranche (12 June 2019) and is subject to the Company satisfying certain conditions,
including obtaining approval of its shareholders.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Consolidated
Loans payable - NTH Mobile Limited
Loans payable - BillFront
Convertible notes payable - JGB
Convertible notes payable - Obsidian
2019
$
2018
$
418,397
2,169,032
-
404,420
2,991,849
-
-
3,287,542
-
3,287,542
50
50
Notes to the financial statements 30 June 2019
Note 20. Non-current liabilities - derivative financial instruments
Consolidated
2019
$
2018
$
Convertible notes derivative liability
152,467
-
●
●
Refer to note 25 for further information on financial instruments.
Refer to note 26 for further information on fair value measurement.
Note 21. Equity - issued capital
Consolidated
2019
Shares
2018
Shares
2019
$
2018
$
Ordinary shares - fully paid
241,265,666
222,074,251
28,720,072
28,167,383
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Issue of shares on exercise of performance rights
Issue of shares
Share buy-back
1 Jul 2017
15 Sep 2017
5 Dec 2017
7 Jun 2018
219,683,699
2,912,844
769,230
(1,291,522)
Balance
Issue of shares
Issue of shares in satisfaction of commitment fees for
new issue of convertible notes
Issue of shares on conversion of convertible notes
30 Jun 2018
12 Dec 2018
12 Jun 2019
28 Jun 2019
222,074,251
11,288,179
1,681,614
6,221,622
28,165,539
-
100,000
(98,156)
28,167,383
428,957
37,500
86,232
$0.130
$0.076
$0.038
$0.014
Balance
30 Jun 2019
241,265,666
28,720,072
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
On 20 Apr 2018, the Company announced a buy-back of ordinary shares for holders of less than marketable parcels of
shares in the Company. A total of 1,291,522 were sold at a price of 7.6 cent per share, being the Volume Weighted Average
Price for the 5 days on which shares were traded between 11 Apr 2018 and 19 Apr 2018. The proceeds were distributed to
the shareholders who participated in the Buy-Back before 20 June 2018. These shares were cancelled once transferred to
the Company.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders &benefits for other stakeholders & to maintain an optimum capital structure to reduce the cost of
capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as
total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment. The Group will pursue additional investments
however in the short term the focus is to integrate and grow its existing businesses in order to maximise synergies.
The Group is subject to certain financing arrangement covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 2018 Annual Report.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
51
51
Notes to the financial statements 30 June 2019
Note 22. Equity - reserves
Consolidated
Foreign currency reserve
Share-based payments reserve
Convertible note optionality reserve
2019
$
2018
$
249,274
4,813,399
-
5,062,673
(261,953)
4,788,649
212,851
4,739,547
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Convertible note optionality reserve
The reserve is used to recognise the value of the optionality component of the convertible note over the life of the facility.
Note 23. Equity - accumulated losses
Consolidated
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Transfer from convertible note optionality reserve
2019
$
2018
$
(28,251,499)
(4,795,984)
212,851
(2,210,227)
(26,041,272)
-
Accumulated losses at the end of the financial year
(32,834,632)
(28,251,499)
Note 24. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 25. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest
rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Due to our
smaller size and less complex business and including the natural revenue and expense cash flow hedges in the Australian and
European operations, whilst we maintain an active dialogue with foreign exchange providers, as yet the Group, to date, has
not required the use of derivative financial instruments such as forward foreign exchange contracts to hedge risk. This may
change in the future as our operations and related treasury needs develop. The Group uses different methods to measure
different types of risk to which it is exposed. These methods may include sensitivity analysis in the case of interest rate, foreign
exchange and other price risks, as well as ageing analysis for credit risk.
Risk management is carried out between the CEO and key management personnel under policies approved by the Board of
Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate
procedures, controls and risk limits. The CEO and CFO identify, evaluate and hedge financial risks within the Group's
operating units (where appropriate) and report to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash
flow forecasting.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
52
52
Notes to the financial statements 30 June 2019
Note 25. Financial instruments (continued)
The average exchange rates and reporting date exchange rates applied were as follows:
Consolidated
Australian dollars
United Kingdom Sterling
European Union Euros
United States Dollars
Hungarian Forint
Average exchange rates
Reporting date exchange rates
2019
2018
2019
2018
0.5525
0.6268
0.7151
201.6197
0.5760
0.6500
0.7760
202.6040
0.5522
0.6172
0.7015
199.0528
0.5610
0.6330
0.7400
280.5860
The carrying amount of the Group’s foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
Consolidated
Australian dollars
Euros
Pound Sterling
United States Dollar
Mexican Peso
Turkish Lira
South African Rand
Hungarian Forint
Other
Sensitivity analysis
Assets
2019
$
928,775
3,221,842
452,159
977,641
337,803
393,953
364,892
96,285
722,246
2018
$
2,414,189
5,346,757
833,453
1,091,473
411,624
238,209
553
294,517
303,868
Liabilities
2019
$
1,367,561
5,259,549
97,501
353,877
74,984
33,010
4,777
-
563,287
2018
$
578,070
5,639,503
130,039
631,248
-
-
-
-
4,684
7,495,596
10,934,643
7,754,546
6,983,544
Consolidated - 2019
%
change
Effect on profit
Effect on
equity
%
change
Effect on profit
Effect on
equity
AUD strengthened
AUD weakened Effect on profit
United Kingdom Sterling
European Union Euros
Other currencies
5%
5%
5%
114,831
(62,617)
221,565
114,831
(62,617)
221,565
(5%)
(5%)
(5%)
(114,831)
62,617
(221,565)
(114,831)
62,617
(221,565)
273,779
273,779
(273,779)
(273,779)
Consolidated - 2018
%
change
Effect on profit
Effect on
equity
%
change
Effect on profit
Effect on
equity
AUD strengthened
AUD weakened Effect on profit
United Kingdom Sterling
European Union Euros
Other currencies
5%
5%
5%
95,027
(1,175,952)
17,521
95,027
(1,175,952)
17,521
(5%)
(5%)
(5%)
(95,027)
1,175,952
(17,521)
(95,027)
1,175,952
(17,521)
(1,063,404)
(1,063,404)
1,063,404
1,063,404
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
53
53
Notes to the financial statements 30 June 2019
Note 25. Financial instruments (continued)
The analysis above has been carried out on the following basis:
●
●
Management’s estimate of what is reasonably possible for changes in exchange rates (i.e. 5%) for the financial year.
Hedged transactions were not taken into consideration. It is reasonable to expect that fluctuations on the value of
hedged items are almost fully offset by hedging instruments.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's main interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group to interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The policy is to maintain
borrowings at fixed rates and to monitor fair value interest rate risk in Australia and Europe to ensure borrowings remain
competitively priced. If deemed necessary, the Group may seek to utilise interest rate swaps or re-financing to achieve this
when necessary.
As at the reporting date, the Group had the following borrowings:
Consolidated
Loans payable - BillFront
Loans payable - NTH
Convertible notes payable - Obsidian
Convertible notes payable - JGB
Net exposure to cash flow interest
rate risk
2019
2018
Weighted average
interest rate
%
Balance
$
Weighted average
interest rate
%
11.25%
3.99%
-
-
2,169,032
418,397
404,420
-
2,991,849
-
-
-
15.00%
Balance
$
-
-
-
3,287,542
3,287,542
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. To date, the significant portion of credit risk relates to the telecommunications aggregator companies from which the
Group receives its cash flows after 7 to 180 days post month end. The Group tries to ensure that it transacts with the largest
aggregator companies available in the various countries in which it conducts business and makes regular industry reference
checks and sets credit limits to mitigate credit risk. If a risk concentration is deemed too great in a particular country then the
Group seeks to utilise multiple aggregators.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. 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.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the
failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments
for a period greater than 1 year.
The Group has no significant credit risk at 30 June 2019 or 30 June 2018.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
54
54
Notes to the financial statements 30 June 2019
Note 25. Financial instruments (continued)
Consolidated
2019
Weighted
average
interest rate
1 year or
less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Non-derivatives
Non-interest bearing
Trade payables
Accrued expenses and other payables
Interest-bearing - variable
Loans payable - BillFront
Interest-bearing - fixed rate
Convertible notes payable
Loans payable - NTH Mobile Limited
%
-
-
$
1,921,970
2,171,442
$
-
-
11.30%
160,780
2,289,617
-
3.99%
-
-
404,420
443,095
Total non-derivatives
4,254,192
3,137,132
Derivatives
Convertible note derivative liability
Total derivatives
-
-
-
-
152,467
152,467
$
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
Consolidated
2018
Weighted
average
interest rate
1 year or
less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Non-derivatives
Non-interest bearing
Trade payables
Accrued expenses and other payables
Interest-bearing - fixed rate
Convertible notes payable
%
-
-
$
2,568,426
2,317,067
15.00%
3,287,542
Total non-derivatives
8,173,035
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
Remaining
contractual
maturities
$
1,921,970
2,171,442
2,450,397
404,420
443,095
7,391,324
152,467
152,467
Remaining
contractual
maturities
$
2,568,426
2,317,067
3,287,542
8,173,035
The cash flows in the maturity analysis above are not expected to occur significantly earlier that contractually disclosed
above.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
55
55
Notes to the financial statements 30 June 2019
Note 26. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated
2019
Liabilities
Loans payable
Convertible notes payable
Convertible notes derivative liability
Total Liabilities
Consolidated
2018
Liabilities
Convertible notes payable
Total Liabilities
Level 1
$
Level 2
$
Level 3
$
Level 4
$
-
-
-
-
-
-
-
-
2,587,429
404,420
152,467
2,587,429
404,420
152,467
3,144,316
3,144,316
Level 1
$
Level 2
$
Level 3
$
Level 4
$
-
-
-
-
3,287,542
3,287,542
3,287,542
3,287,542
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities. The discount rate used is 23%.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Unquoted investments have been valued using a discounted cash flow model.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Disposals
Balance at 30 June 2018
Additions
Refinanced
Loans payable
NTH Mobile
Limited
Loans payable
BillFront
$
-
-
-
$
-
-
-
Convertible
notes
JGB
$
7,923,847
(4,636,305)
3,287,542
Convertible
notes
Obsidian
$
-
-
-
418,397
2,169,032
-
404,420
Total
$
7,923,847
(4,636,305)
3,287,542
2,991,849
-
-
(3,287,542)
-
(3,287,542)
Balance at 30 June 2019
418,397
2,169,032
-
404,420
2,991,849
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
56
56
Notes to the financial statements 30 June 2019
Note 27. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Consolidated
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2019
$
2018
$
1,645,079
19,410
-
-
1,664,489
1,699,809
52,169
153,765
259,590
2,165,333
Detailed remuneration disclosures can be found in the remuneration report and equity interests in the directors’ report.
Note 28. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor
of the Company, and its network firms:
Consolidated
Audit services - RSM Australia Partners
Audit or review of the financial statements
Audit services - RSM Netherlands
Audit or review of the financial statements
Note 29. Commitments
Consolidated
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable
Within one year
One to five years
2019
$
2018
$
149,600
107,000
-
82,720
2019
$
2018
$
416,977
332,166
749,143
334,720
494,751
829,471
Operating lease commitments includes contracted amounts for various offices and plant and equipment under
non-cancellable operating leases. The leases have various escalation clauses. On renewal, the terms of the leases are
renegotiated.
The Group had no finance lease commitments at 30 June 2019 or 30 June 2018.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
57
57
Notes to the financial statements 30 June 2019
Note 30. Related party transactions
Parent entity
Crowd Media Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in note 27 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
Payment for services
Boardroom Pty Limited (Director S. Karzis is the General Manager of Corporate Counsel Pty
Ltd, a subsidiary of Boardroom) provided professional registry and corporate secretarial
services to Crowd Media Holdings Limited
Mish Guru Limited (Director D. Carosa is a 0.25% shareholder) provided marketing services to
Crowd Media Holdings Limited subsidiaries
Wholesale Investor Pty Ltd (Director D. Carosa is a 7.77% shareholder) provided investor
promotions services to Crowd Media Holdings Limited
Other expense transactions
Compensation paid to Sophie Karzis, Company Secretary and legal counsel, via monies paid
to her company Corporate Counsel Pty Ltd
Other (payment)/receipt transactions
Dominet Digital Corporation Pty Ltd (a Carosa vendor) paid Crowd Media Holdings Ltd for
office space rented, at cost, which was partially offset by payments made to Dominet for
virtual PA services and mobile phone reimbursement, at cost.
Global Internet Ventures Pty Ltd (Director D. Carosa is a 25% shareholder) paid Crowd Media
Holdings Ltd for office space rented, at cost.
Kindy Now Pty Ltd (Director D. Carosa is a 7.78% shareholder) paid Crowd Media Holdings
Ltd for office space rented, at cost.
2019
$
2018
$
115,571
82,630
35,335
61,986
4,750
9,750
60,949
94,597
20,490`
(5,931)
84,721
30,807
-
-
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
Current receivables
Global Internet Ventures Pty Ltd (Director D. Carosa is a 25% shareholder) paid Crowd Media
Holdings Ltd for office space rented, at cost.
Kindy Now Pty Ltd (Director D. Carosa is a 7.78% shareholder) paid Crowd Media Holdings
Ltd for office space rented, at cost.
Current payables
Payable to Sophie Karzis, Company Secretary and legal counsel, for director fees via her
company Corporate Counsel Pty Ltd
Payable to Boardroom Pty Limited for professional registry and corporate secretarial services
to Crowd Media Holdings Limited
Mish Guru Limited (Director D. Carosa is a 0.25% shareholder) provided marketing services to
Crowd Media Holdings Limited subsidiaries
Dominet Digital Corporation Pty Ltd (a Carosa vendor) paid Crowd Media Holdings Ltd for
office space rented, at cost, which was partially offset by payments made to Dominet for
virtual PA services and mobile phone reimbursement, at cost.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
2019
$
2018
$
24,984
4,550
-
-
31,474
4,950
19,610
23,386
5,759
1,956
-
-
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
58
58
Notes to the financial statements 30 June 2019
Note 31. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Parent
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issue capital
Foreign currency reserve
Share-based payments reserve
Convertible note optionality reserve
Accumulated losses
2019
$
10,066
10,066
2018
$
(25,546,768)
(25,546,768)
2019
$
2018
$
13,832,362
19,925,348
29,814,047
25,358,156
21,026,036
20,946,901
23,751,955
20,946,901
87,956,338
1,063,333
5,069,128
-
(88,026,707)
87,403,650
-
5,044,378
212,851
(88,249,624)
Total equity
6,062,092
4,411,255
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.
Contingent liabilities
The parent entity has no contingent liabilities at 30 June 2019 or 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
59
59
Notes to the financial statements 30 June 2019
Note 32. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Principal place of
business / Country of
incorporation
Ownership interest
2019
%
2018
%
Name
Bongo Operations Pty Ltd
Bongo IP Pty Ltd
Global AQA Pty Ltd *
Global AQA IP Pty Ltd
Buddy Operations Pty Ltd
Buddy IP Pty Ltd
Crowd Mobile IP Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Crowd Media Holdings Pty Ltd (formerly Crowd Mobile Australia Pty Ltd)
Australia
Bongo Europe Pty Ltd
Digital Global Marketing Pty Ltd
Crowd Mobile EU Kft
Crowd Media (Global) UK Ltd (formerly Crowd Butler UK Ltd)
Crowd Mobile Co-Operatif U.A. *
Crowd Mobile QA Services B.V.
Track Holdings B.V.
Track Online B.V.
Track Concepts B.V.
Be Tracked Media B.V.
Vivazz Mobile B.V.
Track Mobile B.V.
Immediato B.V.
Mobilizo B.V.
Yulara B.V.
Crowd Mobile QA Operations B.V.
Crowd Mobile IP B.V.
Crowd Media B.V.
Q Share Plan Pty Limited
Inala QA B.V.
Australia
Australia
Europe
United Kingdom
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
The Netherlands
Australia
The Netherlands
* Global AQA Pty Ltd owns 1% of Crowd Mobile Co-Operatif U.A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
60
60
Notes to the financial statements 30 June 2019
Note 33. Cash flow information
Reconciliation of loss after income tax to net cash from/(used in) operating activities
Consolidated
Loss after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangibles
Net loss on disposal of intangibles
Share-based payments
Non-cash interest on loans
Transfers - non-cash
Convertible note share issues - non-cash
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease in accrued income
Decrease/(increase) in income tax refund due
Decrease/(increase) in deferred tax assets
Decrease/(increase) in prepayments
Increase in other operating assets
Increase/(decrease) in trade and other payables
Increase in deferred revenue
Increase in derivative liabilities
Decrease in provision for income tax
Decrease in deferred tax liabilities
Decrease in employee benefits
Increase in other provisions
Net cash from/(used in) operating activities
2019
$
2018
$
(4,795,984)
(26,041,272)
209, 128
-
-
24,750
-
-
123,732
222,178
2,675,167
9,874
(1,099,951)
178,009
(41,589)
(686,980)
71,244
152,467
-
-
(36,306)
550,909
(2,443,352)
3,648,101
25,380,044
25,245
382,380
(564,625)
(141,337)
-
3,386,858
-
(343,949)
278,286
(62,007)
(25,410)
63,500
-
-
(786,757)
(2,547,137)
(12,705)
-
2,639,215
Changes in liabilities arising from financing activities
Consolidated
Loans payable
NTH Mobile
Limited
Loans payable
BillFront
Convertible
notes
JGB
Convertible
notes
Obsidian
Balance at 1 July 2017
Net cash used in financing
activities
Balance at 30 June 2018
Net cash from/(used in)
financing activities
$
-
-
-
$
-
-
-
$
7,923,847
(4,636,305)
3,287,542
$
-
-
-
418,397
2,169,032
(3,287,542)
404,420
Balance at 30 June 2019
418,397
2,169,032
-
404,420
Note 34. Earnings per share
Consolidated
Loan
Other
$
Total
$
27,696
(27,696)
7,951,543
(4,664,001)
-
-
-
3,287,542
(295,693)
2,991,849
2019
$
2018
$
Loss after income tax attributable to the owners of Crowd Media Holdings Limited
(4,795,984)
(26,041,272)
Weighted average number of ordinary shares used in calculating basic earnings per share
228,411,790
222,336,199
Weighted average number of ordinary shares used in calculating diluted earnings per share
228,411,790
222,336,199
Number
Basic earnings per share
Diluted earnings per share
Cents
(2.10)
(2.10)
(11.71)
(11.71)
Options and performance rights have been excluded from the above calculation in the current and previous year as their
inclusion would be anti-dilutive.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
61
61
Notes to the financial statements 30 June 2019
Note 35. Share-based payments
As part of the debt refinancing plan in the current year, options were issued to entities associated with JGB (Cayman) Newton
Ltd ('JGB'). The options are unlisted with an exercise price of $0.05 cents and a 3-year term.
Set out below are summaries of options granted:
2019
Grant date
Expiry date
Exercise price
02/04/2019
02/04/2022
$0.050
Balance at the
start of the
year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
2,000,000
2,000,000
-
-
-
-
2,000,000
2,000,000
Other options
Set out below are summaries of additional options issued to the vendors of Track Holdings B.V. (‘Track’) as partial
consideration for the sale of Track to the Company, and to suppliers for capital raising and investor relations services rendered
during the reporting period, outside of the ESOP:
2019
Grant date
Expiry date
Exercise price
29/08/2016
01/11/2021
30/06/2017
09/06/2020
$0.300
$0.250
All options lapsed during the year.
2018
Grant date
Expiry date
Exercise price
29/08/2016
01/11/2021
30/06/2017
09/06/2020
$0.300
$0.250
Balance at the
start of the
year
5,000,000
1,000,000
6,000,000
Balance at the
start of the
year
5,000,000
1,000,000
6,000,000
Granted
Exercised
-
-
-
Granted
Exercised
-
-
-
-
-
-
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
(5,000,000)
(1,000,000)
(6,000,000)
-
-
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
5,000,000
1,000,000
6,000,000
Performance rights
On 17 December 2014, shareholders approved a Performance Rights Plan ('PR Plan'). Under the PR Plan, selected
employees and Directors may be granted performance rights which will entitle them to receive ordinary shares in the
Company, subject to the Company meeting performance objectives.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
62
62
Notes to the financial statements 30 June 2019
Note 35. Share-based payments (continued)
Set out below are summaries of performance rights granted under the plan:
2019
Grant date
Expiry date
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
16/01/2015
11/05/2015
10/07/2015
24/07/2015
02/12/2015
13/04/2016
15/08/2016
15/09/2017
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
2,500,000
1,500,000
325,000
500,000
16,667
479,161
500,000
2,912,844
8,733,672
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,500,000)
(1,500,000)
(325,000)
(500,000)
(16,667)
(479,161)
(500,000)
(2,912,844)
(8,733,672)
-
-
-
-
-
-
-
-
-
2018
Grant date
Expiry date
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
16/01/2015
11/05/2015
10/07/2015
24/07/2015
02/12/2015
13/04/2016
05/08/2016
14/07/2017
15/09/2017
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
30/11/2018
2,500,000
1,500,000
325,000
500,000
16,667
479,161
500,000
-
-
-
-
-
-
-
-
-
6,000,000
3,250,000
-
-
-
-
-
-
-
-
(337,156)
-
-
-
-
-
-
-
(6,000,000)
-
2,500,000
1,500,000
325,000
500,000
16,667
479,161
500,000
-
2,912,844
5,820,828
9,250,000
(337,156)
(6,000,000)
8,733,672
Valuation model inputs
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price at
grant date
Exercise price
Expected
volatility
Dividend yield
Risk-free
interest rate
Fair value at
grant date
02/04/2019
02/04/2022
$0.012
$0.050
81.30%
-
1.00%
$0.0015
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
63
63
Notes to the financial statements 30 June 2019
Note 36. Events after the reporting period
On 31 July 2019, the Company agreed to issue Performance Rights ('PRs') to employees. The PRs are based on share price
targets and the maximum number of shares that can be issued on conversion is 5,500,000 at two years and 5,500,000 at
three years.
On 31 July 2019, the Company agreed not to proceed with the PRs previously agreed to be issued on 25 July 2018. The
three year PRs were based on share price and earnings per share targets and the maximum number of shares that could be
issued on conversion was 6,000,000.
On 29 August 2019, the Company executed a binding Heads of Agreement ('HOA') with an alliance of strategic investors,
collectively the Invincible Investment Consortium ('IIC'), to fund existing Company requirements, as well as develop new
business synergies and joint ventures between Crowd Media and businesses that the IIC can introduce and facilitate. These
would leverage Crowd Media’s well-established technology and digital marketing platforms. Under the agreement, Crowd
Media will issue IIC (and/or their nominees) with convertible notes with a face value of up to $3,700,000 on the following key
terms:
●
●
Tranche 1: $1,700,000 20 month facility with a fixed conversion price of 1.8 cents, of which $1,600,000 has been
received as at 19 September 2019: and
Tranche 2: $2,000,000 24-month facility, to be drawn down in 90 days with a fixed conversion price of 2.0 cents,
subject to the parties agreeing to a business plan which focuses on strategic collaboration objectives.
As part of the investment and collaboration under the agreement, IIC principals Steven Schapera and Robert Quandt will be
joining the Crowd Media Board of Directors in September 2019. Crowd Media’s current Chairman, Theo Hnarakis, will be
retiring from the Board to pursue other opportunities, and Steven Schapera will replace him as new Chairman.
Experience and Expertise of Steven Schapera- Steven is London-based; he co-founded the successful BECCA Cosmetic
brand and, as global CEO, commercialised it into a range of cosmetic products that are distributed throughout Europe, Asia
and North America. Steven guided BECCA, from its infancy through to being a global player in the international luxury
cosmetic space, before exiting the business to Estee Lauder for AUD$300 million. Steven holds a number of Board positions,
including non-exec director of ASX listed OBJ Limited, and has investments in the health, beauty, wellness and tech spaces.
Experience and Expertise of Robert Quandt- Robert worked for 10 years as a consultant for Booz & Company serving large
corporate clients on strategy, operation and organisation. Subsequently, Robert has worked for Linde AG as the strategy lead
for their EUR 6bn Americas business. Until recently, he has served as Board Director and COO/CFO of Invincible Brands.
Invincible Brands is a Berlin-based Influencer led brand builder. Working alongside the co-founders, Robert has helped to
grow this highly profitable business from EUR 7m revenue in 2016 to around €100m in 2019.
As part of the incoming investment by IIC, current CEO Domenic Carosa has agreed to reduce his remuneration package,
beginning 1 September 2019 to EUR 240,000 per annum with an agreed 3-month notice period.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
64
64
Directors’ declaration 30 June 2019
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Theo Hnarakis
Chairman
19 September 2019
Melbourne
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
65
65
INDEPENDENT AUDITOR’S REPORT
To the Members of Crowd Media Holdings Limited
Opinion
We have audited the financial report of Crowd Media Holdings Limited (the Company) and its subsidiaries (the
Group), which comprises the statement of financial position as at 30 June 2019, the statement of profit or loss
and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year
then ended, and notes to the 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 Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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.
66
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.
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue and Accrued Revenue
Refer to Note 5 in the financial statements
The Group’s revenue relates
the sale of
information and entertainment content services for
mobile phones and tablets, and marketing agency
services.
to
Total revenue for the year ended 30 June 2019 was
$23.9m and accrued revenue of $2.7m, which is
material to the financial statements. We have
considered the recognition of revenue due to its size
and magnitude in the financial statements.
The nature and timing of recognition of accrued
revenue at year-end
involves management
judgement and is complex.
We have considered the recognition of revenue and
the associated accrued revenue as a key audit
matter because of the reasons above.
Going Concern
Refer to Note 2 in the financial statements
We identified going concern as a Key Audit Matter
due to Group’s has negative operating cash flows of
$2.4m and loss before income tax of $6.4m for the
year ending 30 June 2019.
Our key audit procedures in relation to the recognition
of revenue included:
• Obtaining a detailed understanding of
the
processes and internal controls associated with
the capture and recording of revenue;
• Assessing whether
revenue
recognition policies were in compliance with
AASB 15 Revenue
from Contracts with
Customers;
the Group’s
• On a sample basis, vouching to supporting
contracts and third-party report of sales data to
revenue recognised;
• Comparing accrued revenue to subsequent third-
party reports and funds receipted; and
• Checking the accuracy of valuation of foreign
currency transactions recorded.
In assessing the appropriateness of the going
concern assumption used in preparing the financial
statements, our procedures included:
Management have performed an assessment of its
ability to continue as a going concern. This included
the preparation of the cashflow forecast for twelve
months which required significant judgement and
assumptions.
• Reviewing the current financial position of the
Group and assessing a number of key ratios;
• Sighting bank statements from August and
September 2019 showing the receipt of $1.6
million of the $1.7 million from Tranche 1 of the
convertible note facility;
to year-end,
Subsequent
the Group obtained
additional funding in the form of a convertible note
facility to cover operating costs over the next 12
months. This amount was incorporated into the
forecast prepared.
• Reviewing management’s
the
twelve months from the date of signing of the
financial statements, including assessing and
challenging the assumptions used.
forecasts
for
67
Key Audit Matters (Continued.)
AASB 9 - Expected Credit Losses
Refer to Note 9 in the financial statements
The Group adopted AASB 9 Financial Instruments
on 1 July 2018. This standard supersedes the
requirements of AASB 139 Financial Instruments -
Recognition and Measurement.
financial statements
Management has determined that there will not be
a material impact of the new standard on the
Group’s
the
calculation of the allowance for impairment of
accounts receivables using an expected credit loss
(“ECL”) model. We considered this a key audit
matter due to the judgements and estimates
involved in the application of the expected credit
loss model.
relates
to
As at 30 June 2019, the carrying value of accounts
receivables amounted to $3.9 million (2018: $2.9
million), and the allowance for impairment of
accounts receivables amounted to $1.8m million
(2018: $0.6 million).
to determine
the allowance
The Group's management has applied a simplified
ECL model
for
impairment of trade receivables. The ECL model
involves the use of various assumptions, macro-
economic factors and study of historical trends
relating to the Group's history of a collection of
trade receivables.
Our audit procedures included the following:
• Assessing the valuation methodology used;
• Verifying whether the ECL model developed by
management is consistent with the requirements
of AASB 9;
• Testing
the accuracy and completeness of
underlying data used in the model and the
arithmetical accuracy of the computation of ECL;
and
• Testing key assumptions and judgments, such as
those used to calculate the likelihood of default
and loss on default by comparing to historical
data, as well as the appropriateness of forward-
looking factors (macroeconomic factors) used to
determine ECL’s.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2019 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
68
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description
forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Crowd Media Holdings Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
J S CROALL
Partner
Dated: 19 September 2019
Melbourne, VIC
69
Shareholder information 30 June 2019
In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not elsewhere
disclosed in this Annual Report. The information provided is current as at 9 August 2019 ('Reporting Date').
Corporate Governance Statement
The Company’s Directors and management are committed to conducting the Group’s business in an ethical manner and in
accordance with the highest standards of corporate governance. The Company has adopted and substantially complies with
the ASX Corporate Governance Principles and Recommendations (Third Edition) ('Recommendations') to the extent
appropriate to the size and nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were in operation
throughout the financial year for the Company, identifies any Recommendations that have not been followed, and provides
reasons for not following such Recommendations ('Corporate Governance Statement').
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will be available for review on
Crowd Media’s website, https://investor.crowdmobile.com/corporate_governance.html#investor (Website), and will be lodged
together with an Appendix 4G with ASX at the same time that this Annual Report is lodged with ASX.
The Appendix 4G will particularise each Recommendation that needs to be reported against by Crowd Mobile and will provide
shareholders with information as to where relevant governance disclosures can be found.
The Company’s corporate governance policies and charters are all available on Crowd Media Holdings Limited’s Website.
Substantial shareholders
Number held
No.
Percentage of total shares
on issue
%
Domenic Carosa
DSAH Holdings Pty Ltd, Daniel Wallis
24,742,968
18,484,045
9.93%
7.42%
Distribution of equity securities
As at the Reporting Date, the number of holders in each class of equity securities:
Fully paid ordinary shares
Options exercisable at $0.05 each on or before 2 April 2022
Convertible Notes
Distribution of ordinary shareholders
Holding ranges
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Number of holders
No.
1,552
3
1
Holders
No.
Total units
No.
Total Shares
%
73
71
236
843
329
4,102
248,546
2,122,378
34,646,052
212,226,332
0.002%
0.100%
0.851%
13.900%
85.147%
1,552
249,247,410
100.000%
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
70
70
Shareholder information 30 June 2019
Distribution of option holders
Holding ranges
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Distribution of convertible notes
Holding ranges
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holders of $0.05 options expiring 2 Apr 2022
-
-
-
-
3
3
Holders of convertible notes
No.
-
1
-
-
-
1
Less than marketable parcels of ordinary shares (‘UMP Shares’)
The number of holders of less than a marketable parcel of ordinary shares based on the closing market price at the Reporting
Date is as follows:
Total Shares
No.
UMP Shares
No.
UMP Holders
No.
Issued shares held by UMP
holders %
249,247,410
9,252,394
756
3.71%
Quoted securities
Twenty largest quoted equity security holders
The Company only has one class of quoted securities, being ordinary shares. The names of the 20 largest holders of ordinary
shares, and the number of ordinary shares and percentage of capital held by each holder is as follows:
Ordinary shares
No.
Total shares issued
%
DSAH Holdings Pty Ltd
Dominet digital Corporation Pty Ltd (The Carosa Family A/C)
Dominet digital investments Pty Ltd (Dominet digital investmt A/C)
Mr Rene Rath
Mr Hendrikus Antonius Johannes Kusters
Mutual Trust Pty Ltd
Australco super investments Pty Ltd (Hnarakis Family S/F A/C)
Perpetual Capital Investments Pty Ltd
Citicorp Nominees Pty Limited
AddingUp Pty Limited (AddingUp S/F A/C)
MFA Capital Pty Ltd (T&J Adams super fund A/C)
Michael Matthew Farrelly
Obsidian Global Partners LLC
Ms Lewei Jiang & Ms Xi Zhang
Yeend Superannuation Pty Ltd (Yeend super fund A/C)
J P Morgan nominees Australia Pty Limited
Mr Rodney Barry Ruttiman & Mrs Jane Lorrie Ruttiman
Mrs Elizabeth Adell Holmes
Stolow Pty Ltd (The Leung investment A/C)
Mr Risto Alberg
Total remaining holders balance
18,484,045
11,792,523
9,923,378
8,792,570
8,792,570
5,807,598
4,177,650
4,000,000
3,271,145
3,000,000
2,700,000
2,700,000
2,636,313
2,185,000
2,106,274
2,017,540
2,010,948
2,000,000
2,000,000
1,950,813
100,348,367
148,899,043
7.416%
4.731%
3.981%
3.528%
3.528%
2.330%
1.676%
1.605%
1.312%
1.204%
1.083%
1.083%
1.058%
0.877%
0.845%
0.809%
0.807%
0.802%
0.802%
0.783%
40.260%
59.740%
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
71
71
Shareholder information 30 June 2019
Unquoted equity securities
The number of each class of unquoted equity securities on issue, and the number of their holders, are as follows:
Class of equity securities
Number of unquoted equity
securities
Number
Of Holders
Options exercisable at $0.05 each expiring on 2 April 2022
Convertible notes
2,000,000
4,109
3
1
Except as listed below, no persons hold 20% or more of the equity securities in any unquoted class that were not issued or
acquired under an employee incentive scheme.
●
●
●
746,162 options exercisable at $0.05 each, expiring 2 April 2022 are held by JGB Capital Offshore Ltd.
1,136,541 options exercisable at $0.05 each, expiring 2 April 2022 are held by JGB Partners LP.
4,109 convertible notes are held by Obsidian Global Partners, LLC.
Voting rights
The only class of equity securities on issue in the Company which carry voting rights is ordinary shares.
At a general meeting of the Company, every holder of ordinary shares is entitled to vote in person or by proxy or attorney; and
on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by
proxy or attorney has one vote for each ordinary share he holds.
Voluntary escrow
There are no securities on issue in the Company that are subject to voluntary escrow.
Stock Exchange Listings
The Company’s ordinary shares are quoted on the Australian Securities Exchange ('ASX') (ASX issuer code: CM8) and on the
Frankfurt Stock Exchange (European stock code: CM3).
Buybacks
No securities were purchased on-market during the reporting period under or for the purposes of an employee incentive
scheme or to satisfy the entitlements of the holders of options or other rights to acquire securities granted under an employee
incentive scheme.
The Company is not currently conducting an on-market buy-back.
Item 7 issues of securities
There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act which have not
yet been completed.
Company secretary
The Company’s secretary is Laura Newell.
Registered office
The address and telephone number of the Company’s registered office are:
Level 4
44 Gwynne Street
CREMORNE VIC 3121
Telephone: +61 3 9020 1468
Share registry
The address and telephone number of the Company’s share registry, Boardroom Pty Limited, are:
Street Address:
Level 12
225 George Street
SYDNEY NSW 2000
Telephone: +61 2 9290 9600
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
72
72
i
.
m
o
c
a
d
e
m
d
w
o
r
c
w
w
w
.