Crowd Media Holdings Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Crowd Media Holdings Limited
13 083 160 909
For the year ended 30 June 2020
For the year ended 30 June 2019
2. Results for announcement to the market
The Group has adopted Accounting Standard AASB 16 'Leases' for the year ended 30 June 2020 using the modified
retrospective approach and as such the comparatives have not been restated.
Revenues from ordinary activities
down
31.3% to
16,503,010
Loss from ordinary activities after tax attributable to the owners of Crowd
Media Holdings Limited
down
60.1% to
(1,914,560)
Loss for the year attributable to the owners of Crowd Media Holdings
Limited
down
60.1% to
(1,914,560)
$
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
The loss for the Group after providing for income tax amounted to $1,914,560 (30 June 2019: $4,795,984).
Refer to Directors Report for discussion of the results of operation for the year.
Reporting
period
Cents
Previous
period
Cents
0.47
0.14
3. Net tangible assets
Net tangible assets per ordinary security
4. Control gained over entities
Not applicable.
5. Loss of control over entities
Not applicable.
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
Crowd Media Holdings Limited
Appendix 4E
Preliminary final report
7. Dividend reinvestment plans
Not applicable.
8. Details of associates and joint venture entities
Not applicable.
9. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unqualified opinion has been issued.
11. Attachments
Details of attachments (if any):
The Annual Report of Crowd Media Holdings Limited for the year ended 30 June 2020 is attached.
12. Signed
Signed ___________________________
Date: 28 August 2020
Steven Schapera
Chairman
Melbourne
Crowd Media
Holdings Limited
(ASX:CM8 / FWB: CM3)
For year ended 30 June 2020
Faces above are generated using Artificial Intelligence (AI) by Generated.Photos
Despite challenges that none of
us have ever witnessed before,
Crowd continues to improve in
the most important of all metrics:
the bottom line. After two years of
substantial losses, underlying
EBITDA is now positive for FY20
and steadily improving.
“ Steven Schapera
Crowd Media Holdings Limited - Chairman
Crowd Media Holdings Limited
Contents
30 June 2020
Corporate directory
Chairman’s letter
Chief Executive Officer’s report
Directors’ report
2
3
5
8
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
74
Independent auditor’s report to the members of Crowd Media Holdings Limited
75
Shareholder information
79
“
I am pleased with the financial turnaround
of the business, albeit we still have much
work ahead of us. The new Crowd Direct
division is slowly gaining some traction
while we continue to work on our stated
goal of changing the way products and
services are sold via digital influencers.
We believe conversational commerce is
the future of ecommerce.
1
Crowd Media Holdings Limited
Corporate directory
30 June 2020
Directors
Steven Schapera - Chairman
Domenic Carosa
Robert Quandt
John Palermo
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
2
Chairman’s Letter
“We have streamlined every single aspect of the
business during FY20 and evolved into a lithe, lean,
and nimble business run by entrepreneurs, not
corporate managers. We have identified and flushed
out opportunities, defined measurable objectives that
are coupled to timelines, developed the strategies
and strategic alliances to meet these objectives, and
executed with speed and professionalism.”
Dear Shareholders,
I am pleased to present Crowd Media’s 2020 Annual Report. Despite challenges that none of us have ever witnessed
before, Crowd continues to improve in the most important of all metrics: the bottom line. After two years of substantial
losses, underlying EBITDA is now positive for FY20 and steadily improving.
Crowd’s financial and strategic turnaround began in September 2019, following a sizeable investment by a consortium
led by me and my co-director Robert Quandt. First, the new Board developed a very clear 3-year transition vision for the
Company: to be a tech-based media company with a focus on conversational commerce; we shared this at the
November 2019 AGM, and detailed specific objectives that would be met within specific timelines. Second, working
closely with Crowd’s CEO, Domenic Carosa and his Management team, Robert Quandt has drawn upon his vast
consulting and operational experience to realign the business and drive turnaround profitability. Crowd is now absolutely
focussed on meeting its clearly understood objectives and timelines, and operationally is more agile, more capable,
more technical, and more efficient despite operating upon a substantially lower cost base.
Financial Summary
Crowd Direct (Direct-to-Consumer Division)
For FY 2020, revenue was approximately $16.5 million,
underlying EBITDA was a little over $0.14 million, and
operating cashflow was ($1.8 million).
Underlying EBITDA Results
Crowd Media reported an underlying EBITDA result of
$0.14 million for FY20, an improvement of $2.8 million
from a loss of ($2.6 million) for FY19, as follows:
Net Profit / (Loss) after tax (NPAT)
(1,914,560)
Add back: income tax benefit
Add back: finance costs
Deduct: interest revenue
Add back: depreciation & amortisation
(654,348)
899,679
(327)
598,156
Earnings before interest, tax,
depreciation and amortisation (EBITDA)
(1,071,400)
Add: allowance for expected credit losses
Add: share-based payments expense
Add: restructuring and financing costs
Add: net fair value loss on derivative
financial liabilities
Effects of exchange rate changes
Underlying EBITDA
(3,197)
302,488
605,265
303,902
4,315
141,373
3
Immediately following our investment, Crowd ceased
to be a fee-earning agency for external brands. In line
with the new Board’s vision, Crowd shifted focus to
selling exemplary products that it is strategically
aligned with on a digital platform.
The newly created Crowd Direct division has achieved
revenue of $0.35 million from a standing start during
FY20. In the last few months of the financial year, three
new brands were tested, namely I Am Kamu, London
Labs and KINN Living. All of these brands continue to
be piloted; it is an iterative process as we test, tweak,
and test again in order to home in on the ‘secret sauce’
required to sell each category or product. This is an
essential phase that determines how to best scale up
sales and marketing initiatives. This can take 3-6
months, sometimes longer, especially if the space is
hotly contested.
Another six brands are expected to be onboarded in
FY21. With the unfortunate arrival of COVID-19, it is
now fair to say that home-care, hygiene, and health
products have never been more integral to the lives of
our customers than they are now. In June 2020, Crowd
announced that the Company had entered into an
agreement to market and distribute brands from the
portfolio of the UK’s esteemed Vital Group.
Shareholders can expect to see Crowd bolster
revenues from their products, especially from those in
the health/wellness space.
Chairman’s Letter
Mobile Division
Q&A: Crowd Mobile has witnessed a decline in the
use of SMS as a paid-messaging platform by its target
audience. This trend has been accompanied by
continued, material, regulatory headwinds, and it
comes as no surprise that we have reported softer
Mobile revenues in FY20. Whilst we have managed to
stabilise this vertical, and even get it to the point where
it is generating small monthly profits again, the decline
in paid-SMS messaging over time is inevitable. To
mitigate this, Crowd’s tech team are working on tech
that will enable our Q&A messaging to work – AND be
monetised - on other platforms such as Whatsapp or
Messenger. This tech is the basis of our
“conversational commerce” concept that we are so
excited about.
Subscription: This division has also faced substantial
regulatory headwinds, which we were able to mitigate
with the launch of a number of new products and
countries. Revenue for FY20 was up 10% on FY19,
and we expect this vertical to remain profitable in
FY21.
Fiscal Responsibility
The Company improved underlying EBITDA to $0.14m
in FY20 compared to an underlying EBITDA loss of
($2.6m) in FY19. We expect underlying EBITDA to
improve in FY21.
The Company further reduced its securitized BillFront
debt facility down to EUR1m (circa $1.7m). The
BillFront debt facility matures in April 2021, and as
such this facility is now classified as a current liability
on the Company’s balance sheet. CEO Dom Carosa
and Director Robert Quandt have both had positive
discussions with BillFront regarding the facility, and the
Board will explore all options available. These may
include extending the facility.
The Company also has $1.9m in outstanding
unsecured Convertible Notes (T1 and T2) with the
majority held indirectly by entities associated with
Chairman Steven Schapera, Director Robert Quandt
and CEO Domenic Carosa. These notes mature in
April 2021 (T1) and December 2021 (T2) and the
expectation is that they will either be converted to
equity and/or extended further. Accordingly, 66% of the
Convertible Notes (T1) are classified as a current
liability on the balance sheet.
The Board continues to review cashflow, costs, debt
finance strategy, and balance sheet strength on an
ongoing and disciplined basis.
Board, Governance and Management
The Board is committed to ensuring Crowd’s business
is conducted in accordance with the highest standards
of corporate governance and we work closely with our
auditors who assist us to navigate this process to the
highest possible standard.
This, together with strong management and an
experienced Board, creates a positive culture for
shareholders, employees and customers.
Outlook
We have streamlined every single aspect of the
business during FY20 and evolved into a lithe, lean,
and nimble business run by entrepreneurs, not
corporate managers. We have identified and flushed
out opportunities, defined measurable objectives that
are coupled to timelines, developed the strategies and
strategic alliances to meet these objectives, and
executed with speed and professionalism.
The influencer market is a highly competitive and
dynamic one. As with almost any market, it favours the
incumbent, but we have good reason to believe we can
squeeze our way in. We have picked a diverse
assortment of products to identify and test the area of
opportunity. Our real interest is to be at the table when
technology shifts the market tectonically to
conversational commerce. Then, we will be the
incumbent, and hold a truly sustainable competitive
advantage.
We continue to drive opportunities that will leverage
our Q&A and Subscription technology platforms (and,
importantly, the data retained within them). We are also
growing the Crowd Direct division with new brands,
focusing on quality of revenue, cost efficiency and
agility. On the back of this, we move into FY21 with a
continued and clear focus on our Horizon 2 and 3
media-tech objectives. We have the vigour and the
commitment to execute our well-defined strategy to
meet these objectives on time and on budget in 2021
and 2022, respectively.
On behalf of the Board, I thank you, our Shareholders,
for your ongoing support and loyalty. To the Company’s
CEO, Domenic Carosa, and his Team, thank you for
your loyalty, integrity, and committed effort during a
most challenging period. I also thank my co-directors,
Robert Quandt and John Palermo, for the significant
value they have added to the Board.
As Chairman, I look forward to leading Crowd Media
through another year, as we move forward with our
strategic plans and reposition this business for a
prosperous future.
Steven Schapera
Crowd Media Holdings Limited - Chairman
4
Chief Executive Officer’s Report
“Crowd Media showed significant financial
improvements in FY20, generating underlying
EBITDA profit of $0.1 million, an improvement of
$2.8 million over the FY-19 loss of ($2.6 million)”
Dear Shareholders,
Crowd Media’s FY20 year was a transitional one and we have already shown material improvements in our bottom
line.
We are extremely excited to have secured the European Investment Consortium (EIC), led by our new Chairman,
Steven Schapera, and director Robert Quandt, both in terms of funding and human resource. Steven and Robert are
proven performers who have greatly assisted Crowd with both our existing operations and new opportunities. Crowd
also welcomed new director John Palermo, who brings his special expertise in corporate transaction execution,
strategic business management and business structuring to the Board.
Crowd raised $2.8 million in FY20 from the EIC, with the issuance of convertible notes across two tranches. These
proceeds were used to pay down the convertible notes issued to Obsidian in FY19, to cover redundancy costs
resulting from the strategic review performed in late FY19 and to provide additional working capital.
Crowd is now in a position to leverage on its core strengths to capitalize on new growth opportunities and to achieve
its three-horizon growth strategy that was developed and communicated at the November 2019 AGM.
Annual review
Crowd Media showed significant financial
improvements in FY20, generating underlying EBITDA
profit of $0.1 million, an improvement of $2.8 million
over the FY-19 loss of ($2.6 million).
Mobile Division
The Q&A division encountered material regulatory
headwinds and sector declines as millennials slowed
the use of paid-SMS. The steps taken to streamline
this business have now stabilised it, evidenced by the
fact that it is generating small monthly profits again.
The Q&A division generated an underlying EBITDA
profit contribution of $0.2 million in FY20 (improved
from a loss of $0.5 million in FY19).
Importantly, in line with the Plan, the Q&A division
continues to invest in R&D, testing product pivots to
further leverage its proprietary Artificial Intelligence (AI)
technology. In fact, we now have AI responsible for
answering more than 60% of all questions, helping to
improve operating margins. This is the conversational
tech platform for the Company’s Horizon 3 “talking
head” conversational commerce model.
Crowd Media’s Subscription business also faced a
number of regulatory headwinds, which we were able to
mitigate with the launch of a number of new products
and new markets. The division was up 10% to $7m
revenue and it generated an underlying EBITDA profit
contribution of $2.1 million in FY20 (up from $1.0 million
in FY19).
Crowd Direct
In line with Crowd’s strategic shift in FY20, instead of
simply being a fee-earning agency for the big brands,
we will earn a larger slice of the retail sale proceeds of
brands that the Company is strategically aligned with.
During FY20, Crowd onboarded four new brands: 1)
British beauty brand, London Labs; 2) German
fashion-house, I Am Kamu; 3) eco-friendly, natural,
home cleaning products of KINN Living; and (4) Vital
innovations, British brand builder across a number of
sectors including healthcare, consumer and water
purification. We expect to announce a further 6 new
brand deals in FY21.
5
Chief Executive Officer’s Report
Three Horizon Growth Strategy
Looking Forward
Crowd’s growth strategy is laid out across three
horizons:
●
●
●
Horizon 1 (CY20): Direct-to-consumer (D2C),
thereby capturing a larger slice of the retail
spend. Crowd will sell products and/or services
that it either owns, or part-owns, or is
strategically aligned with;
Horizon 2 (CY21): Sell digital products and/or
services via collaborations, partnerships, or
strategic alliances. Initially, this will be in the
(regulated) travel insurance and fintech space;
and
Horizon 3 (CY22): Expanding the way we
interact with our favorite influencers – creating
authentic and real time “digital head”
experiences
Outlook for FY2021
Crowd will be focused on the following areas in
FY2021:
●
●
Crowd Direct: Execution of existing and new
brands over the coming financial year while
continuing our work on driving innovation in
the future of influencer marketing.
Mobile (Q&A & Subscription): Further stabilise
this business, optimise them for the future, and
grow revenues with the objective of
consistently delivering profits monthly.
I am pleased with the financial turnaround of the
business, albeit we still have much work ahead of us.
The new Crowd Direct division is slowly gaining some
traction while we continue to work on our stated goal of
changing the way products and services are sold via
digital influencers. We believe conversational
commerce is the future of ecommerce.
I would like to thank our board for their support and our
staff and executive team for their hard work and
application in these trying times.
I would also like to formally thank our outgoing
Chairman, Theo Hnarakis, for his leadership since
listing the Company in January 2015, and outgoing
director, Sophie Karzis, for her extensive contribution
to the Company.
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 FY21 and beyond.
Domenic Carosa
Chief Executive Officer
6
Crowd Media Holdings Limited
Directors' report
30 June 2020
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group' or 'Crowd') consisting of Crowd Media Holdings Limited (referred to hereafter as the 'Company', 'parent entity'
or 'Crowd Media') and the entities it controlled at the end of, or during, the year ended 30 June 2020.
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:
Steven Schapera - Chairman
Domenic Carosa
Robert Quandt
John Palermo
Theo Hnarakis – Former Chairman
Sophie Karzis
Appointed 23 September 2019
Appointed 23 September 2019
Appointed 10 February 2020
Retired 23 September 2019
Retired 10 February 2020
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
During the 2020 financial year, Crowd Media Holdings Limited was organised into three operating segments: Mobile
Content-Q&A (or ‘Q&A’), Mobile Content-Subscription (or ‘Subscription’) and Crowd Direct. Due to the Company’s strategy
to transition from being an agency to being sellers of brands with whom we have strategic alliance, the Crowd Direct
segment was created for the direct-to-consumer business during the financial year and the activities in the prior Agency
business are no longer reported as an operating segment.
Crowd Media Group earned revenue for the year ended 30 June 2020 ('FY20') of $16,480,683 versus $23,918,776 in the
prior period ended 30 June 2019 (‘pcp’, ’prior year’ or 'FY19'). The Company’s earnings before interest, tax, depreciation
and amortisation ('EBITDA') was a loss of ($1,071,400) for the year (pcp: loss of ($5,587,379)) and the net loss after tax for
the year was ($1,914,560) compared with a pcp net loss after tax of ($4,795,984). The other comprehensive income for the
year attributable to the owners of Crowd Media was $57,764 when accounting for a foreign currency translation gain on
foreign operations. Crowd Media’s net asset position at 30 June 2020 was $2,581,775, an increase from the 30 June 2019
balance of $948,113.
8
Crowd Media Holdings Limited
Directors' report
30 June 2020
Notably, the Company’s EBITDA and net loss includes a non-cash share-based payment charge of $302,488, restructuring
and financing costs of $605,265 (related to costs associated with the European Investment Consortium convertible notes
issued during the year, share issuance costs and restructuring of the Media division), a non-cash net fair value loss on
derivative financial liabilities of $303,902 (related to the valuation of the conversion option on the Obsidian convertible note
that was repaid in September 2019) and allowance for expected credit losses of ($3,197). 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 profit of $141,373, an improvement of $2.8 million versus the prior year loss of ($2,648,609), as follows:
2020
$
2019
$
Increase/
(decrease)
$
Percentage
change
%
Net profit / (loss) after tax ('NPAT')
(1,914,560)
(4,795,984)
2,881,424
(60%)
Add back: income tax benefit
Add back: finance costs
Deduct: interest revenue
Add back: depreciation and amortisation
(654,348)
899,679
(327)
598,156
(1,581,426)
582,894
(1,991)
209,128
927,078
316,785
1,664
389,028
(59%)
54%
(84%)
186%
EBITDA
(1,071,400)
(5,587,379)
4,515,979
(81%)
Add back: allowance for expected credit losses
Add back: share-based payments expense
Add back: restructuring and financing costs
Add back: net fair value loss on derivative financial liabilities
Effects of exchange rate changes
(3,197)
302,488
605,265
303,902
4,315
1,158,485
24,750
1,590,620
-
164,915
(1,161,682)
277,738
(985,355)
303,902
(160,600)
(100%)
1122%
(62%)
-
(97%)
Underlying EBITDA
141,373
(2,648,609)
2,789,982
(105%)
Less: Impact of adoption of AASB 16
(418,346)
-
(418,346)
-
Underlying EBITDA excluding AASB 16 impact
(276,973)
(2,648,609)
2,371,636
(90%)
Comparison of years ended 30 June 2020 to 30 June 2019
Revenue
Other income
Cost of sales
Selling, general and administration expenses
Impairment expense
EBITDA Profit / (Loss)
Less: Impact of adoption of AASB 16
EBITDA excluding AASB 16 impact
EBITDA Profit / (Loss)
Interest income
Depreciation and amortisation
Finance costs
Income tax benefit
2020
$
2019
$
Increase/
(decrease)
$
Percentage
change
%
16,480,683 23,918,776
-
(7,167,258)
(21,180,412)
(1,158,485)
(5,587,379)
22,000
(4,642,716)
(12,934,564)
3,197
(1,071,400)
(7,438,093)
22,000
2,524,542
8,245,848
1,161,682
4,515,979
(418,346)
(1,489,746)
-
(5,587,379)
(418,346)
4,097,633
(1,071,400)
327
(598,156)
(899,679)
654,348
(5,587,379)
1,991
(209,128)
(582,894)
1,581,426
4,515,979
(1,664)
(389,028)
(316,785)
(927,078)
(31%)
-
(35%)
(39%)
(100%)
(81%)
-
(73%)
(81%)
(84%)
186%
54%
(59%)
NPAT
(1,914,560)
(4,795,984)
2,881,424
(60%)
9
Crowd Media Holdings Limited
Directors' report
30 June 2020
Revenue
Revenue
2020
$
2019
$
Increase/
(decrease)
$
Percentage
change
%
16,480,683 23,918,776
(7,438,093)
(31%)
For the year, revenue from Crowd Media’s main operating units was represented by Q&A of $8,860,666 (pcp:
$15,923,286), Subscription of $7,032,328, (pcp: $6,361,291) and Crowd Direct of $347,923 (pcp: not applicable, division
commenced in FY20).
The Q&A business encountered significant headwinds and produced softer than expected revenues. The Company
continues to optimize its cost base given the softer revenues in its legacy mobile businesses. Billed message volumes
decreased from 12.5 million to 6.3 million year on year. The average revenue per paid message for the current year was
$1.38 compared to $1.29 for the prior period.
Subscription contributed revenue of $7,032,328 and the business continues to be profitable. Management will continue to
expand the product offering in FY21, adding new and better-quality third-party content and diversifying revenue in order to
lift revenue and profitability.
Expenses
(i) Cost of sales
For the year, the Group’s cost of sales was $4,642,716, or 28% of revenue (pcp: $7,167,258 at 30%). This included Q&A
at $2,620,694 (pcp: $4,327,093), Subscription at $1,484,849 (pcp: $1,796,815) and Crowd Direct at $182,301.
(ii) Selling, general and administration expense
Crowd Media’s selling, general and administration expenses (including Marketing) of $12,934,564 for the year decreased
by 39% compared to the prior period. The decrease is mainly due to a decrease in marketing expenses and cost savings
initiatives. The larger movements in expenses for FY20 versus FY19, were as follows:
Marketing
Employee benefits expense
Restructuring and financing costs
Share-based payment
Impairment expense
2020
$
2019
$
Increase/
(decrease)
$
Percentage
change
%
4,375,121
5,176,636
605,265
302,488
(3,197)
6,993,715
8,663,575
1,590,620
24,750
1,158,485
(2,618,594)
(3,486,939)
(985,355)
277,738
(1,161,682)
(37%)
(40%)
(62%)
1122%
(100%)
10
Crowd Media Holdings Limited
Directors' report
30 June 2020
●
●
●
●
●
Marketing: The consolidated marketing expense of $4,375,121, at 27% of revenue, was down by $2,618,594, or 37%,
versus the prior period of $6,993,715 (28% of revenue). Q&A marketing expense of $2,489,746 for the year (pcp:
$5,250,706) as a percentage of revenue declined to 29% from 33% in prior year. As a percentage of revenue, the
FY20 Subscription expense of $1,755,498 declined slightly from the FY19 expense of $1,587,156, at 26% and 27% of
revenue, respectively. Marketing costs for Crowd Direct were $129,877, at 37% of revenue.
Employee benefits expense: The consolidated expense decreased by $3,486,939, or 40%, for the year, due to a
decrease in headcount as the result of the restructurings that occurred in FY19 and further reductions in FY20. Q&A
for the period was $2,747,805, a decrease of 56% versus the previous corresponding period of $6,296,010. The
Subscription expense was $1,386,955 for the period, an increase of 14% versus the prior period expense of
$1,220,657. The Crowd Direct expense was $158,322 for the period.
Restructuring and financing costs: In the current year, these included costs associated with the European Investment
Consortium convertible notes issued during the year, share issuance costs and transitioning of the Media division.
The consolidated expense of $605,265 decreased by 62% compared to the prior period.
Share-based payment: The consolidated expense of $302,488 for the year (attributed to the Q&A CGU) relates to a
Directors’ and staff incentive expense, as well as expenses recorded for options granted for consulting and investor
relations services provided to the Company.
Allowance for expected credit losses: The consolidated gain was ($3,197) for the year, compared to a loss of
$1,158,485 in the prior period.
(iii) Depreciation and amortisation
Depreciation
Amortisation
2020
$
2019
$
Increase/
(decrease)
$
Percentage
change
%
551,555
46,601
192,988
16,140
358,567
30,461
186%
189%
598,156
209,128
389,028
186%
The consolidated depreciation and amortisation expense for the year of $598,156 (pcp: $209,128) is mainly comprised of
Q&A at $177,896 (pcp: $71,176) and Subscription at $417,310 (pcp: $129,612). The increase from prior period is mainly
due to a depreciation charge for the Company’s right-of-use assets upon adoption of AASB 16 by the Group from 1 July
2019.
(iv) Finance costs
The consolidated finance costs for the year of $899,679 increased by $316,785, or 54%, from the prior year. The current
period includes an interest charge for the Company’s lease liabilities upon adoption of AASB 16 by the Group from 1 July
2019.
(v) Income tax expense/(benefit)
The consolidated tax benefit for FY20 of $654,348 is mainly represented by a Q&A benefit of $360,242 (pcp: $813,042)
and a Subscription benefit of $199,720 (pcp: $420,346).
Cash flow
The Company’s net cash used in operating activities for the year was ($1,797,144), an improvement of 26% compared to
the prior period cash used of ($2,443,352). Operating cash flows are expected to improve in FY21 due to realising benefits
from the ongoing initiatives to improve business performance and optimize costs. Net trading receipts (excluding interest
and tax cash flows) for the year was ($829,429), which is a 68% increase over the prior year of ($2,632,124).
The net cash flow from investing activities for the period was ($267,131), versus $120,536 in the prior year, mainly
reflecting additional payments for intangibles. The net cash flow from financing activities for the period was $2,992,654
versus $133,264 in the prior period. This consists of proceeds from issue of shares and convertible notes, which are
partially offset by repayment of borrowings and lease liabilities.
11
Crowd Media Holdings Limited
Directors' report
30 June 2020
Liquidity and Financial Position
At Crowd Media’s 30 June 2020 reporting date:
●
●
Cash and cash equivalents (‘cash’) were $1,913,953 (30 June 2019: $839,462).
Working capital (defined as current assets less current liabilities) was ($300,448) (30 June 2019: $1,545,624). The 30
June 2020 net current liabilities position is due to the BillFront loan payable and European Investment Consortium
convertible notes payable (Tranche 1), totalling $2,905,275, transferring to current liabilities as they each mature in
April 2021.
Reporting date total current and non-current borrowings (‘debt’) were $3,554,598 (30 June 2019: $2,991,849).
Net debt (debt less cash), at 30 June 2020 was $1,640,645, a decrease of $511,742 from $2,152,387 at 30 June
2019.
Net assets at 30 June 2020 were $2,581,775, an increase of $1,633,662 from $948,113 at 30 June 2019.
●
●
●
The financial statements have been prepared on a going concern basis. Refer to note 2 of the financial statements.
Significant changes in the state of affairs
On 31 July 2019, the Company cancelled the Performance Rights ('PRs') 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 31 July 2019, the Company agreed to issue 11,000,000 PRs to employees, excluding the directors and CEO. On 18
December 2019, the Board modified the conditions of the performance rights as follows:
●
1-year performance rights: 20% of the performance rights (2,200,000) will be issued to employees (excluding the
directors and CEO) that have been continuously employed by Crowd as of the vesting date of 30 June 2020.
2-year performance rights: 30% of the performance rights (3,300,000) will be issued to employees (excluding the
directors and CEO) that have been continuously employed by Crowd as of the vesting date of 30 June 2021.
3-year performance rights: 50% of the performance rights (5,500,000) will be issued to employees (excluding the
directors and CEO) that have been continuously employed by Crowd as of the vesting date of 30 June 2022.
Any extenuating circumstances regarding continuous employment are subject to Board approval.
●
●
●
On 29 August 2019, the Company executed a binding Heads of Agreement ('HOA') with an alliance of strategic investors,
collectively the European Investment Consortium ('EIC'), to fund existing Company requirements, as well as develop new
business synergies and joint ventures between Crowd Media and businesses that the EIC can introduce and facilitate.
These would leverage Crowd Media’s well-established technology and digital marketing platforms. Under the agreement,
Crowd Media will issue EIC (and/or their nominees) with convertible notes with a face value of up to $3,700,000 on the
following key terms:
●
●
Tranche 1: $1,741,000 was raised with a fixed conversion price of 1.8 cents and maturing on 29 April 2021; and
Tranche 2: $1,080,000 was raised with a fixed conversion price of 2.0 cents and maturing on 18 December 2021.
Board of Directors changes
On 23 September 2019, the Company announced changes to its Board of Directors with the appointment of Mr. Steven
Schapera as the Company’s new Chairman and non-executive director, replacing Mr. Theo Hnarakis, who retired from the
Board to pursue other opportunities. Mr. Robert Quandt also joined the Board as a new non-executive director.
Furthermore, on 10 February 2020, the Company announced that Mr. John Palermo joined the Board as a new non-
executive director, replacing outgoing Director Ms. Sophie Karzis, who retired for personal reasons.
Letter of intent with Forever Holdings Ltd
On 8 January 2020, the Company announced that it has executed a letter of intent ('LOI') with London-based technology
company Forever Holdings Ltd ('FHL'). FHL is a voice-and-visual interactive digital media company. Its technology can
enable one-to-one digital encounters between an influencer and anyone who wishes to converse with them.
The LOI is structured for the parties to enter into exclusive negotiations with respect to forming a commercial partnership
between FHL and Crowd Media Holdings Limited regarding the launch of a 'voice-and-visual' interactive digital media
product for a range of sectors including influencer marketing, customer service, healthcare and education.
Further details can be found in the announcement lodged on the ASX on 8 January 2020 and 4 May 2020.
12
Crowd Media Holdings Limited
Directors' report
30 June 2020
Repayment of loan payable to NTH Mobile Limited
On 21 February 2020, the Company announced that it has received monies from Sata Bank of circa EUR 262,000
approximately 15 months after the bank’s license was suspended by the Malta Financial Services Authority. These funds
were due to Crowd for revenue generated in 2018 and were used to repay the loan payable to NTH Mobile Limited (refer to
note 23 for further information) in full on 21 February 2020. Further details can be found in the announcement lodged on
the ASX on 21 February 2020.
Capital raising and partial repayment of loan payable to BillFront
On 23 June 2020, the Company announced that it raised $1.5 million through a placement of 62,210,000 ordinary shares
at $ 0.025 per share and 31,105,000 options with an exercise price of $0.04 and 2-year expiry from issue. These options
are subject to Shareholder approval. The placement proceeds were utilised by the Company to reduce the BillFront loan
payable by EUR 0.3m (circa $0.5m), as well as to strengthen the balance sheet, accelerate scale up and bolster sales.
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
Novel Coronavirus (COVID-19)
The Novel Coronavirus ('COVID-19') has been declared a pandemic in March 2020 by the World Health Organisation
('WHO'). There have been considerable economic impacts in Australia, Europe and globally arising from the outbreak of
COVID-19 and Government action to reduce the spread of the virus. The outbreak of COVID-19 and the subsequent
quarantine measures imposed by the Australian, European and other governments as well as the travel and trade
restrictions imposed by Australia, Europe and other countries in early 2020 have caused disruption to businesses and
economic activity.
The impact of the COVID-19 pandemic is ongoing is dependent on measures imposed by the Australian Government and
other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided. It is not practicable to estimate the potential impact, positive or negative, after the reporting
date.
Results of the Extraordinary General Meeting held on 25 August 2020
At the 25 August 2020 EGM, Shareholders approved the following:
●
Issue of 576,889 shares and 576,889 options on 6 December 2019 in consideration for corporate advisory and
consulting services provided by Peak Asset Management;
Prior issue of 4,752,000 shares and 4,752,000 options on 30 January 2020 in consideration for corporate advisory
and consulting services provided by Starland Management Pty Ltd;
Prior issue of 5,000,000 shares on 17 June 2020 to VITAL Innovations;
Prior issue of 61,210,000 shares on 26 June 2020 to professional and sophisticated investors; and
Issue of 31,105,000 options to shareholders who participated in the placement on 26 June 2020.
●
●
●
●
No other matter or circumstance has arisen since 30 June 2020 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.
13
Crowd Media Holdings Limited
Directors' report
30 June 2020
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Steven Schapera
Non-Executive Chairman (appointed 23 September 2019)
Mechanical Engineering, Winemaking
Steven has more than 30 years’ experience founding and building businesses across
agricultural, wine, and cosmetics industries. He co-founded BECCA Cosmetics in
2001 and exited to Estee Lauder in 2016 for more than AUD $300m. He continues to
serve as Chairman of BECCA Holdings, the original investment entity. He was an
early investor into Berlin-based Invincible Brands GmbH, and has served on the
board as an NED since January 2018. Having studied both mechanical engineering
and winemaking, Steven possesses a rare mix of technical and bio-technical skills.
These are combined with an excellent understanding of supply chain, branding and
positioning, as evidenced by his significant success selling branded products in more
than 40 countries across Europe, North America, Australia, Asia, and Africa in the
beauty, health, and wellness industries.
CEO Lab Brands Ltd (UK); Chairman BECCA Holdings Pty Ltd; Non-Executive
Director (NED) Invincible Brands GmbH (Germany); NED at ASX-listed OBJ Ltd; NED
Wild Nutrition Ltd (UK)
Former directorships (last 3 years): None
Special responsibilities:
None
None
Interests in shares:
9,100,000 options over ordinary shares (held indirectly by Namaqua Holdings Ltd; Mr.
Interests in options:
Schapera has a relevant interest in Namaqua Holdings Ltd and accordingly has a
relevant interest in the securities held by the entity)
None
500 Tranche 1 and 500 Tranche 2 convertible notes (held indirectly)
Interests in rights:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
Domenic Carosa
Chief Executive Officer and Executive Director
Masters of Entrepreneurship and Innovation (MEI) from Swinburne University
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
None
Special responsibilities:
58,888 ordinary shares (held directly) and 25,684,080 ordinary shares (held indirectly)
Interests in shares:
5,200,000 options over ordinary shares (held indirectly)
Interests in options:
None
Interests in rights:
100 Tranche 2 convertible notes (held indirectly)
Contractual rights to shares:
14
Crowd Media Holdings Limited
Directors' report
30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
Robert Quandt
Non-Executive Director (appointed 23 September 2019)
Master of Industrial Engineering from Technical University of Berlin
Robert Quandt is a consultant by training and has spend 10 years in Management
Consulting at Booz & Company. He also served 2 years as strategy lead for the €5bn
Americas Business of Linde AG a German industrial gases supplier. He later joined
Invincible Brands, a digital native brand builder with HelloBody, Natural Mojo,
IamKamu, Mermaid + Me and Banana Beauty as COO and CFO and helped to scale
the business from 7m to 100m in just 3 years. Robert has broad expertise in
operations from supply chain to fulfilment and deep expertise in Finance. He also lead
the sale of Invincible Brands to the London based Private Equity Capital D.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
None
None
Interests in shares:
9,100,000 options over ordinary shares (held indirectly)
Interests in options:
None
Interests in rights:
185 Tranche 1 convertible notes (held indirectly)
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
John Palermo
Non-Executive Director (appointed 10 February 2020)
Fellow Chartered Accountant
John has 20 years' experience in public practice, with expertise in corporate
transaction execution, strategic business management and business structuring.
Alterra Limited (ASX: 1AG)
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
Interests in shares:
None
None
Interests in options:
None
Interests in rights:
Contractual rights to shares:
None
Name:
Title:
Experience and expertise:
Theo Hnarakis
Former Chairman (retired 23 September 2019)
Theo Hnarakis brought 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:
Not applicable as no longer a Director
Former directorships (last 3 years): Not applicable as no longer a Director
Not applicable as no longer a Director
Special responsibilities:
Not applicable as no longer a Director
Interests in shares:
Not applicable as no longer a Director
Interests in options:
Not applicable as no longer a Director
Interests in rights:
Not applicable as no longer a Director
Contractual rights to shares:
15
Crowd Media Holdings Limited
Directors' report
30 June 2020
Name:
Title:
Experience and expertise:
Sophie Karzis
Former Non-Executive Director (retired 10 February 2020)
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:
Not applicable as no longer a Director
Former directorships (last 3 years): Not applicable as no longer a Director
Not applicable as no longer a Director
Special responsibilities:
Not applicable as no longer a Director
Interests in shares:
Not applicable as no longer a Director
Interests in options:
Not applicable as no longer a Director
Interests in rights:
Contractual rights to shares:
Not applicable as no longer a Director
'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
Laura Newell of Boardroom Pty Limited has worked in multiple Company Secretary roles 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 2020, and
the number of meetings attended by each director were:
Steven Schapera - Chairman
Domenic Carosa
Robert Quandt
John Palermo
Theo Hnarakis – Former Chairman
Sophie Karzis
Full Board
Attended
Held
11
16
10
5
5
10
11
16
11
6
5
10
Held: represents the number of meetings held during the time the director held office.
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
16
Crowd Media Holdings Limited
Directors' report
30 June 2020
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.
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.
17
Crowd Media Holdings Limited
Directors' report
30 June 2020
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 2019, 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 11,000,000.
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 2020, 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 2019 Annual General Meeting ('AGM')
At the 25 November 2019 AGM, 87.64% of the votes received supported the adoption of the remuneration report for the
year ended 30 June 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
Details of remuneration
The key management personnel of the Group consisted of the directors of Crowd Media Holdings Limited and the following
persons:
●
●
●
Melanie Mouldenhauer – Chief Financial Officer;
Antoaneta Ignatovska - Former Chief Financial Officer (resigned effective 31 July 2019); and
Michel de Jong - Chief Operating Officer (made redundant, effective 30 September 2019);
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
18
Crowd Media Holdings Limited
Directors' report
30 June 2020
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Leave
Termination Super-
monetary payments annuation benefits
$
$
$
$
Equity-
settled
$
Total
$
188,404
152,054
23,275
37,500
36,058
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,563
-
-
-
-
-
-
51,780
51,780
-
-
-
240,184
203,834
23,275
41,063
36,058
456,048
-
2,396
-
5,700
-
29,588
493,732
2020
Non-Executive
Directors:
S Schapera**
R Quandt**
J Palermo**
T Hnarakis*
S Karzis*
Executive
Directors:
D Carosa
Other Key
Management
Personnel:
M Mouldenhauer
A Ignatovska*
M de Jong*
212,297
49,238
117,117
1,271,991
-
-
-
-
-
-
-
2,396
-
-
60,281
60,281
-
-
-
9,263
-
-
-
-
20,079
-
-
232,376
49,238
177,398
153,227 1,497,158
*
**
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 to 30 June 2020
2019
Non-Executive
Directors:
T Hnarakis
S Karzis
Executive
Directors:
D Carosa *
Other Key
Management
Personnel:
M
Mouldenhauer***
A Ignatovska
M de Jong
G Cooney **
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Leave
Termination Super-
monetary payments annuation benefits
$
$
$
$
Equity-
settled
$
Total
$
144,318
119,449
-
-
-
-
-
-
13,710
-
581,232
-
2,587
-
5,700
16,269
288,826
339,626
127,671
1,617,391
-
-
15,787
-
15,787
-
1,149
6,733
1,432
11,901
-
-
-
-
-
-
-
-
-
19,410
19
-
-
-
-
-
-
-
-
-
-
158,028
119,449
-
589,519
16,269
-
289,975
-
362,146
-
-
129,103
- 1,664,489
Crowd Media Holdings Limited
Directors' report
30 June 2020
*
**
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 to 30 June 2019
(a) Cash bonus relates to prior period targets.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
S Schapera
R Quandt
J Palermo
T Hnarakis
S Karzis
Executive Directors:
D Carosa
Other Key Management
Personnel:
M Mouldenhauer
A Ignatovska
M de Jong
G Cooney
Fixed remuneration
2019
2020
At risk - STI
At risk - LTI
2020
2019
2020
2019
78%
75%
100%
100%
100%
-
-
-
100%
100%
94%
100%
91%
100%
100%
-
100%
100%
96%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4%
-
22%
25%
-
-
-
6%
9%
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Domenic Carosa
Executive Director and Chief Executive Officer
13 January 2015
Ongoing
Base annual package*, performance based, ‘at-risk’ STI and discretionary share
based LTI remuneration, subject to annual performance review. 6 months termination
by employer, 3 months by executive. The Company may terminate the agreement
with cause in certain circumstances such as gross misconduct.
* Base annual package - Netherlands annual package €240,000 per annum plus
statutory social security, plus Australian Director Fees of $60,000 per annum plus
statutory superannuation
Melanie Mouldenhauer
Chief Financial Officer
1 June 2019
Ongoing
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 - €128,000 plus statutory social security
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
20
Crowd Media Holdings Limited
Directors' report
30 June 2020
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 2020.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
13 December 2019
13 December 2019
13 December 2019
Vesting date and
exercisable date
13 December 2019
13 December 2019
13 December 2019
Options granted carry no dividend or voting rights.
Fair value
per option
Expiry date
Exercise price at grant date
13 December 2022
13 December 2022
13 December 2022
$0.03000
$0.05000
$0.07000
$0.0122
$0.0094
$0.0077
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 2020.
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and
other key management personnel in this financial year or future reporting years are as follows:
Grant date
18 December 2019
18 December 2019
18 December 2019
Vesting date and
exercisable date
30 June 2020
30 June 2021
30 June 2022
Expiry date
30 June 2020
30 June 2021
30 June 2022
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the Group for the five years to 30 June 2020 are summarised below:
Fair value
per right
at grant date
$0.0230
$0.0230
$0.0230
2020
$
2019
$
2018
$
2017
$
2016
$
Sales revenue
EBITDA*
Total comprehensive income for the year
attributable to the owners of Crowd Media
Holdings Limited
16,480,683 23,918,776 38,552,347 43,887,388 36,994,826
6,315,439
(23,175,246)
(1,071,400)
(5,587,379)
9,407,765
(1,856,796)
(4,284,757)
(25,640,051)
(251,234)
379,882
*
EBITDA excluding the impact of adoption of AASB 16 in 2020 is ($1,489,746).
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
0.03
(0.68)
(0.68)
0.01
(2.10)
(2.10)
0.04
(11.71)
(11.71)
0.14
(0.05)
(0.05)
0.16
0.56
0.47
2020
2019
2018
2017
2016
21
Crowd Media Holdings Limited
Directors' report
30 June 2020
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 Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
S Schapera
D Carosa
R Quandt
J Palermo
T Hnarakis*
S Karzis*
M Mouldenhauer
A Ignatovska
M de Jong
-
24,742,968
-
-
4,177,650
504,736
-
-
-
29,425,354
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
1,000,000
-
-
- 25,742,968
-
-
-
-
-
(4,177,650)
-
(504,736)
-
-
-
-
-
-
(4,682,386) 25,742,968
*
Disposals/other represents no longer a key management personnel, not necessarily a disposal of holding
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:
Options over ordinary shares
S Schapera
D Carosa
R Quandt
J Palermo
T Hnarakis
S Karzis*
M Mouldenhauer
A Ignatovska
M de Jong
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
9,100,000
-
5,200,000
-
9,100,000
-
-
-
-
-
2,600,000
-
-
-
-
-
-
-
- 26,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,600,000)
-
-
-
9,100,000
5,200,000
9,100,000
-
-
-
-
-
-
(2,600,000) 23,400,000
*
Expired/forfeited/other represents options lapsing on retirement from the Board
22
Crowd Media Holdings Limited
Directors' report
30 June 2020
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:
Performance rights over ordinary shares
S Schapera
D Carosa
R Quandt
J Palermo
T Hnarakis
S Karzis
M Mouldenhauer
A Ignatovska
M de Jong
Balance at
the start of
the year
Granted
Expired/
forfeited/
other
Balance at
the end of
the year
Vested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,598,000
-
-
1,598,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,598,000
-
-
1,598,000
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
6 December 2019
6 December 2019
6 December 2019
6 December 2019
13 December 2019
13 December 2019
13 December 2019
19 December 2019
30 January 2020
30 January 2020
27 March 2020
20 April 2020
20 April 2020
1 May 2020
11 June 2020
11 June 2020
Expiry date
2 April 2022
6 December 2021
6 December 2021
6 December 2021
6 December 2021
13 December 2022
13 December 2022
13 December 2022
31 December 2021
31 December 2021
31 December 2023
31 December 2023
31 December 2021
31 December 2023
31 December 2021
31 December 2021
31 December 2023
Exercise
price
Number
under option
2,000,000
$0.05000
576,889
$0.03000
8,514,488
$0.03000
5,000,000
$0.05000
$0.10000
5,000,000
$0.03000 11,700,000
$0.05000
5,850,000
5,850,000
$0.07000
$0.03000 12,555,556
277,778
$0.03000
4,752,000
$0.03000
4,750,000
$0.03000
5,555,556
$0.03000
4,250,000
$0.03000
3,611,111
$0.03000
1,111,111
$0.03000
8,000,000
$0.03000
89,354,489
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.
23
Crowd Media Holdings Limited
Directors' report
30 June 2020
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
18 December 2019*
18 December 2019
18 December 2019
Expiry date
30 June 2020
30 June 2021
30 June 2022
Number
under rights
2,200,000
3,300,000
5,500,000
11,000,000
*
Performance rights that vested on 30 June 2020 were issued subsequent to the financial year in August 2020.
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.
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 2020 and up to the date of this report.
Shares issued on the exercise of performance rights
The following ordinary shares of Crowd Media Holdings Limited were issued during the year ended 30 June 2020 and up to
the date of this report on the exercise of performance rights granted:
Date performance rights granted
31 July 2019
*
Shares were issued after the reporting date of 30 June 2020
Number of
shares
issued*
1,476,382
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.
24
Crowd Media Holdings Limited
Directors' report
30 June 2020
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
___________________________
Steven Schapera
Chairman
28 August 2020
Melbourne
25
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Crowd Media Holdings Limited for the year ended 30 June
2020, 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
M PARAMESWARAN
Partner
Dated: 28 August 2020
Melbourne, Victoria
26
Crowd Media Holdings Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Revenue
Revenue from continuing operations
Cost of sales
Gross profit
Other income
Interest revenue calculated using the effective interest method
Net fair value gain on financial assets
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
Net fair value loss on financial liabilities
Finance costs
Loss before income tax benefit
Income tax benefit
Consolidated
Note
2020
$
2019
$
5
16,480,683 23,918,776
(7,167,258)
(4,642,716)
11,837,967 16,751,518
6
7
7
7
8
22,000
327
-
-
1,991
106,902
(4,375,121)
(1,433,995)
(1,234,066)
(598,156)
(5,176,636)
(97,305)
(11,051)
(302,488)
3,197
(303,902)
(899,679)
(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)
(2,568,908)
(6,377,410)
654,348
1,581,426
Loss after income tax benefit for the year attributable to the owners of Crowd
Media Holdings Limited
28
(1,914,560)
(4,795,984)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of Crowd
Media Holdings Limited
57,764
511,227
57,764
511,227
(1,856,796)
(4,284,757)
Cents
Cents
Basic earnings per share
Diluted earnings per share
39
39
(0.68)
(0.68)
(2.10)
(2.10)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
27
Crowd Media Holdings Limited
Statement of financial position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Accrued income
Inventories
Income tax receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred revenue
Borrowings
Lease liabilities
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2020
$
2019
$
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1,913,953
2,176,440
1,925,793
118,236
471,974
262,605
6,869,001
839,462
2,170,127
2,752,300
-
334,075
316,424
6,412,388
224,470
1,950,985
825,158
2,244,437
5,245,050
352,892
-
613,994
1,579,919
2,546,805
12,114,051
8,959,193
3,727,401
85,062
2,905,275
285,433
13,427
152,851
7,169,449
4,093,412
176,345
-
-
46,098
550,909
4,866,764
649,323
1,713,504
-
2,362,827
2,991,849
-
152,467
3,144,316
9,532,276
8,011,080
2,581,775
948,113
26
27
28
31,599,781 28,720,072
5,062,673
(32,834,632)
5,731,186
(34,749,192)
2,581,775
948,113
The above statement of financial position should be read in conjunction with the accompanying notes
28
Crowd Media Holdings Limited
Statement of changes in equity
For the year ended 30 June 2020
Consolidated
Foreign
currency
reserve
$
Share-based
payments
reserve
$
Convertible
note
optionality
reserve
$
Issued
capital
$
Accumulated
losses
$
Total equity
$
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:
Contributions of equity, net of
transaction costs (note 26)
Share-based payments (note
40)
Transfers
-
-
-
-
511,227
511,227
552,689
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,795,984)
(4,795,984)
-
511,227
(4,795,984)
(4,284,757)
-
552,689
24,750
-
-
(212,851)
-
212,851
24,750
-
Balance at 30 June 2019
28,720,072
249,274
4,813,399
-
(32,834,632)
948,113
Consolidated
Foreign
currency
reserve
$
Share-based
payments
reserve
$
Convertible
note
optionality
reserve
$
Issued
capital
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2019
28,720,072
249,274
4,813,399
-
(32,834,632)
948,113
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:
Contributions of equity, net of
transaction costs (note 26)
Share-based payments (note
40)
Convertible note option (note
28)
-
-
-
-
57,764
57,764
2,879,709
-
-
-
-
-
-
-
-
-
302,488
-
-
-
-
-
-
308,261
(1,914,560)
(1,914,560)
-
57,764
(1,914,560)
(1,856,796)
-
-
-
2,879,709
302,488
308,261
Balance at 30 June 2020
31,599,781
307,038
5,115,887
308,261
(34,749,192)
2,581,775
The above statement of changes in equity should be read in conjunction with the accompanying notes
29
Crowd Media Holdings Limited
Statement of cash flows
For the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Government grants (COVID-19)
Interest and other finance costs paid
Income taxes refunded
Income taxes paid
Consolidated
Note
2020
$
2019
$
17,155,085 26,868,408
(29,500,532)
20,948
106,902
-
(430,427)
491,349
-
(17,984,514)
58,033
-
22,000
(899,679)
-
(148,069)
Net cash used in operating activities
38
(1,797,144)
(2,443,352)
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
Proceeds from borrowings - NTH Mobile Limited
Proceeds from borrowings - BillFront
Proceeds from borrowings - Obsidian
Proceeds from issue of convertible notes - European Investment Consortium
Repayment of borrowings - BillFront
Repayment of borrowings - JGB
Repayment of convertible notes - Obsidian
Repayment of lease liabilities
Net cash from financing activities
Net increase/(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
14
16
26
(15,090)
(255,919)
3,878
-
-
(14,352)
(51,826)
6,505
137,904
42,305
(267,131)
120,536
1,555,250
-
-
-
2,821,000
(497,198)
-
(563,071)
(323,327)
428,957
418,397
2,169,032
404,420
-
-
(3,287,542)
-
-
2,992,654
133,264
928,379
839,462
146,112
(2,189,552)
2,559,776
469,238
Cash and cash equivalents at the end of the financial year
9
1,913,953
839,462
The above statement of cash flows should be read in conjunction with the accompanying notes
30
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
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', 'parent entity' or 'Crowd Media') and the entities it controlled at the end of, or during, the
year (referred to as the 'Group' or 'Crowd'). 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 are:
Registered office
Level 4
44 Gwynne Street
Cremorne VIC 3121
Principal place of business
Australia:
Level 4
44 Gwynne Street
Cremorne VIC 3121
Europe (Netherlands):
95B Piet Heinkade
1019 GM Amsterdam
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 28 August 2020. 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 2020-4 Amendment to Australian Accounting Standards - COVID-19-Related Rent Concessions
The Group has early adopted the amendment to AASB 16 from 1 July 2019. The amendment provides a practical
expedient for lessees to account for COVID-19-related rent concessions that: result in lease payments that are
substantially the same as, or less than, the consideration for the lease immediately prior to the change; where any
reduction in the lease payments affects only payments originally due on or before 30 June 2021; and where there is no
substantive change to other terms and conditions of the lease. The practical expedient allows an entity not to assess rent
concessions meeting the criteria as a lease modification. As a result, to the extent that lease concessions represent a
forgiveness or waiver of lease payments, such concessions are treated as variable lease payments recognised in profit or
loss with a corresponding adjustment to the lease liability. To the extent that the lease concession in substance represents
a delay in lease repayments such that lease consideration is not changed, the lease liability is not extinguished. Interest
continues to accrue for that period. The Group has applied the practical expedient to all rent concessions that meet the
abovementioned criteria and as the Group received no rent concessions, there was no profit or loss impact from the
adoption of this amendment.
31
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
AASB 16 Leases
The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates
the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets,
right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier
periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results
improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the
lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially
change how a lessor accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated.
The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Finance lease commitments as at 1 July 2019 (AASB 117)
Transition assessment adjustment
Operating lease commitments discount based on the weighted average incremental borrowing rate of 5.5%
(AASB 16)
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Tax effect on the above adjustments
Reduction in opening retained profits as at 1 July 2019
1 July
2019
$
749,143
-
2,016,077
(442,956)
2,322,264
(359,887)
(1,962,377)
(2,322,264)
-
-
Practical expedients applied
In adopting AASB 16, the Group has used the following practical expedients permitted by the standard:
●
applied a single discount rate to a portfolio of leases with reasonably similar characteristics;
●
accounted for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term
leases;
excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
●
●
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, for the financial year ended 30 June 2020, the Group incurred a loss of
$1,914,560, had net operating cash outflows of $1,797,144 and had net current liabilities of $300,448. Furthermore, at 30
June 2020 the Group has current borrowings of $2,905,275, comprised of the loan payable to BillFront of $1,671,834,
maturing on 12 April 2021, and convertible notes payable (Tranche 1) of $1,233,441, maturing on 29 April 2021.
These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will continue as a
going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business
and at the amounts stated in the financial report.
32
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
In the directors' opinion, there are reasonable grounds to believe that the Group will be able to continue as a going
concern, after consideration of the following factors:
●
The Group expects to generate positive operating cashflow and utilise growth opportunities in the Crowd Direct
division in the next year to improve profitability; and
The Group’s proven record of being able to raise funds to support its business plan, which includes receiving
$2,821,000 of funding through the European Investment Consortium convertible notes (refer to notes 20 and 23) in
the first half of the year and receiving a further $1,555,250 through a placement of 62,210,000 shares at $0.025 (refer
to note 26) in the second half of the year.
●
Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to
adopt the going concern basis in the preparation of the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets or
liabilities that might be necessary if the Group does not continue as a going concern.
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 36.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Crowd Media Holdings
Limited as at 30 June 2020 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.
33
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
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.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
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.
34
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
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.
35
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
Inventories
Finished goods are stated at the lower of cost and net realisable value on a 'first in first out' basis. Cost comprises of
purchase and delivery costs, net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
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 an 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.
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
36
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
Leases (to 30 June 2019)
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 and 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.
Right-of-use assets (from 1 July 2019)
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted
for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss
as incurred.
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.
37
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
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.
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.
38
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Lease liabilities (from 1 July 2019)
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are
incurred. Variable lease payments include rent concessions in the form of rent forgiveness or a waiver as a direct
consequence of the Covid-19 pandemic and which relate to payments originally due on or before 30 June 2021.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
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.
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.
39
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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.
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.
40
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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 2020. 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.
New Conceptual Framework for Financial Reporting
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and
early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new
guidance on measurement that affects several Accounting Standards. Where the consolidated entity has relied on the
existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt
with under the Australian Accounting Standards, the consolidated entity may need to review such policies under the
revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on
the consolidated entity's financial statements.
41
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the Group based on known information. This consideration extends to the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in
specific notes, there does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting
date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
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 40 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, historical collection rates, the impact
of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected
credit losses, as disclosed in note 10, is calculated based on the information available at the time of preparation. The
actual credit losses in future years may be higher or lower.
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.
42
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
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 and 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.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the
underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical
incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in
circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to
discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such
a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an
asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
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 Direct. The Company operates mobile content businesses globally but predominantly in Europe,
Latin America 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.
Due to the Company’s transition during the current financial year from being an agency to being sellers of brands through
strategic alliances, the Crowd Direct segment was created for the direct-to-consumer business. The activities in the prior
Crowd Media unit, which are not material to the group in the current financial year, are no longer a focus of the CODM, but
have been included here for comparative purposes.
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.
43
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 4. Operating segments (continued)
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 Direct
Crowd Media
Crowd Direct (direct-to-consumer) works with brands and digital influencers to sell products
and/or services that it owns, or part-owns, or is strategically aligned with.
Crowd Media operates as an agency, working with brands and digital influencers to provide
social media marketing, digital influencer advertising and third party affiliate services. This
division is not material in the current year and is no longer a focus of the CODM, but has
been reported here for comparative purposes.
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.
Operating segment information
Consolidated - 2020
Revenue
Sales to external customers
Interest income
Total revenue
EBITDA
Depreciation and amortisation
Allowance for expected credit losses
Interest income
Finance costs
Other non-cash expenses
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Q&A*
$
Subscription
$
Crowd
Direct
$
Crowd
Media
$
Total
$
8,860,666
327
8,860,993
7,032,328
-
7,032,328
(2,502,575)
(177,896)
-
327
1,760,834
(303,902)
(1,223,212)
2,204,497
(417,310)
3,197
-
(2,660,471)
-
(870,087)
347,923
-
347,923
(209,515)
-
-
-
-
-
(209,515)
6,201,054
5,358,356
554,641
5,493,039
3,649,978
389,259
239,766 16,480,683
327
239,766 16,481,010
-
(263,102)
(2,950)
-
-
(42)
-
(266,094)
(770,695)
(598,156)
3,197
327
(899,679)
(303,902)
(2,568,908)
654,348
(1,914,560)
- 12,114,051
12,114,051
-
9,532,276
9,532,276
*
Q&A segment includes Group Corporate costs.
44
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 4. Operating segments (continued)
Consolidated - 2019
Revenue
Sales to external customers
Interest income
Total revenue
EBITDA
Depreciation and amortisation
Allowance for expected credit losses
Interest income
Finance costs
Other non-cash expenses
Loss before income tax benefit
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
Australasia
Europe
Latin America
Other
Q&A*
$
Subscription
$
Crowd
Media
$
Total
$
15,923,286
1,991
15,925,277
6,361,291
-
6,361,291
1,634,199 23,918,776
1,991
1,634,199 23,920,767
-
(3,299,165)
(71,176)
(978,258)
1,991
1,799,374
106,903
(2,440,331)
427,500
(129,612)
(147,338)
-
(2,376,698)
-
(2,226,148)
(1,664,132)
(8,340)
(32,889)
-
(5,570)
-
(1,710,931)
5,320,341
3,385,513
253,339
5,605,533
1,994,227
411,320
(4,535,797)
(209,128)
(1,158,485)
1,991
(582,894)
106,903
(6,377,410)
1,581,426
(4,795,984)
8,959,193
8,959,193
8,011,080
8,011,080
Revenue
2020
$
2019
$
Geographical non-current
assets
2020
$
2019
$
226,703
776,353
15,047,078 20,692,287
1,773,305
676,831
1,014,535
192,367
805,537
2,195,078
-
-
597,714
369,173
-
-
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.
16,480,683 23,918,776
3,000,615
966,887
45
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 5. Revenue
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated - 2020
Major product lines
Information
Entertainment and content
Direct-to-consumer
Marketing agency
Geographical regions
Australasia
Europe
Latin America
Other
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Consolidated - 2019
Major product lines
Information
Entertainment and content
Marketing agency
Geographical regions
Australasia
Europe
Latin America
Other
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Q&A
$
Subscription
$
Crowd
Direct
$
Crowd
Media
$
Total
$
8,860,666
-
-
-
-
7,032,328
-
-
-
-
347,923
-
-
-
-
239,766
8,860,666
7,032,328
347,923
239,766
8,860,666
7,032,328
347,923
239,766 16,480,683
168,222
8,269,399
343,713
79,332
58,481
6,195,478
670,822
107,547
-
347,923
-
-
-
226,703
234,278 15,047,078
1,014,535
192,367
-
5,488
8,860,666
7,032,328
347,923
239,766 16,480,683
8,860,666
-
7,032,328
-
347,923
-
- 16,240,917
239,766
239,766
8,860,666
7,032,328
347,923
239,766 16,480,683
Q&A
$
Subscription
$
Crowd
Media
$
Total
$
15,923,286
-
-
-
6,361,291
-
- 15,923,286
6,361,291
-
1,634,199
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
-
776,353
1,187,983 20,692,287
1,773,305
676,831
-
446,216
15,923,286
6,361,291
1,634,199 23,918,776
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
46
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 6. Other income
Government grants (COVID-19)
Consolidated
2020
$
2019
$
22,000
-
During the Coronavirus (‘COVID-19’) pandemic, the Group has received JobKeeper support payments from the Australian
Government amounting to $12,000 which are passed on to eligible employees. These have been recognised as
government grants in the financial statements and recorded as other income over the periods in which the related
employee benefits are recognised as an expense. The Group is eligible for JobKeeper support from the government on the
condition that employee benefits continue to be paid.
During the year the Group received payments from the Australian Government amounting to $10,000 as part of its
‘Boosting Cash Flow for Employers’ scheme in response to the Coronavirus (‘COVID-19’) pandemic. These non-tax
amounts have been recognised as government grants and recognised as income once there is reasonable assurance that
the Company will comply with any conditions attached.
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Property, plant and equipment (note 14)
Right-of-use assets (note 15)
Total depreciation
Amortisation
Intangibles (note 16)
Total depreciation and amortisation
Impairment
Allowance for expected credit losses
Finance costs
Interest and finance charges paid
Interest and finance charges paid/payable on lease liabilities
Finance costs expensed
Leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
47
Consolidated
2020
$
2019
$
141,856
409,699
192,988
-
551,555
192,988
46,601
16,140
598,156
209,128
(3,197)
1,158,485
779,999
119,680
582,894
-
899,679
582,894
-
407,815
34,216
62,263
302,488
24,750
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 8. Income tax benefit
Income tax benefit
Current tax
Deferred tax - origination and reversal of temporary differences
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Increase in deferred tax assets (note 17)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
Tax at the statutory tax rate of 27.5% (2019: 30%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Entertainment expenses
Share-based payments
Employee entitlement accruals
Interest expense (JGB Optionality)
Other items (net)
Differences in overseas tax rates
Income tax benefit
Amounts charged directly to equity
Deferred tax assets (note 17)
Note 9. Current assets - cash and cash equivalents
Cash at bank
Consolidated
2020
$
2019
$
10,170
(664,518)
(25,761)
(1,555,665)
(654,348)
(1,581,426)
(664,518)
(1,555,665)
(2,568,908)
(6,377,410)
(706,450)
(1,913,223)
272
90,746
2,006
-
12,595
3,331
7,425
9,258
9,824
14,621
(600,831)
(53,517)
(1,868,764)
287,338
(654,348)
(1,581,426)
Consolidated
2020
$
2019
$
-
455,714
Consolidated
2020
$
2019
$
1,913,953
839,462
48
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 10. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Interest receivable
Consolidated
2020
$
2019
$
2,224,998
(467,048)
1,757,950
3,903,833
(1,792,223)
2,111,610
418,490
-
811
57,706
2,176,440
2,170,127
Allowance for expected credit losses
The Group has recognised a recovery of $3,197 (30 June 2019: loss of $1,158,485) in profit or loss in respect of the
expected credit losses for the year ended 30 June 2020.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
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
2020
%
2019
%
Carrying amount
2019
$
2020
$
Allowance for expected
credit losses
2020
$
2019
$
13%
23%
84%
98%
100%
5%
13%
69%
91%
100%
1,365,444
726,877
78,670
14,522
39,485
1,606,562
565,988
73,428
727,263
930,592
176,354
170,638
66,298
14,273
39,485
75,578
73,578
50,665
661,810
930,592
2,224,998
3,903,833
467,048
1,792,223
The Group has increased its monitoring of debt recovery as there is an increased probability of customers delaying
payment or being unable to pay, due to the COVID-19 pandemic.
Note 11. Current assets - accrued income
Accrued income
Consolidated
2020
$
2019
$
1,925,793
2,752,300
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.
Note 12. Current assets - inventories
Finished goods - at cost
Consolidated
2020
$
2019
$
118,236
-
49
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 13. Current assets - other
Prepayments
Security deposits
Other deposits
Note 14. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
2020
$
2019
$
223,953
8,098
30,554
241,327
8,098
66,999
262,605
316,424
Consolidated
2020
$
2019
$
985,153
(760,683)
983,954
(631,062)
224,470
352,892
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 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2020
Note 15. Non-current assets - right-of-use assets
Buildings - right-of-use
Less: Accumulated depreciation
Plant and
equipment
$
498,368
14,352
(6,505)
39,665
(192,988)
352,892
15,090
(3,878)
2,222
(141,856)
224,470
Consolidated
2020
$
2019
$
2,364,569
(413,584)
1,950,985
-
-
-
The Group leases land and buildings for its offices under agreements of between two to five years with, in some cases,
options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
50
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 15. Non-current assets - right-of-use assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Buildings -
right-
of-use
$
-
-
2,322,264
38,420
(409,699)
1,950,985
Consolidated
2020
$
2019
$
317,214
317,214
2,715,033
(2,617,309)
97,724
2,714,980
(2,616,054)
98,926
13,600,158 13,600,006
(8,191,809)
(5,408,197)
-
(8,191,961)
(5,408,197)
-
3,328,241
(991,771)
(2,114,833)
221,637
3,085,181
(969,293)
(2,114,833)
1,055
621,900
(456,899)
165,001
621,900
(456,899)
165,001
33,396
(9,814)
23,582
36,892
(5,094)
31,798
825,158
613,994
Consolidated
Balance at 1 July 2018
Balance at 30 June 2019
Recognised on adoption of AASB 16 (note 2)
Exchange differences
Depreciation expense
Balance at 30 June 2020
Note 16. Non-current assets - intangibles
Goodwill after impairment
Intellectual property - at cost
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
51
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 16. 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:
Intellectual
Distribution
Website
and other
Goodwill property
network
$
$
$
Software Databases intangibles
$
$
$
Total
$
Consolidated
Balance at 1 July 2018
Additions
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2019
Additions
Exchange differences
Amortisation expense
317,214
-
-
-
-
317,214
-
-
-
100,042
-
-
99
(1,215)
98,926
-
21
(1,223)
6,289
-
-
154
(6,443)
-
-
-
-
-
5,720
-
-
-
(4,665)
1,055
242,653
1,574
(23,645)
165,001
-
-
-
-
165,001
-
-
-
119,622
51,826
(137,904)
2,071
(3,817)
713,888
51,826
(137,904)
2,324
(16,140)
31,798
13,266
251
(21,733)
613,994
255,919
1,846
(46,601)
221,637
165,001
23,582
825,158
Balance at 30 June 2020
317,214
97,724
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
2020
$
2019
$
230,774
64,393
22,047
230,774
64,393
22,047
317,214
317,214
52
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 17. 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 to profit or loss (note 8)
Charged to equity (note 8)
Closing balance
Note 18. Current liabilities - trade and other payables
Trade payables
Accrued expenses and other payables
Refer to note 30 for further information on financial instruments.
Note 19. Current liabilities - deferred revenue
Deferred revenue
Consolidated
2020
$
2019
$
2,426,559
5,991
242,933
21,558
3,110
1,326,003
8,979
341,521
352,015
7,115
2,700,151
2,035,633
(455,714)
(455,714)
2,244,437
1,579,919
1,579,919
664,518
-
479,968
1,555,665
(455,714)
2,244,437
1,579,919
Consolidated
2020
$
2019
$
1,734,562
1,992,839
1,921,970
2,171,442
3,727,401
4,093,412
Consolidated
2020
$
2019
$
85,062
176,345
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.
53
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 20. Current liabilities - borrowings
Loans payable - BillFront
Convertible notes payable - European Investment Consortium (Tranche 1)
Refer to note 23 for further information on assets pledged as security.
Refer to note 30 for further information on financial instruments.
Consolidated
2020
$
2019
$
1,671,834
1,233,441
2,905,275
-
-
-
Loans payable - BillFront
The BillFront note balance date debt is EUR€1,039,835. 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 - European Investment Consortium
On 29 August 2019, the Company entered into an agreement with a consortium of strategic investors, the European
Investment Consortium, under which the members agreed, amongst other things, to subscribe for convertible notes with a
face value of up to $3.7 million via two tranches.
Tranche 1 was fully executed on 19 December 2019, after shareholder approval was granted at the 2019 Annual General
Meeting, pursuant to which the Company raised $1,741,000 (less associated fees and costs) and issued 1,741 convertible
notes with a face value of $1,000 each. The Tranche 1 notes are convertible into shares at a fixed price of $0.018 and
mature on 29 April 2021. At 30 June 2020, 1,325 Tranche 1 notes were outstanding and 416 notes had been converted
into shares. The fair value of the conversion right of the notes is recorded as a reserve within equity.
Tranche 2 is detailed in note 23.
Note 21. Current liabilities - lease liabilities
Lease liability
Refer to note 30 for further information on financial instruments.
Note 22. Current liabilities - employee benefits
Employee benefits
Consolidated
2020
$
2019
$
285,433
-
Consolidated
2020
$
2019
$
13,427
46,098
54
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 23. Non-current liabilities - borrowings
Loans payable - NTH Mobile Limited
Loans payable - BillFront
Convertible notes payable - Obsidian
Convertible notes payable - European Investment Consortium (Tranche 2)
Consolidated
2020
$
2019
$
-
-
-
649,323
418,397
2,169,032
404,420
-
649,323
2,991,849
Refer to note 30 for further information on financial instruments.
Loans payable – NTH Mobile Limited
The NTH Mobile Limited prior balance date debt was EUR€261,500. The principal balance and interest, payable at a fixed
annual rate of 3.99%, was repaid in full on 21 February 2020.
Loans payable – BillFront
The BillFront note balance date debt is EUR€1,039,835. 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. The loan is now classified as
current (refer note 20).
Convertible notes – Obsidian
The Obsidian convertible note 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. Obsidian subsequently
converted 2,200 notes to shares. On 3 September 2019, the company paid out the remaining 3,059 convertible notes in
cash generated from the issue of the European Investment Consortium (Tranche 1) convertible notes (refer note 20).
Convertible notes - European Investment Consortium
On 29 August 2019, the Company entered into an agreement with a consortium of strategic investors, the European
Investment Consortium, under which the members agreed, amongst other things, to subscribe for convertible notes with a
face value of up to $3.7 million via two tranches. Tranche 1 was fully executed on 19 December 2019 (refer note 20).
Under Tranche 2 of the European Investment Consortium convertible notes, $1,080,000 (less associated fees and costs)
was raised, pursuant to which 1,080 convertible notes with a face value of AUD 1,000 each were issued on 30 January
2020. The Tranche 2 notes are convertible into shares at a fixed price of $0.02 and mature on 18 December 2021. At 30
June 2020, 740 Tranche 2 notes were outstanding and 340 notes had been converted into shares. The fair value of the
conversion right of the notes is recorded as a reserve within equity.
The fair value of the conversion right of the notes is recorded as a reserve within equity.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Loans payable - NTH Mobile Limited
Loans payable - BillFront
Convertible notes payable - Obsidian
Convertible notes payable - European Investment Consortium
55
Consolidated
2020
$
2019
$
-
1,671,834
-
1,882,764
418,397
2,169,032
404,420
-
3,554,598
2,991,849
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 24. Non-current liabilities - lease liabilities
Lease liability
Refer to note 30 for further information on financial instruments.
Note 25. Non-current liabilities - derivative financial instruments
Convertible note derivative liability - fair value
Refer to note 30 for further information on financial instruments.
Refer to note 31 for further information on fair value measurement.
Note 26. Equity - issued capital
Consolidated
2020
$
2019
$
1,713,504
-
Consolidated
2020
$
2019
$
-
152,467
Ordinary shares - fully paid
384,016,015 241,265,666 31,599,781 28,720,072
Consolidated
2020
Shares
2019
Shares
2020
$
2019
$
56
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 26. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
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
1 July 2018
12 December 2018
12 June 2019
28 June 2019
222,074,251
11,288,179
$0.03800
28,167,383
428,957
1,681,614
6,221,622
$0.00000
$0.01400
37,500
86,232
Balance
Issue of shares on conversion of convertible notes
Issue of shares on conversion of convertible notes
Issue of shares on conversion of convertible notes
Issue of shares as consideration for corporate and
other advisory services
Issue of shares as consideration for corporate and
other advisory services
Issue of shares on conversion of convertible notes
Issue of shares in lieu of interest
Issue of shares as consideration for corporate and
other advisory services
Issue of shares on convertible note conversion
Issue of shares in lieu of interest
Issue of shares on convertible note conversion
Issue of shares in lieu of interest
Issue of shares on convertible note conversion
Issue of shares on convertible note conversion
Issue of shares in lieu of interest
Issue of shares on convertible note conversion
Issue of shares in lieu of interest
Issue of shares on convertible note conversion
Issue of shares on convertible note conversion
Issue of shares in lieu of interest
Issue of shares in lieu of interest
Issue of shares on capital raising
Issue of shares on capital raising
Less: share issue transaction costs
30 June 2019
8 July 2019
27 August 2019
2 September 2019
241,265,666
7,981,744
7,918,582
4,246,139
$0.01389
$0.01458
$0.01682
28,720,072
110,858
115,453
71,405
15 October 2019
8,514,488
$0.01800
153,261
6 December 2019
13 December 2019
13 December 2019
576,889
12,555,556
241,333
$0.01800
$0.01800
$0.02540
10,384
226,000
6,126
30 January 2020
30 January 2020
30 January 2020
27 March 2020
27 March 2020
20 April 2020
20 April 2020
20 April 2020
1 May 2020
1 May 2020
11 June 2020
11 June 2020
11 June 2020
11 June 2020
17 June 2020
26 June 2020
4,752,000
277,778
9,002
4,750,000
130,848
5,555,556
4,250,000
478,205
3,611,111
208,205
1,111,111
8,000,000
292,808
78,994
5,000,000
62,210,000
-
$0.02000
$0.01800
$0.02100
$0.02000
$0.01830
$0.01800
$0.02000
$0.01880
$0.01800
$0.02010
$0.01800
$0.02000
$0.02400
$0.02570
$0.03000
$0.02500
$0.00000
95,040
5,000
189
95,000
2,395
100,000
85,000
8,990
65,000
4,185
20,000
160,000
7,027
2,030
150,000
1,555,250
(168,884)
Balance
30 June 2020
384,016,015
31,599,781
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
There is no current on-market share buy-back.
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 and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
57
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 26. Equity - issued capital (continued)
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 2019 Annual Report.
Note 27. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Convertible note optionality reserve
Consolidated
2020
$
2019
$
307,038
5,115,887
308,261
249,274
4,813,399
-
5,731,186
5,062,673
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 28. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Transfer from convertible note optionality reserve
Accumulated losses at the end of the financial year
Note 29. Equity - dividends
Consolidated
2020
$
2019
$
(32,834,632)
(1,914,560)
-
(28,251,499)
(4,795,984)
212,851
(34,749,192)
(32,834,632)
There were no dividends paid, recommended or declared during the current or previous financial year.
58
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 30. 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.
The average exchange rates and reporting date exchange rates applied were as follows:
Australian dollars
United Kingdom Sterling
European Union Euros
United Stated Dollars
Hungarian Forint
Average exchange rates
Reporting date exchange
rates
2020
2019
2020
2019
0.5324
0.6068
0.6711
204.4948
0.5525
0.6268
0.7151
201.6197
0.5578
0.6124
0.6876
217.5790
0.5522
0.6172
0.7015
199.0528
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
Consolidated
Australian Dollar
Euros
Pound Sterling
United States Dollar
Mexican Peso
Turkish Lira
South African Rand
Hungarian Forint
Other
Assets
2020
$
2019
$
Liabilities
2020
$
2019
$
1,985,312
3,194,095
275,829
141,812
20,139
98,841
-
39,272
309,443
928,775
3,221,842
452,159
977,641
337,803
393,953
364,892
96,285
722,246
4,368,805
3,678,075
76,570
308,018
-
21,434
-
(519)
1,079,868
1,367,561
5,259,549
97,501
353,877
74,984
33,010
4,777
-
563,287
6,064,743
7,495,596
9,532,251
7,754,546
59
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 30. Financial instruments (continued)
Sensitivity analysis
Consolidated - 2020
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
United Kingdom Sterling
European Union Euros
Other currencies
5%
5%
5%
55,343
74,645
136,474
55,343
74,645
136,474
5%
5%
5%
(55,343)
(74,645)
(136,474)
(55,343)
(74,645)
(136,474)
266,462
266,462
(266,462)
(266,462)
Consolidated - 2019
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
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)
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
2020
2019
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Loans payable - BillFront
Loans payable - NTH
Convertible notes payable - Obsidian
Convertible notes payable - European Investment Consortium
11.25%
-
-
10.00%
Net exposure to cash flow interest rate risk
1,671,834
-
-
1,882,764
3,554,598
11.25%
3.99%
-
-
Balance
$
2,169,032
418,397
404,420
-
2,991,849
60
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 30. Financial instruments (continued)
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 2020 or 30 June 2019.
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.
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade payables
Accrued expenses and other
payables
Interest-bearing - variable
Lease liability
Loans payable - BillFront
Interest-bearing - fixed rate
Convertible notes payable
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
1,734,562
1,992,839
-
-
-
-
-
11.25%
285,433
1,824,661
713,964
-
999,540
-
10.00%
1,417,434
7,254,929
683,991
1,397,955
-
999,540
-
-
-
-
-
-
1,734,562
1,992,839
1,998,937
1,824,661
2,101,425
9,652,424
61
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 30. Financial instruments (continued)
Consolidated - 2019
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
Total non-derivatives
Derivatives
Convertible note derivative
liability
Total derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
1,921,970
2,171,442
-
-
11.25%
160,780
2,289,617
-
-
404,420
3.99%
-
4,254,192
443,095
3,137,132
-
-
-
152,467
152,467
-
-
-
-
-
-
-
-
-
-
1,921,970
2,171,442
-
2,450,397
-
-
-
-
-
404,420
443,095
7,391,324
152,467
152,467
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 31. 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 - 2020
Liabilities
Loans payable
Convertible notes payable
Total liabilities
Consolidated - 2019
Liabilities
Loans payable
Convertible notes payable
Convertible note derivative liability
Total liabilities
There were no transfers between levels during the financial year.
62
Level 1
$
Level 2
$
Level 3
$
Total
$
Level 1
$
-
-
-
-
-
-
-
-
-
-
1,671,827
1,882,764
3,554,591
1,671,827
1,882,764
3,554,591
Level 2
$
Level 3
$
Total
$
-
-
-
-
2,587,429
404,420
152,467
3,144,316
2,587,429
404,420
152,467
3,144,316
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 31. Fair value measurement (continued)
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 2018
Additions
Loans
payable -
NTH Mobile
Limited
$
Loans
payable -
BillFront
$
Convertible
notes -
Obsidian
$
Convertible
notes -
European
Investment
Consortium
$
Total
$
-
418,397
-
2,169,032
-
556,887
-
-
-
3,144,316
Balance at 30 June 2019
Additions
Change in derivative liability fair value
Repayments
Conversions
Foreign currency translation movement
418,397
-
-
(418,397)
-
-
2,169,032
-
-
(492,207)
-
(4,998)
556,887
-
303,902
(563,071)
(297,718)
-
-
2,523,991
-
-
(641,227)
-
3,144,316
2,523,991
303,902
(1,473,675)
(938,945)
(4,998)
Balance at 30 June 2020
-
1,671,827
-
1,882,764
3,554,591
Note 32. 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:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Consolidated
2020
$
2019
$
1,274,387
9,263
60,281
153,227
1,645,079
19,410
-
-
1,497,158
1,664,489
Detailed remuneration disclosures can be found in the remuneration report and equity interests in the directors' report.
63
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 33. 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:
Audit services - RSM Australia Partners
Audit or review of the financial statements
Note 34. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2020
$
2019
$
118,000
149,600
Consolidated
2020
$
2019
$
-
-
-
416,977
332,166
749,143
AASB 16 was adopted using the modified retrospective approach from 1 July 2019. As a result, the category of operating
leases no longer exists and current leases are recognised as an asset and liability on the face of the statement of financial
position under AASB 16. A maturity analysis of future lease liability payments is presented in note 30. The comparative
lease commitments included above are those required under the superseded accounting standard AASB 117.
Note 35. Related party transactions
Parent entity
Crowd Media Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 37.
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration report included in the
directors' report.
64
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 35. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2020
$
2019
$
Payment for services:
Boardroom Pty Limited (Former 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 Ltd. Amounts reported are until resignation as
a director by S. Karzis on 10 February 2020.
63,018
115,571
Compensation paid to Sophie Karzis, Former Director and legal counsel, via monies paid to
her company, Corporate Counsel Pty Ltd.
32,979
60,949
Wholesale Investor Pty Ltd (Director D. Carosa is a 7.25% shareholder) provided investor
promotions services to Crowd Media Holdings Ltd.
6,000
4,750
Mish Guru Limited (Director D. Carosa is a 0.25% shareholder) provided marketing services
to Crowd Media Holdings Limited subsidiaries.
5,874
35,335
Other expense/(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.
(120)
(20,490)
Global Internet Ventures Pty Ltd (Director D. Carosa is a 20% shareholder) paid Crowd
Media Holdings Ltd for office space rented, at cost.
(111,010)
(84,721)
Kindy Now Pty Ltd (Director D. Carosa is a 7.74% shareholder) paid Crowd Media Holdings
Ltd for office space rented, at cost.
(20,819)
(30,807)
Lab Brands Ltd (Director S. Schapera is a Director and CEO) supplied products and services
to Crowd Media Holdings Ltd relating to the selling of London Labs products in the Direct-to-
Consumer division.
Invincible Brands Lifestyle Services GmbH (Director S. Schapera is a Non-Executive
Director) paid Crowd Media Holdings Ltd for marketing and selling of its products, net of the
related product and distribution expenses owed by Crowd.
16,551
(224,082)
-
-
65
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 35. Related party transactions (continued)
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2020
$
2019
$
Current receivables:
Global Internet Ventures Pty Ltd (Director D. Carosa is a 18% shareholder) paid Crowd
Media Holdings Ltd for office space rented, at cost.
-
24,984
Kindy Now Pty Ltd (Director D. Carosa is a 7.74% shareholder) paid Crowd Media Holdings
Ltd for office space rented, at cost.
13,585
4,550
Current payables:
Payable to Sophie Karzis, Company Secretary and legal counsel, for director fees via her
company Corporate Counsel Pty Ltd
-
31,474
Payable to Boardroom Pty Limited for professional registry and corporate secretarial
services to Crowd Media Holdings Limited
11,129
19,610
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.
832
1,956
Lab Brands Ltd (Director S. Schapera is a Director and CEO) supplied products and services
to Crowd Media Holdings Ltd relating to the selling of London Labs products in the Direct-to-
Consumer division
Invincible Brands Lifestyle Services GmbH (Director S. Schapera is a Non-Executive
Director) paid Crowd Media Holdings Ltd for marketing and selling of its products, net of the
related product and distribution expenses owed by Crowd.
Other liabilities:
Director S. Schapera held 500 Tranche 1 (refer note 20) and 500 Tranche 2 (refer note 23)
convertible notes issued by Crowd Media Holdings Ltd at 30 June 2020.
Director D. Carosa held 100 Tranche 2 (refer note 23) convertible notes issued by Crowd
Media Holdings Ltd at 30 June 2020.
Director R. Quandt held 185 Tranche 1 (refer note 20) convertible notes issued by Crowd
Media Holdings Ltd at 30 June 2020.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
16,551
12,646
904,182
87,746
172,216
-
-
-
-
-
66
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 36. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Foreign currency reserve
Share-based payments reserve
Convertible note optionality reserve
Accumulated losses
Total equity
Parent
2020
$
2019
$
180,323
10,066
180,323
10,066
Parent
2020
$
2019
$
16,805,657 13,832,362
33,846,192 29,814,047
23,355,463 21,026,036
24,113,317 23,751,955
90,836,049 87,956,338
1,063,333
5,069,128
-
(88,026,707)
1,063,333
5,371,616
308,261
(87,846,384)
9,732,875
6,062,092
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 2020 and 30 June 2019.
Contingent liabilities
The parent entity has no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
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.
67
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 37. 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:
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
Crowd Media Holdings Pty Ltd (formerly Crowd Mobile
Australia Pty Ltd)
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.
Principal place of business /
Country of incorporation
Ownership interest
2019
2020
%
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
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%
*
Global AQA Pty Ltd owns 1% of Crowd Mobile Co-Operatif U.A.
68
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 38. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax benefit for the year
(1,914,560)
(4,795,984)
Consolidated
2020
$
2019
$
Adjustments for:
Depreciation and amortisation
Share-based payments
Change in derivative liability fair value
Convertible note share issues - non-cash
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease in accrued income
Increase in inventories
Decrease/(increase) in income tax refund due
Increase in deferred tax assets
Decrease in prepayments
Decrease/(increase) in other operating assets
Decrease in trade and other payables
Increase/(decrease) in deferred revenue
Increase/(decrease) in derivative liabilities
Decrease in employee benefits
Increase/(decrease) in other provisions
598,156
302,488
303,902
-
209,128
24,750
-
123,732
(6,313)
826,507
(118,236)
(137,899)
(664,518)
17,374
36,445
(366,011)
(91,283)
(152,467)
(32,671)
(398,058)
222,178
2,675,167
-
9,874
(1,099,951)
178,009
(41,589)
(686,980)
71,244
152,467
(36,306)
550,909
Net cash used in operating activities
(1,797,144)
(2,443,352)
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2018
Net cash from/(used in)
financing activities
Derivative financial liability
Balance at 30 June 2019
Net cash from/(used in)
financing activities
Leases recognised on adoption
of AASB 16 (note 2)
Conversions
Change in derivative liability
fair value
Conversion option recorded in
equity
Loans
payable -
NTH Mobile
Limited
$
Loans
payable -
BillFront
$
Convertible
notes
payable -
JGB
$
Convertible
notes
payable -
European
Investment
Obsidian Consortium
Convertible
notes
payable -
$
$
Lease
liabilities
$
Total
$
-
- 3,287,542
-
418,397
-
2,169,032
-
(3,287,542)
-
404,420
152,467
-
-
-
-
- 3,287,542
-
-
(295,693)
152,467
- 3,144,316
556,887
(563,071)
2,821,000
(323,327)
1,019,007
-
(297,718)
-
(641,227)
2,322,264
-
2,322,264
(938,945)
303,902
-
-
(297,009)
-
-
303,902
(297,009)
- 1,882,764 1,998,937 5,553,535
418,397 2,169,032
(418,397)
(497,198)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69
Balance at 30 June 2020
- 1,671,834
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 39. Earnings per share
Consolidated
2020
$
2019
$
Loss after income tax attributable to the owners of Crowd Media Holdings Limited
(1,914,560)
(4,795,984)
Weighted average number of ordinary shares used in calculating basic earnings per share
280,020,911 228,411,790
Weighted average number of ordinary shares used in calculating diluted earnings per share 280,020,911 228,411,790
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.68)
(0.68)
(2.10)
(2.10)
Options and performance rights have been excluded from the above calculation in the current and previous year as their
inclusion would be anti-dilutive.
Note 40. Share-based payments
Options
Debt refinancing plan options
As part of the debt refinancing plan in the year ended 30 June 2019, 2,000,000 options were issued to entities associated
with JGB (Cayman) Newton Ltd ('JGB').
Consultant options
At the 2019 Annual General Meeting, shareholders approved the grant of 8,514,488 options to Starland Management Pty
Ltd, and on 30 January 2020 a further 4,752,000 options were granted, in consideration for corporate advisory and
consulting services provided by Starland Management Pty Ltd. On 6 December 2019, 576,889 consultant options were
granted to Peak Asset Management in consideration for corporate and advisory and consulting services provided by Peak
Asset Management.
Investor Relations consultant options
At the 2019 Annual General Meeting, shareholders approved the grant of 10,000,000 Investor Relations consultant options
in consideration for investor relations services provided by its investor relations consultant, DGWA, the German Institute for
Asset and Equity Allocation and Valuation 'Deutsche Gesellschaft für Wertpapieranalyse GmbH'.
Executive Share Options Plan ('ESOP')
The ESOP established by the Group and approved by shareholders at a general meeting, granted 26,000,000 options over
ordinary shares in the Company to certain key management personnel (and Directors) of the Group. The options were
granted in accordance with performance guidelines established by the Board.
70
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 40. Share-based payments (continued)
Set out below are summaries of options granted:
2020
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
02/04/2022
06/12/2021
06/12/2021
06/12/2021
06/12/2021
13/12/2022
13/12/2022
13/12/2022
31/12/2023
02/04/2019
06/12/2019
06/12/2019
06/12/2019
06/12/2019
13/12/2019
13/12/2019
13/12/2019
30/01/2020
2019
$0.05000
$0.03000
$0.03000
$0.05000
$0.10000
$0.03000
$0.05000
$0.07000
$0.03000
-
2,000,000
576,889
-
8,514,488
-
5,000,000
-
-
5,000,000
- 13,000,000
6,500,000
-
6,500,000
-
4,752,000
-
2,000,000 49,843,377
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
02/04/2019
02/04/2022
$0.05000
-
-
2,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
576,889
8,514,488
5,000,000
5,000,000
(1,300,000) 11,700,000
5,850,000
5,850,000
4,752,000
(2,600,000) 49,243,377
(650,000)
(650,000)
-
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
2,000,000
2,000,000
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.
On 31 July 2019, the Company agreed to issue 11,000,000 Performance Rights ('PRs') to employees, excluding the
directors and CEO. On 18 December 2019, the Board modified the conditions of the performance rights as follows:
●
1-year performance rights: 20% of the performance rights (2,200,000) will be issued to employees that have been
continuously employed by Crowd as of the vesting date of 30 June 2020. For employees that met the vesting
conditions, the 1-year performance rights were exercised in August 2020.
2-year performance rights: 30% of the performance rights (3,300,000) will be issued to employees that have been
continuously employed by Crowd as of the vesting date of 30 June 2021.
3-year performance rights: 50% of the performance rights (5,500,000) will be issued to employees that have been
continuously employed by Crowd as of the vesting date of 30 June 2022.
Any extenuating circumstances regarding continuous employment are subject to Board approval.
●
●
●
Set out below are summaries of performance rights granted:
2020
Grant date
Expiry date
18/12/2019
18/12/2019
18/12/2019
30/06/2020
30/06/2021
30/06/2022
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
2,200,000
-
3,300,000
-
-
5,500,000
- 11,000,000
-
-
-
-
2,200,000
-
3,300,000
-
-
5,500,000
- 11,000,000
71
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 40. Share-based payments (continued)
2019
Grant date
Expiry date
16/01/2015
11/05/2015
10/07/2015
24/07/2015
02/12/2015
13/04/2016
05/08/2016
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
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
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)
-
-
-
-
-
-
-
-
-
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
06/12/2019
06/12/2019
06/12/2019
06/12/2019
13/12/2019
13/12/2019
13/12/2019
30/01/2020
06/12/2021
06/12/2021
06/12/2021
06/12/2021
13/12/2022
13/12/2022
13/12/2022
31/12/2023
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.02100
$0.02100
$0.02100
$0.02100
$0.02400
$0.02400
$0.02400
$0.02100
$0.03000
$0.03000
$0.05000
$0.10000
$0.03000
$0.05000
$0.07000
$0.03000
87.70%
87.70%
87.70%
87.70%
87.70%
87.70%
87.70%
87.70%
-
-
-
-
-
-
-
-
1.04%
1.04%
1.04%
1.04%
1.04%
1.04%
1.04%
1.04%
$0.0079
$0.0790
$0.0053
$0.0025
$0.0122
$0.0094
$0.0077
$0.0101
For the performance rights 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
18/12/2019
18/12/2019
18/12/2019
30/06/2020
30/06/2021
30/06/2022
Note 41. Events after the reporting period
Share price Expected
volatility
at grant date
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.02300
$0.02300
$0.02300
-
-
-
-
-
-
-
-
-
$0.0230
$0.0230
$0.0230
Novel Coronavirus (COVID-19)
The Novel Coronavirus ('COVID-19') has been declared a pandemic in March 2020 by the World Health Organisation
('WHO'). There have been considerable economic impacts in Australia, Europe and globally arising from the outbreak of
COVID-19 and Government action to reduce the spread of the virus. The outbreak of COVID-19 and the subsequent
quarantine measures imposed by the Australian, European and other governments as well as the travel and trade
restrictions imposed by Australia, Europe and other countries in early 2020 have caused disruption to businesses and
economic activity.
The impact of the COVID-19 pandemic is ongoing is dependent on measures imposed by the Australian Government and
other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided. It is not practicable to estimate the potential impact, positive or negative, after the reporting
date.
72
Crowd Media Holdings Limited
Notes to the financial statements
30 June 2020
Note 41. Events after the reporting period (continued)
Results of the Extraordinary General Meeting held on 25 August 2020
At the 25 August 2020 EGM, Shareholders approved the following:
●
Issue of 576,889 shares and 576,889 options on 6 December 2019 in consideration for corporate advisory and
consulting services provided by Peak Asset Management;
Prior issue of 4,752,000 shares and 4,752,000 options on 30 January 2020 in consideration for corporate advisory
and consulting services provided by Starland Management Pty Ltd;
Prior issue of 5,000,000 shares on 17 June 2020 to VITAL Innovations;
Prior issue of 61,210,000 shares on 26 June 2020 to professional and sophisticated investors; and
Issue of 31,105,000 options to shareholders who participated in the placement on 26 June 2020.
●
●
●
●
No other matter or circumstance has arisen since 30 June 2020 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.
73
Crowd Media Holdings Limited
Directors' declaration
30 June 2020
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
2020 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
___________________________
Steven Schapera
Chairman
28 August 2020
Melbourne
74
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 2020, 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 2020 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial report, which indicates that the Group incurred a net loss after tax of
$1,914,560 and had net operating cash outflows of $1,797,144 during the year ended 30 June 2020. As at this
date, the Group had net current liabilities of $300,448. As stated in Note 2, these events or conditions, along with
other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on
the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
75
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed 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 direct to consumer
product sales and/or services.
to
Total revenue for the year ended 30 June 2020 was
$16.4m and accrued revenue of $1.9m, 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.
AASB 9 – Expected Credit Loss
Refer to Note 10 in the financial statements
As at 30 June 2020, gross trade receivables
amounted to $2.2m (2019: $3.9m), and the
allowance for impairment of accounts receivables
amounted to $0.5m (2019: $1.8m).
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.
We considered this a key audit matter as the ECL
is highly subjective and requires management to
make significant judgements, assumptions and
estimates
the
expected credit loss model.
the application of
involved
in
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.
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
mathematical accuracy of the computation of
ECL;
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; and
Assessing whether
the disclosures
in
the
financial statements are adequate.
76
Key Audit Matters (Continued)
Convertible Loan Notes
Refer to Note 20 and 23 in the financial statements
During the year, the Group issued convertible loan
notes for the value of $2.8m and as at 30 June
2020, $1.9m was outstanding.
We have identified the valuation and accounting
treatment of convertible loans as a key audit matter
because both are complex areas and require the
use of estimates. Further, the separation of the
debt element
from the equity element of a
convertible loan involves a significant degree of
judgement.
Our audit procedures included the following:
Review of the convertible loan agreements to
evaluate the terms and conditions;
Evaluate the accounting treatment proposed to
determine whether in compliance with Australian
Accounting Standards;
Verified amounts, interest rates and maturities to
the supporting documentation;
Evaluating the reasonableness of key inputs in
the valuation model;
Tested and reperformed the calculations carried
out to split the convertible loans into equity and
debt elements; and
Assessing whether
the disclosures
in
the
financial statements are adequate.
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 2020 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.
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.
77
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 2020.
In our opinion, the Remuneration Report of Crowd Media Holdings Limited, for the year ended 30 June 2020,
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
M PARAMESWARAN
Partner
Dated: 28 August 2020
Melbourne, Victoria
78
Crowd Media Holdings Limited
Shareholder information
30 June 2020
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 10 August 2020 ('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
Percentage of
total shares
on issue
%
Number held
No.
25,742,968
20,213,228
6.70%
5.26%
Number of
holders
No.
1,604
2
14
3
12
1
3
3
3
1
9
5
16
16
16
DOMENIC CAROSA
818 CORPORATE PTY LTD (818 A/C)
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 $0.03 each on or before 6 December 2021
Options exercisable at $0.03 each on or before 31 December 2021
Options exercisable at $0.03 each on or before 13 December 2022
Options exercisable at $0.03 each on or before 31 December 2023
Options exercisable at $0.05 each on or before 6 December 2021
Options exercisable at $0.05 each on or before 2 April 2022
Options exercisable at $0.05 each on or before 13 December 2022
Options exercisable at $0.07 each on or before 13 December 2022
Options exercisable at $0.10 each on or before 6 December 2021
Convertible notes – Tranche 1 maturing on 29 April 2021
Convertible notes – Tranche 2 maturing on 18 December 2021
Performance rights vesting on 30 June 2020
Performance rights vesting on 30 June 2021
Performance rights vesting on 30 June 2022
79
Crowd Media Holdings Limited
Shareholder information
30 June 2020
Distribution of ordinary shareholders
Holdings 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 option holders
Holdings 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
Holdings 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
No.
Total units
No.
Percentage of
total shares
%
4,983
78
237,069
68
213
1,911,222
798 32,949,141
447 348,913,600
-
0.060
0.500
8.580
90.860
1,604 384,016,015
100.000
Holders of
options
No.
-
-
-
-
42
42
Holders of
convertible
notes
No.
14
-
-
-
-
14
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.
Percentage of issued shares
held by UMP holders
%
384,016,015
3,370
76
0.09
80
Crowd Media Holdings Limited
Shareholder information
30 June 2020
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:
CAROSA CORPORATION BV
818 CORPORATE PTY LTD (818 A/C)
D S A H HOLDINGS PTY LTD
MR RENE RATH
MR HENDRIKUS ANTONIUS JOHANNES KUSTERS
1215 CAPITAL PTY LTD
MR DIMCE NASTOVSKI (BRANDON NASTOVSKI A/C)
MR NOEL RUSSELL CAMERON & DR BELINDA CAROLINE GOAD (NOEL CAMERON
SUPER FUND A/C)
MUTUAL TRUST PTY LTD
STARLAND NOMINEES PTY LTD (THE STARLAND A/C)
MAESTRO CAPITAL PTY LTD (MAESTRO CAPITAL SUPER A/C)
MICHAEL MATTHEW FARRELLY
AUSTRALCO SUPER INVESTMENTS PTY LTD (HNARAKIS FAMILY S/F A/C)
MS CHUNYAN NIU
BUMBLETON PTY LTD (WILLIAM COATS S/F A/C)
MR ANDREW MARK DUNCAN
MR DIMCE NASTOVSKI (CAITLIN NASTOVSKI A/C)
CITICORP NOMINEES PTY LIMITED
ADDINGUP PTY LIMITED (ADDINGUP S/F A/C)
PERPETUAL CAPITAL INVESTMENTS PTY LTD
Total remaining holders balance
Ordinary shares
% of total
Number held
23,846,567
20,213,228
18,484,045
8,792,570
8,792,570
7,477,142
7,445,426
6,641,176
5,807,598
5,332,102
4,550,000
4,200,000
4,177,650
4,000,000
3,484,185
3,438,009
3,324,574
3,311,863
3,000,000
2,937,936
shares
issued
6.210
5.264
4.813
2.290
2.290
1.947
1.939
1.729
1.512
1.389
1.185
1.094
1.088
1.042
0.907
0.895
0.866
0.862
0.781
0.765
149,256,641
38.868
234,759,374
61.132
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
Options exercisable at $0.03 each on or before 6 December 2021
Options exercisable at $0.03 each on or before 31 December 2021
Options exercisable at $0.03 each on or before 13 December 2022
Options exercisable at $0.03 each on or before 31 December 2023
Options exercisable at $0.05 each on or before 6 December 2021
Options exercisable at $0.05 each on or before 2 April 2022
Options exercisable at $0.05 each on or before 13 December 2022
Options exercisable at $0.07 each on or before 13 December 2022
Options exercisable at $0.10 each on or before 6 December 2021
Convertible notes – Tranche 1 maturing on 29 April 2021
Convertible notes – Tranche 2 maturing on 18 December 2021
Performance rights vesting on 30 June 2020
Performance rights vesting on 30 June 2021
Performance rights vesting on 30 June 2022
81
Number of
unquoted
equity
Number
securities
of holders
9,091,377
23,111,112
11,700,000
21,752,000
5,000,000
2,000,000
5,850,000
5,850,000
5,000,000
1,325
740
2,200,000
2,857,500
4,762,500
2
14
3
12
1
3
3
3
1
9
5
16
16
16
Crowd Media Holdings Limited
Shareholder information
30 June 2020
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.
●
●
●
●
●
●
●
●
●
●
●
Options exercisable at $0.03 each on or before 6 December 2021: 8,514,488 are held by 818 Corporate Pty Ltd (818
A/C).
Options exercisable at $0.03 each on or before 31 December 2021: 5,555,556 are held by Mr Matthew Lucas Cain.
Options exercisable at $0.03 each on or before 13 December 2022: 4,550,000 are held by JCL Investments GMBH;
4,550,000 are held by Namaqua Holdings Ltd; 2,600,000 are held by Dominet Digital Investments Pty Ltd (Dominet
Digital Inves Fam AC).
Options exercisable at $0.03 each on or before 31 December 2023: 9,820,000 are held by 818 Corporate Pty Ltd (818
A/C).
Options exercisable at $0.05 each on or before 6 December 2021: 5,000,000 are held by Stefan Muller.
Options exercisable at $0.05 each on or before 2 April 2022: 1,136,541 are held by JGB Partners LP; 746,162 are
held by JGB Capital Offshore Ltd.
Options exercisable at $0.05 each on or before 13 December 2022: 2,275,000 are held by JCL Investments GMBH;
2,275,000 are held by Namaqua Holdings Ltd; 1,300,000 are held by Dominet Digital Investments Pty Ltd (Dominet
Digital Inves Fam AC).
Options exercisable at $0.07 each on or before 13 December 2022: 2,275,000 are held by JCL Investments GMBH;
2,275,000 are held by Namaqua Holdings Ltd; 1,300,000 are held by Dominet Digital Investments Pty Ltd (Dominet
Digital Inves Fam AC).
Options exercisable at $0.10 each on or before 6 December 2021: 5,000,000 are held by Stefan Muller.
Convertible notes – Tranche 1 maturing on 29 April 2021: 500 notes are held by Namaqua Holdings Ltd.
Convertible notes – Tranche 2 maturing on 18 December 2021: 500 notes are held by Namaqua Holdings Ltd.
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
82
Crowd Media Holdings Limited
Shareholder information
30 June 2020
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
83
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