DIGITALX LIMITED | ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2019
LETTER FROM THE CHAIR
DIRECTORS’ REPORT
OPERATING & FINANCIAL REVIEW
REMUNERATION REPORT
DIRECTORS’ DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASHFLOWS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
BASIS FOR PREPARATION
KEY OPERATING & FINANCIAL RESULTS
CAPITAL & RISK MANAGEMENT
FINANCIAL POSITION
EQUITY
GROUP STRUCTURE
OTHER DISCLOSURES
CORPORATE DIRECTORY
ASX INFORMATION
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Dear Shareholders,
Following a very successful financial year ended 30 June 2018, the result for the 2019 Financial Year for DigitalX has reflected all the
challenges and circumstances that have impacted the digital assets markets generally, both in Australia and globally. This saw a
reversal of the Company’s performance from a profit generating position as at 30 June 2018 to the US$2.5m loss that was the final
result as at 30 June 2019.
Notwithstanding that fact, the Company did see a number of positive developments that have placed the Company in a strong position
to build and grow on its internal knowledge and experience in the Blockchain and digital assets space. Those developments included:
•
•
The Company maintained its Bitcoin holdings, with prices of Bitcoin rising by approximately 30% since March 2019. The value of
these Company assets provides the Company with various options and opportunity as the Directors work on the ongoing strategic
direction of the Company post the end of the financial year.
The Company successfully raised AU$3.75m (excluding costs) during the financial year meaning that the Company is well-
capitalised to execute its business plans and strategy.
In addition to these matters that occurred during the financial year, post the end of the financial year, the Company has made key
strategic decisions that the Directors consider build upon the work that was done during the last Financial Year and present the
Company with key opportunities for the future, including the restructuring of the Board and the decision to focus on two distinct
business units: Blockchain Consulting and Development and Asset Management.
Your Board will continue to sharpen our focus on these two business areas in 2019/2020 with the absolute intention to create value
for Shareholders, and we look forward to being able to present exciting developments for the Company to Shareholders as soon as is
appropriate.
1
Once again, on behalf of my fellow Directors, thank you for your continued interest and support in DigitalX.
Yours sincerely,
Toby Hicks
Non-Executive Chair
Your Directors present their report together with the financial report on the consolidated entity (referred to hereafter as the Group
or Consolidated entity) consisting of DigitalX Limited (DigitalX or the Company) and the entities it controlled at the end of, or during,
the year ended 30 June 2019. Information contained within this report and the financial report is presented in United States dollars
($USD).
Directors
The following persons were Directors of DigitalX Limited during the financial year and up to the date of this report:
Mr Toby Hicks
Non-Executive Chairman
Term of Appointment
Appointed 10 July 2019
Status
Non-Independent
Non-Executive
Current Directorships
None
Previous Directorships of
Listed Entities within past 3
years
None
Mr Peter Rubinstein
Non-Executive Director
Term of Appointment
Appointed 15 September
2017
Status
Non-Independent
Non-Executive
Current Directorships
Genetic Technologies Limited
Since 31 January 2018
Previous Directorships of
Listed Entities within past 3
years
None.
Experience
Mr Hicks is a Partner of Steinepreis Paganin Lawyers & Consultants with over 15 years'
experience advising companies, both public and private, on matters relating to corporate
governance, capital raisings, and mergers and acquisitions, as well as general commercial and
strategic legal advice. He acts for a number of ASX listed companies.
Mr Hicks holds a Bachelor of Business (Management) and a Bachelor of Laws as well as a
Graduate Diploma in Company Secretarial Practice from the Governance Institute and is a
Chartered Secretary.
Mr Hicks spent 16 years as a Governor at the University of Notre Dame Australia and served for
14 years on the University’s Finance, Audit and Risk Committee and 4 years on the Law School
Advisory Board (Fremantle).
Mr Hicks had previously served on the Board from 15 September 2017 to 7 September 2018.
2
Interests in shares and options held as at the date of the report
7,500,000 performance rights; and
2,500,000 unlisted options exercisable at $0.10 each expiring on 30 June 2024.
Experience
Mr Peter Rubinstein has over 20 years’ experience in early stage technology commercialisation
through to public listings on the ASX. He is a lawyer by training, having worked at one of the
large national firms prior to moving in house at Montech, the commercial arm of Monash
University.
Mr Rubinstein has had significant exposure to the creation, launch and management of a diverse
range of technology companies including in biotech, digital payments and renewable energy.
Mr Rubinstein is also Chairman of EasyPark ANZ an early adopter in the “Smart City”
opportunities for digital parking.
Interests in shares and options held as at the date of the report
25,466,296 fully paid ordinary shares;
3,400,000 unlisted options exercisable at $0.0324 each expiring on 18 September 2020;
1,000,000 unlisted options exercisable at $0.22 each expiring on 10 December 2023;
1,500,000 unlisted options exercisable at $0.25 each expiring on 10 December 2023;
2,000,000 unlisted options exercisable at $0.30 each expiring on 10 December 2023; and
617,284 unlisted options exercisable at $0.324 each expiring on 1 September 2020.
Mr Leigh Travers
Executive Director
Term of Appointment
Appointed 24 July 2016
Status
Non-independent
Executive
Current Directorships
None
Experience
Mr Leigh Travers has enjoyed a decade of building relationships in financial and technology
markets through his experience with fintech and investment advisory companies. He is a current
Director of Blockchain Australia, the industry body for blockchain businesses in Australia.
Mr Travers previously worked for seven years at Australian wealth management firm Euroz
Securities as an Investment Advisor. His clients included high net worth, institutions and listed
companies as he provided trading advice and assisted with company buybacks and sell downs
and capital raising services.
Mr Travers holds a Bachelor of Commerce and Communications from the University of Western
Australia and has completed a Fintech Certification from the Massachusetts Institute of
Technology and Certificate in Blockchain Strategy from RMIT.
Previous Directorships of
Listed Entities within past 3
years
None
Interests in shares and options held as at the date of the report
5,000,000 fully paid ordinary shares; and
9,000,000 performance rights.
Mr Xue Samuel (“Sam”) Lee
Non-Executive Director
Term of Appointment
Appointed 15 September
2017 (Resigned 8 July 2019)
Status
Independent
Non-Executive
Current Directorships
None
Previous Directorships of
Listed Entities within past 3
years
Genetic Technologies Limited
Resigned July 2019
Experience
Mr Sam Lee is the founder and CEO of Blockchain Global Ltd. Blockchain Global is a profitable
Blockchain technology company with offices in Melbourne, New York, Kobe, Shanghai and
Dalian. Since incorporation, Blockchain Global has, through its corporate accelerator program,
made over 50 investments in companies leveraging Blockchain technology.
3
Mr Lee is a frequent interviewee on CNBC, BBC and Sky News and a panellist at the World
Economic Forum, as well as at numerous Blockchain summits.
Interests in shares and options held as at the date of the report
10,096,296 fully paid ordinary shares;
1,203,704 unlisted options exercisable at $0.0324 each expiring on 8 September 2020;
2,800,000 unlisted options exercisable at $0.0324 each expiring on 18 September 2020;
1,000,000 unlisted options exercisable at $0.22 each expiring on 10 December 2023;
1,500,000 unlisted options exercisable at $0.25 each expiring on 10 December 2023; and
2,000,000 unlisted options exercisable at $0.30 each expiring on 10 December 2023.
Experience
Mr Stephen Roberts is an experienced Chair and non-executive director of a number of listed and
private commercial enterprises across financial services, bio-pharm logistics, agriculture and
waste recycling. Mr Roberts’ most recent executive position was as Regional Chief Executive
Officer and Senior Partner of Mercer Investments, Asia Pacific and prior to that Managing
Director of Russell Investments, Australasia.
Interests in shares and options held as at the date of the report
Nil
Mr Stephen Roberts
Non-Executive Director
Term of Appointment
Appointed 3 April 2019
Resigned 4 July 2019
Status
Independent
Non-Executive
Current Directorships
Pyrolyx AG
Previous Directorships of
Listed Entities within past 3
years
Cryosite Ltd
Company Secretary
Ms Shannon Coates has over 20 years’ experience in corporate law and compliance. She is currently named company secretary to a
number of public unlisted and listed companies; having provided company secretarial and corporate advisory services to boards across
a variety of industries, including financial services, manufacturing and technology both in Australia and internationally. Ms Coates is
a qualified lawyer, Chartered Secretary and graduate of the AICD’s Company Directors course.
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Ms Shannon Coates was appointed Company Secretary of DigitalX on 8 December 2016.
Principal activities
During the financial year the Group continued to develop and deliver on its strategy of focussing on advisory related services to the
blockchain market. The principal activities of the Group consisted of:
• Advisory;
• Blockchain consulting;
•
• Media (via its joint venture).
Funds under management; and
Refer to the Operating and Financial Review for further information about each of the activities.
Environmental regulation
The Group is not subject to significant environmental regulation in respect of its operations.
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the financial year were as follows:
• During the course of the financial year the Group’s contributed equity increased by $USD3,230,731 (from $USD30,431,588 to
$USD33,662,319) as a result of shares issued for strategic placements, conversion of options and conversion of convertible notes
during the year. The changes for the year are disclosed in Note F1.
• As a result of the changes in equity noted above, and a year on year increase in digital asset prices, the Group’s cash and digital
asset position increased by $USD2,000,493 (from $USD10,272,569 to $USD12,276,062) positioning the Group with a strong
financial position heading into the 2020 financial year.
•
In addition to the above, the Group also announced the following significant changes and updates to the market during the
financial year which contributed to the overall performance and position of the Group at the end of the financial year:
Date
Announcement
Impact1
Link2
27/07/2018
JV update - Coincast Media to launch TV show
Investments
Announcement
29/08/2018
Investment in YPB convertible note
7/09/2018
Retirement of Non-Executive Director
Investments
Announcement
Directors’ Report Announcement
18/09/2018 Digital asset platform development and funding commitment
Investments
Announcement
28/09/2018 Service of Proceedings
20/11/2018
Launch of Blockchain Centre
Legal Expenses
Announcement
PPE
Announcement
23/11/2018 DigitalX enters JV with US Investment Bank AmerX
Investments
Announcement
3/04/2019
Appointment of Non-Executive Director
Directors’ Report Announcement
16/04/2019 Gold stablecoin investment and advisory engagement
Investments
Announcement
7/05/2019
Finalisation of legal proceedings
Legal Expenses
Announcement
Revenue
15/05/2019 A$3.75 Million Raised in SPP and Top Up Placement
1 Refer to the relevant section of the Report for the impact of the change.
2Refer to ASX announcement for full details.
Dividends
Equity
Equity
Announcement
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No dividends have been paid or declared up to the date of this report. The Directors have not recommended the payment of a dividend
in the current financial year.
Any future determination as to the payment of dividends by the Company (and the potential creation of a dividend policy for that
purpose) will be at the discretion of the Directors and will depend on the availability of distributable earnings and operating results
and financial condition of the Company, future capital requirements and general business as well as other factors considered relevant
by the Directors. No assurance in relation to the payment of dividends or franking credits attaching to dividends can be given by the
Company.
Subsequent events
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected the Group’s operations, results or state
of affairs, or may do so in future years other than those set out below.
Date of event
1 July 2019
Details of event
On 1 July 2019, 24,691,358 shares were issued at a price of $AUD0.0324 on conversion of 24,691,358
options.
4 July 2019
On 4 July 2019, Mr Stephen Roberts resigned as a Director of the Company.
8 July 2019
On 8 July 2019, Mr Sam Lee resigned as a Director of the Company.
11 July 2019
On 11 July 2019, Mr Toby Hicks was appointed as a Director and Non-Executive Chairman of the
Company.
As part of his appointment to the Board, Mr Hicks (or his nominee) was issued with 7.5 million
performance rights, automatically capable of conversion on the Company’s shares trading on ASX
achieving a volume weighted average trading price of not less than $0.09 for not less than 15
consecutive trading days within three years from the date of issue, and 2.5 million options exercisable
at $0.10 on or before 30 June 2024 (Incentive Securities). Mr Hicks’ Incentive Securities were issued on
11 July 2019 under the Company’s available annual placement capacity under ASX Listing Rule 7.1.
5 September 2019
On 5 September 2019, the Company announced noted it would seek to wind up the Futuredge Capital
Joint Venture (Formerly FutureICO Pty Ltd) and had terminated its Coincast Media joint venture.
Refer to the full announcement.
28 September 2019
On 28 September 2019, the Group became aware that a small Chinese based exchange, Coin Tiger, had
listed Bankorus (BKTS) tokens for trading. There was no announcement or marketing from the Company
indicating that a listing was pending. On review, the Group notes that the trading volumes since listing
have been low but considers that it may be indicative of an active market. At the time of the report the
price per token was $0.008 on 24-hour trading volume of $USDT690.
At 30 June 2019, the Group holds Bankorus Tokens at 30 June 2019 totalling $770,000 ($0.93 per token),
this balance may be impaired if the exchange listing is determined to legitimate and an active market
exists.
30 September 2019
Due to the volatile nature and the materiality of the digital assets held, we disclose the value of digital
assets held by the Group, excluding the DigitalX Fund and unlisted digital assets, as at the close date of
the 29 September 2019.
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Coin Symbol
Coin Amount
BTC
Altcoins
Total
431
-
-
$USD Spot Price
at 30 June
$10,817.16
-
$USD Spot Price
at 29 Sept
$8,104.19
-
-
$USD Balance
$3,492,905
$31,842
$3,524,747
Operating results
The result for the year ended 30 June 2019 was a consolidated loss attributable to members of the Group of $USD2,524,151 (2018:
profit of $USD2,595,834).
DigitalX provided services to the digital asset market during a profitable 2018 financial year, however, the results for the 2019 financial
year were impacted by a slow-down in the market and a significant draw down in the value of digital asset prices which has contributed
to a significant reduction in the Group’s revenue from the previous financial year. The four main service offerings the Group operated
during the period were corporate advisory, blockchain consulting, funds management, and media (via the Coincast Joint Venture).
Since the end of the 2019 financial year, DigitalX has been working hard to leverage its core competencies, specifically, the
commercialisation of blockchain technologies and is focusing on the two business lines of blockchain consulting and development and
funds management.
Despite the final financial result, the Group ended the year well capitalised and resourced to deliver an improved year for
shareholders.
Corporate advisory
DigitalX provided corporate advisory services to organisations seeking to launch digital assets during 2018/2019 through a
combination of technical due diligence, marketing and promotion, and introductions to DigitalX’s network.
While DigitalX has significant industry experience in this sector, the poor performance of the market (only 7% of ICOs outperformed
Bitcoin1) saw DigitalX reshape it’s offering to focus on security token offerings (being digital assets representing financial securities).
DigitalX formed the DX Americas LLC joint venture to service this security token market with US Investment Bank, Americas Executions
LLC. DigitalX considers the demand for security tokens to still be at a preliminary stage due to the current lack of secondary trading
markets for these financial products and therefore early revenues have been minimal.
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Blockchain consulting and development
DigitalX has provided services to a small number of groups during the year, with highlights including publicly listed clients and a tier
one global energy firm. DigitalX is currently tailoring a consulting offering to deliver introductory blockchain technology workshops
and proof of concept development, assisting clients to rapidly validate use cases for adopting blockchain technologies into their
businesses.
DigitalX has been actively working to build a market for blockchain technology consulting and development, which is strong
internationally. DigitalX management have been heavily involved in growing interest in the blockchain industry through a range of
speaking events, educational engagements and contributions to: Blockchain Australia, CPA Annual Congress Western Australia, Office
of the Auditor General WA, CPA Western Australia Member's Breakfast, Australian Human Rights Commission - Impact of new
technology, ADCA ICO Treasury submission, Blockchain Centre Perth, West Tech Fest, World Bank Aid and International Development
Tour. DigitalX will continue to lead efforts to create a market for blockchain technology in Australia which the firm is well capitalised
to commercialise.
DigitalX secured its first client in the stable coin market through the engagement with Bullion Asset Management to launch ‘xbullion’,
a gold backed digital asset. xbullion issuance and redemptions are recorded on the blockchain and are audited for compliance. In
addition to the use of blockchain, the underlying gold bullion is securely vaulted and insured and investors who purchase xbullion will
be able to redeem these digital assets for physical gold bullion if they choose.
The Company is at the forefront of these new digital assets in Australia that seek to encapsulate the benefits of both historical
regulated securities and the new technologies provided by digital assets.
Funds under management
The Group’s funds under management division, DigitalX Asset Management, focuses on offering professionally managed investment
products that invest in digital assets and blockchain technology companies. Over the past year, the division operated its Digital Asset
Fund, which invests in leading digital assets, with a smaller allocation towards special trading opportunities.
1 https://www.theblockcrypto.com/2019/08/07/a-post-mortem-on-the-ico-bubble-at-least-89-of-icos-are-in-the-red/
Since its launch on 1 May 2018, the Digital Asset Fund has underperformed its benchmark market cap weighted index by 8% to June
30, 2019, principally as a result of its significant underweighting in bitcoin relative to its benchmark index. Additionally, the fund has
20% of its assets invested in two unlisted investments.
This division also worked on its product development and research efforts. The portfolio management team has focused on developing
extensive research on hardware and software inputs to the blockchain ecosystem and on applications to other emerging technologies
such as the internet-of-things (IOT) and AI. The division also developed and distributed research notes on blockchain and digital asset
ecosystems.
Division personnel also worked on developing its distribution strategy throughout the year, and continued to build contacts with
prospective distribution partners and investors in Europe and in Panama. The division plans to expand marketing of its Digital Asset
Fund and continue product development efforts over the coming year.
Coincast Media
Coincast Media was a joint venture that provided education, public relations and content creation to the blockchain marketplace. The
division started the year strongly with the launch of the 12-week weekly blockchain TV series ‘Coincast TV’ on Sky News. Coincast was
involved with planning a second series of Coincast TV with other media channels but was unsuccessful in securing a contract that
would be profitable for the business. Coincast Media engaged with DIVAN.TV, an international TV streaming service which is available
in more than 200 countries around the world, but the engagement did not yield commercial success.
Coincast Media was engaged to provide media, marketing and PR services for a variety of exciting technology companies. The primary
strategy focused on serving clients that were going through a news heavy period, such as a capital raising process or conference and
roadshow activities. As the market declined over the period, the opportunity to generate high value engagements in the industry was
limited to a select few clients. On 5 September 2019, the Company announced it would wind down the Coincast Media joint venture
as the business model had not developed in the manner that both parties had anticipated.
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Future Developments
DigitalX has experienced a transitional year in a challenging market as it shapes its offering towards blockchain consulting and
development and asset management. We consider blockchain technology to be in its formative years. While major structural and
technological revolutions often have a 50-year cycle2, it is important to remember it is only 10 years since the launch of the Bitcoin
whitepaper. DigitalX’s mission to commercialise applications of blockchain technology is unchanged, and we are well capitalised to
achieve this goal. The Company expects to be in a strong position to present its refined blockchain commercialisation strategy and the
exciting developments in xbullion to the market in coming months.
2 https://appliedabstractions.com/2008/09/18/carlota-perez-on-how-to-understand-global-technology-trends/
Message from the Board of Directors
The Directors present this Remuneration Report, which forms part of the Directors’ Report for the financial year ended 30 June 2019.
The Directors note that Director and Executive remuneration continues to be an area that receives stakeholder focus and scrutiny, as
such the Remuneration Report has been structured in an attempt to provide transparency and clarity to readers around the
framework, policies and remuneration of DigitalX Limited’s Directors and its Executives.
The Remuneration Report has been set out under the following main headings:
A. Key Management Personnel
B. Remuneration policy, including the relationship between remuneration policy and Company performance
C.
Key terms of employment contracts
D. Remuneration of Directors and Executives
E.
Share options and performance rights granted to Directors
F.
Shareholdings of Directors
G. Related party transactions
H.
I.
Future remuneration developments
Definitions
The information provided in this Remuneration Report has been audited as required by Section 308(3C) of the Corporations Act 2001.
KEY MANAGEMENT PERSONNEL
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The Key Management Personnel (“KMP”) of the Group consist of the Board and Executives. This is the case due to the size and scale
of the Group’s current operations. All the named persons held their current position for the whole or part of the financial year and
since the end of the financial year unless otherwise stated.
KMP
Position
Status
Term as KMP
Peter Rubenstein
Sam Lee
Toby Hicks
Stephen Roberts
Leigh Travers
Neel Krishnan
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
President
Non-Executive KMP
Non-Executive KMP
Non-Executive KMP
Non-Executive KMP
Executive KMP
Executive KMP
Full Year
Full Year
To 7 Sept 2018
From 3 Apr 2019
Full Year
Full Year
REMUNERATION POLICY
For the year ended 30 June 2019 the Board as a whole determined and
reviewed compensation arrangements for the Executive Directors and where
applicable the Executive Team. The Board assessed the appropriateness of the
nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective
of ensuring maximum shareholder benefit from the retention of a high-quality
team. The objective of the Company’s remuneration framework was to ensure
reward for performance was competitive and appropriate to the results
delivered.
The Board aims to ensure that executive
rewards satisfied the following key criteria for
good reward governance practices:
Competitiveness and reasonableness;
Acceptability to shareholders;
Performance linked;
Transparency; and
Capital management.
DIGITALX LTD (DCC) EXECUTIVE REMUNERATION STRATEGY
An appropriate balance of fixed
and at-risk components.
Attract, motivate and retain
executive talent required at
stage of development.
The creation of reward differentiation
to drive performance
culture/behaviours.
Shareholder value creation through
equity incentives that meet
contemporary design .
Total Targeted Remuneration (TTR)
TTR is set by reference to the relevant
targets and market benchmarks
Fixed
At Risk
Total Fixed Remuneration (TFR)
Short Term Incentive (STI)
Long Term Incentive (LTI)
Fixed remuneration is set on
relativities reflecting
responsibilities, performance,
qualifications & experience.
A new STI policy is under consideration
but aims to align rewards with
performance culture.
Allocations in the past have been one
off and ad-hoc. A new LTI policy is
under consideration designed to align
with shareholder value creation and
contemporary standards.
10
Remuneration will be delivered as
Base salary plus any allowances
(including superannuation, pension,
or relevant statutory entitlements).
STI will be paid and/or vest on
achievement of the performance
hurdle and completion of the
relevant performance period.
Annual LTI allocations be considered
under the LTI policy.
Strategic Intent & Marketing Positioning
TFR in the early stages will be position
between 25th percentile and the
median compared to relevant market
data considering expertise and
performance in the role and will be
reassessed as the Group develops.
Performance incentive is directed to
achieve key strategic and financial
targets. TFR + STI opportunity is
intended to be positioned in the 3rd
quartile (Median to 75th) of relevant
benchmark reference group.
LTI is intended to provide a reward
for ‘out performance’ and align
executives with shareholder
interests. LTI opportunity to be
positioned at the top of the 3rd
quartile.
Total Targeted Remuneration (TTR)
TTR is intended to be positioned in the 3rd quartile (Median to 75th) compared to relevant market-based comparisons. 4th
quartile TTR should only be achieved/targeted if demonstratable outperformance against key strategic and financial targets is
achieved by DigitalX and the relevant executive.
IMPLEMENTATION OF REMUNERATION STRATEGY REVIEW
In the prior year Annual Report, the Directors noted they had commenced an independent remuneration review with remuneration
consultant, Crichton + Associates, to review the Group’s remuneration framework as presented above. While this is the Group’s target
model the Directors note that the remuneration recommendation for fixed remuneration was significantly higher (show in the graph
to the right) than the proposed 2019 remuneration framework and the Directors did not consider it appropriate to adopt the
remuneration recommendations given the overall market and performance of the Company.
ELEMENTS OF REMUNERATION
Base pay
Directors and Executives are offered a competitive base salary. Base pay for executives is reviewed annually by the Board to ensure
that individual executive’s pay is competitive with the market and is also reviewed upon promotion or additional responsibilities.
There is no guarantee of base pay increases fixed in any executive or director contracts.
Commission
There is no entitlement to commissions-based remuneration.
Short term incentives (STI)
Executive Director
To align the remuneration of the Executive Director and the performance of the Company, the Executive Director is issued STI in the
form of performance rights that vest on the achievement of certain performance hurdles. The STI for the year ended 30 June 2019
were approved by shareholders at the Annual General Meeting held on 27 November 2018.
11
Staff
For the purpose of incentivising and tying the rewarding of the Company’s staff to the performance of the Company, the Board has
determined that it may, at its discretion, issue shares or other similar instruments from time to time as a reward.
Long term incentives (LTI)
There were no LTI issued for the year ended 30 June 2019.
Performance Metrics
At the 2018 AGM the Board set the following performance metrics for 30 June 2019 year for the
Executive Director as part of the issue of 9,000,000 performance rights (STI).
Key
The table below sets out the performance against those metrics and where applicable,
commentary made on the progress towards the performance targets.
Target achieved
Work in progress
Target not met
Metric
Met?
Progress made
Company achieving NPAT of $5,000,000
As noted in the commentary on results for the period in the Operating
and Financial Review, the results for the year were impacted by a slow-
down in the market and a significant draw down in the value of digital
asset prices which has contributed to a significant reduction in the
Group’s revenue from the previous financial year. The Group continues
to work on and target its expenditure by looking for and taking
advantage of efficiencies through technology, cost reductions from
synergies across operations and good commercial management along
with continually improving internal systems for reporting, tracking and
monitoring.
Since the end of the 2019 financial year, DigitalX has been working hard
to leverage its core competencies, specifically, the commercialisation
of blockchain technologies and is focusing on blockchain consulting and
development and funds management.
Despite the final financial result, the Group ended the year well
capitalised and resourced to deliver an improved year for shareholders.
Company’s Shares closing at a price
equal to or greater than $0.25 on five
consecutive trading days over the term
of the Performance Rights
As noted above, the Group faced a slow-down in the market and a
significant draw down in the value of digital asset prices which, along
with other factors, has impacted the Company’s share price finishing
26% lower for the 12 months ended 30 June 2019.
However, as noted to the market in its annoucment on the 5 September
2019 the Board acknowledges that the area in which the Company
operates continues to be a dynamic and moving space and
shareholders should know that the Company undertakes significant
work to remain at the forefront of this business. Over the past few
months, significant work has been undertaken to consider how best to
utilise the Company’s experience and knowledge to drive further
growth for shareholders. The Board feels confident that the internal
restructuring and focus on both the development of blockchain as a
new commercial technology and the consideration of investment
opportunities in the technology space represent the best opportunity
to see growth for shareholders while operating in this space.
12
Consistent with the commentary above.
Company’s Shares closing at a price
equal to or greater than $0.30 on five
consecutive trading days over the term
of the Performance Rights
RELATIONSHIP BETWEEN THE REMUNERATION POLICY AND COMPANY
PERFORMANCE
As noted in Sections A & B, the Board seeks to align the interests of the Executive Team
with those of the shareholders when setting future short and long-term benefits. For the
year ended 30 June 2019 the total remuneration is reflective of the remuneration
strategy with adjustments made to reflect the current state of the Group and the change
in performance from the previous year, this is evident from the relationship between:
•
•
•
•
Total KMP reported remuneration down 43% from $1,437,838 to $816,299
reflective of a decrease in performance-based remuneration primarily in the form
of share-based payments. Total base remuneration (including other benefits) was
down 12% from $479,860 to $422,146 in line with the financial performance of the
Company;
The exception to the trend above is total remuneration for the Non-Executive
Directors, Messrs Rubinstein and Lee, who received incentive options approved by
shareholders at the 2018 AGM valued at $296,636.
The overall remuneration trend is also consistent with the share price performance
and earnings per share (EPS) performance as evident in the graphs to the right;
Subsequent to the end of the financial year, the Board decreased fees for Non-
Executive Directors.
The Company is not yet at stage of its development where it considers benchmark
returns against an ASX peer group (blockchain focussed) relevant based on limited
inclusions and comparable data.
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2,000,000
0
(2,000,000)
(4,000,000)
(6,000,000)
(8,000,000)
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Share price & total KMP
remuneration trend
At risk
Base
Share price at the EOY
Basic EPS & total KMP
remuneration trend
At risk
Base
Basic earnings per share
13
0.160
0.140
0.120
0.100
0.080
0.060
0.040
0.020
0.000
0.010
0.000
(0.010)
(0.020)
(0.030)
(0.040)
(0.050)
Net profit &
KMP remuneration
Net profit/(loss) before tax
Total reported remuneration
2015
2016
2017
2018
2019
RELATIONSHIP BETWEEN THE REMUNERATION POLICY AND COMPANY PERFORMANCE – FIVE YEAR DATA TABLE
The table below includes the remuneration and performance data from the preceding five (5) financial years used to analyse the linkage between remuneration and performance in the section
above.
Revenue & other income from all operations
36,600,025
40,403,656
8,041,026
9,905,859
2,555,039 ↓
Net profit/(loss) before tax
(6,769,719)
(3,417,305)
(3,973,961)
2,595,834
(2,524,151) ↓
30 June 2015
$USD
30 June 2016
$USD
30 June 2017
$USD
30 June 2018
$USD
30 June 2019
$USD
Total reported in remuneration report
Remuneration - Base
Remuneration - At risk
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Share Price at the start of year
Share price at the end of year
Final dividend
1,264,620
1,264,620
-1
(0.042)
(0.042)
0.370
0.150
-
955,292
910,725
44,567
(0.019)
(0.019)
0.150
0.140
-
755,980
1,437,838
812,419 ↓
691,496
64,484
(0.020)
(0.020)
0.140
0.036
-
479,860
957,978
0.006
0.005
0.036
0.075
-
418,266 ↓
394,153 ↓
14
(0.005) ↓
(0.005) ↓
0.075
-
0.055 ↓
-
1 At risk remuneration for the year ended 30 June 2015 not shown as the amount was negative due to the reversal of the share-based payment expense for that year.
KEY TERMS OF EMPLOYMENT CONTRACTS
Executives
Mr Leigh Travers
Executive Director
Under an Executive Employment Agreement entered into between Mr Travers and DigitalX, Mr Travers is appointed as Executive
Director, in effect from 28 November 2017. The employment will be ongoing until it is terminated in accordance with Mr Travers’
Executive Employment Agreement. The employment may be terminated by either party giving 6 months’ written notice (although
less than 6 months’ notice is required by DigitalX in certain circumstances such as Mr Travers’ illness, absence, material breaches or
misconduct in which case Mr Travers will not be entitled to receive any payment in lieu or compensation as set out below). On
termination of his employment and where DigitalX elects to make payment in lieu of notice, the Company must pay Mr Travers a
payment equal to his salary for the remainder of the notice period. Mr Travers will be under restraint and non-solicitation clauses for
up to 24 months after the termination of his employment.
Mr Travers’ current salary is $USD145,000 per annum (exclusive of mandatory social security payments including superannuation)
subject to annual salary reviews and his reasonable expenses will also be paid by the Company.
Under all of the Employment Agreements above, DigitalX, in its absolute discretion acting reasonably, can assign and transfer the
employment to any of DigitalX’s Related Bodies Corporate.
Mr Neel Krishnan
President
15
Under an Executive Employment Agreement entered into between Mr Krishnan and DigitalX, Mr Krishnan was appointed as President
of DigitalX, in effect from 28 November 2016. The employment will be ongoing until it is terminated in accordance with Mr Krishnan’s
Employment Agreement. The employment may be terminated by either party giving 1 months’ written notice (although less than 1
months’ notice is required by DigitalX in certain circumstances such as Mr Krishnan‘s illness, absence, material breaches or misconduct
in which case Mr Krishnan will not be entitled to receive any payment in lieu or compensation as set out below). On termination of
his employment and where DigitalX elects to make payment in lieu of notice, the Company must pay Mr Krishnan a payment equal to
his salary for the remainder of the notice period. Mr Krishnan will be under restraint and non-solicitation clauses for up to 12 months
after the termination of his employment.
Mr Krishnan‘s current salary is $USD148,000 per annum (inclusive of mandatory social security payments including superannuation)
subject to annual salary reviews and his reasonable expenses will also be paid by the Company.
Under all of the Employment Agreements above, DigitalX, in its absolute discretion acting reasonably, can assign and transfer the
employment to any of DigitalX’s Related Bodies Corporate.
Non-Executive Directors
Non-Executive Directors remuneration arrangements include compensation in the form of annual Directors’ fees in accordance with
their relevant service agreement. The Non-Executive Directors from time to time may receive incentive compensation in the form of
share-based payments (as approved by Shareholders).
For the year ended 30 June 2019, all Non-Executive Directors received a base fee of $AUD50,000 exclusive of entitlements. With the
exception of Mr Peter Rubinstein who received a base fee of $AUD75,000 from September 2018 onwards in recognition of the
responsibilities of the role of the chair. Subsequent to the end of the year all fees were reduced back to $AUD50,000.
Amounts payable to Director controlled entities for services provided by Directors for the year ending 30 June 2019 is detailed in the
following table of this report. The Group may carry out consulting activities with the Directors on an arm’s length basis in the normal
course of business.
REMUNERATION OF DIRECTORS AND EXECUTIVES
The compensation for each Director and executive for the period is contained in the following table:
Year ended 30 June 2019
Name
Short-term employee benefits
Post-employment
benefits
Share-based payment
Total
At Risk %
Salary & Fees1
$USD
Director Fees1
$USD
Other Benefits2
$USD
Superannuation3
$USD
Shares
$USD
Options and
performance rights8
$USD
$USD
Non-Executive
Directors
Peter Rubinstein
Sam Lee5
Toby Hicks6
Stephen Roberts7
Executive Directors
Leigh Travers
Other KMP
Neel Krishnan
Total
-
-
-
-
140,062
125,000
265,062
50,510
35,707
6,087
9,569
-
-
101,003
-
-
-
-
-
-
-
-
-
-
-
-
148,318
148,318
-
-
198,828
74.6%
184,025
80.6%
16
6,087
9,569
-
-
9,494
13,306
29,3544
192,216
20.2%
25,026
34,520
4,375
17,681
24,483
24,483
43,680
369,670
222,564
31.2%
812,419
49.9%
1 Amounts paid in Australian Dollars are converted to United States Dollars at time of payment.
2 Other benefits include tokens from Initial Coin Offerings (ICOs) distributed to KMP and staff.
3 Superannuation or equivalent (i.e 401k, social security).
4 Included in the total is an amount of $USD29,354 relating to the share-based payment expense for performance rights issued but not vested.
5 Sam Lee resigned effective 8 July 2019.
6 Toby Hicks resigned effective 7 September 2018 and was reappointed on 10 July 2019.
7 Stephen Roberts was appointed effective 3 April 2019 and resigned on 4 July 2019.
8 Refer to Sections E & F of the Remuneration Report for additional details.
Year ended 30 June 2018
Name
Short-term employee benefits
Post-employment
benefits
Share-based payment
Total
At Risk %
Salary & Fees
$USD
Director Fees
$USD
Other Benefits2
$USD
Superannuation3
$USD
Shares, options and
performance rights6
$USD
Shares, options and
performance rights6
$USD
Non-Executive
Directors
Peter Rubinstein
Sam Lee
Toby Hicks4
Faisal Khan5
Executive Directors
Leigh Travers
Other KMP
Neel Krishnan
Total
-
-
-
-
133,909
126,125
260,034
25,625
22,453
41,914
15,788
-
-
105,780
1 Amount paid in Australian Dollars are converted to United States Dollars at 0.7714.
2 Other benefits include tokens from Initial Coin Offerings (ICOs) distributed to KMP and staff.
3 Superannuation or equivalent (i.e 401k, social security).
4 Toby Hicks resigned effective 7 September 2018.
5 Faisal Khan resigned effective 23 November 2017.
6 Refer to Sections E & F of the Remuneration Report for additional details.
-
-
-
-
-
-
-
-
-
-
152,420
10,857
-
-
-
-
$USD
25,625
22,453
-
-
194,334
78.4%
26,645
40.7%
17
69,399
12,721
167,320
534,813
918,162
76.5%
18,683
88,082
13,243
25,964
92,568
423,165
-
250,619
36.9%
534,813
1,437,838
66.6%
SHARE OPTIONS AND PERFORMANCE RIGHTS GRANTED TO DIRECTORS
Name
2019
Toby Hicks
Leigh Travers
Peter Rubinstein
Sam Lee
Total
Opening balance
Granted as
compensation
Exercised during the
period
Closing balance
Options
-
-
-
-
-
-
-
4,500,0001
4,500,0001
9,000,000
-
-
-
-
-
-
-
4,500,000
4,500,000
9,000,000
1 Messers Lee and Rubinstein were issued with 4,500,000 incentive options on the terms and conditions set out in the notice of annual general meeting for 2018 and
approved at the Company’s AGM on 22 November 2018. The incentive options were vested immediately in accordance with the terms and conditions approved by
shareholders and 9,000,000 remain unexercised at 30 June 2019. Further details on the valuation can be found in Note F2.
Name
2019
Toby Hicks
Leigh Travers
Peter Rubinstein
Sam Lee
Total
Options
Opening balance
Granted as
compensation
Exercised during the
period
Closing balance
-
-
-
-
1,000,000
29,000,000
1(1,000,000)
9,000,000
18
-
-
-
-
-
-
-
-
1,000,000
9,000,000
(1,000,000)
9,000,000
1 On 3 July 2018, 1,000,000 performance rights were converted to ordinary shares for performance hurdles met in the previous financial year.
2 Leigh Travers was issued with 9,000,000 performance rights on the terms and conditions set out in the notice of annual general meeting for 2018 and approved at
the Company’s AGM on 22 November 2018. During the year the performance hurdle for none of the 3 tranches were satisfied and 9,000,000 rights remain unvested
at 30 June 2019. Further valuation details can be found in F2.
SHAREHOLDINGS OF DIRECTORS
Directors
Peter Rubinstein
Sam Lee
Toby Hicks
Stephen Roberts
Leigh Travers
Total
Opening Balance
1 July 2018
Granted as
Compensation
Conversions &
Vesting
Net Other
Changes1
Closing Balance
30 June 2019
16,470,000
4,911,111
800,000
-
3,261,111
25,442,222
-
-
-
-
-
-
6,796,2962
5,185,1852
-
-
23,266,296
10,096,296
-
-
(800,000)
-
-
-
1,000,0003
200,000
4,461,111
12,981,481
(600,000)
37,823,703
1 Net changes includes initial holdings, final holdings and on-market sales as reported to the market per the respective Appendix 3X, 3Y, and 3Z.
2 Conversions relate to options received as part of convertible note entered into prior to becoming a Director.
3 Included in the total is 1,000,000 shares received on vesting of performance rights noted in Section E above.
RELATED PARTY TRANSACTIONS
Year ended 30 June 2019
• During the year, the Group paid Steinepreis Paganin, a law firm of which former Non-Executive Director Toby Hicks is a partner,
$5,533 for legal services rendered on various matters. This amount relates to the period of the financial year that Mr Hicks was a
Director of the Company. At 30 June 2019, Steinepreis Paganin is not considered a related party as Mr Hicks was not a Director
at 30 June 2019.
• During the year, the Group recognised an expense and paid Blockchain Global Ltd, a company of which Messrs Rubinstein and
Lee served as Directors of during the year, of $1,211 for reimbursement of costs. The Company notes that both Mr Rubinstein
and Mr Lee resigned as Directors of Blockchain Global during the year and the Company no longer considers Blockchain Global to
be a related party on that basis. Messrs Rubinstein and Lee were appointed Directors of the Company as nominees of Blockchain
Global Ltd.
• During the year, Mars Capital Australia Pty Ltd, a company controlled by Non-Executive Director Sam Lee, converted 14
convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, to 5,185,185 ordinary shares. As part
of the conversion 2,800,000 options exercisable at $AUD0.0324 expiring 18 September 2020 were also issued. During the year,
$AUD5,236 of interest was paid, and recognised as an expense, on the convertible notes held. At 30 June 2019, no amounts were
owed to Mars Capital.
• During the year, Irwin Biotech Nominees Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein, converted
17 convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, to 6,796,296 ordinary shares. As
part of the conversion 3,400,000 options exercisable at $AUD0.0324 expiring 18 September 2020 were also issued. During the
year, $AUD6,358 of interest was paid, and recognised as an expense on the convertible notes held. At 30 June 2019, no amounts
were owed to Irwin Biotech.
• During the year, the Group paid Value Admin Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein,
$USD50,509 as part of Non–Executive Director fees.
19
Year ended 30 June 2018
• During the financial year 2,546,000 unlisted options exercisable at $AUD0.08, expiring on 30 June 2018, lapsed unexercised.
• During the year, the Group paid Steinepreis Paganin, a law firm of which former Non-Executive Director Toby Hicks is a partner,
$AUD116,607 for legal services rendered on various matters. At 30 June 2018, the Group owed $AUD2,545 to Steinepreis Paganin.
• During the year, the Group recognised an expense and paid Blockchain Global Ltd, a company of which Mr Lee served as a Director
of for the year, $USD469,623 for services related to initial coin offerings. At 30 June 2018, no amounts were owed to Blockchain
Global Ltd. Messrs Rubinstein and Lee were appointed Directors of the Company as nominees of Blockchain Global Ltd.
• During the year, Mars Capital Australia Pty Ltd, a company controlled by Non-Executive Director Sam Lee, was issued 14
convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, as approved by Shareholders on 25
August 2017. Each convertible note was entitled to 100,000 incentive options, exercisable at $AUD0.0324 and expiring 8
September 2019. During the year, $AUD11,737 of interest was paid, and recognised as an expense, on the convertible notes held.
At 30 June 2018, the Group owed $AUD5,236 to Mars Capital Australia Pty Ltd for unpaid interest.
• During the year, Irwin Biotech Nominees Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein, was issued
17 convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, as approved by Shareholders on 25
August 2017. Each convertible note was entitled to 100,000 incentive options, exercisable at $AUD0.0324. During the year,
$AUD16,422 of interest was paid, and recognised as an expense on the convertible notes held. At 30 June 2018, the Group owed
$AUD6,357 to Irwin Biotech for unpaid interest.
• During the year, Rip Opportunities Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein, was issued 10
convertible notes, with a face value of $AUD10,000 each, convertible at $AUD 0.027 each, as approved by Shareholders on 25
August 2017. Each convertible note was entitled to 100,000 incentive options, exercisable at $AUD 0.0324 and expiring 14
September 2019. Convertible notes have been converted during the year. During the year, $AUD2,589 of interest was paid on
the convertible notes held. At 30 June 2018, no amounts were owed to Rip Opportunities Pty Ltd as the notes have been converted
during the year.
• During the year, the Group paid Value Admin Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein,
$USD22,231 as part of Non–Executive Director fees.
FUTURE REMUNERATION DEVELOPMENTS
The Directors note at last year’s Annual General Meeting the Remuneration Report passed unanimously on a show of hands and there
were no comments on the Remuneration Report. There are no future developments planned.
20
DEFINITIONS
Key management personnel
Those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or
indirectly, including any director (whether executive or otherwise) of that entity.
Remuneration of an officer or employee of a corporation
A benefit given to an officer or employee of a corporation is remuneration if and only if the benefit, were it received by a director of
the corporation, would be remuneration of the director for the purposes of an accounting standard that deals with disclosure in
companies' financial reports of information about directors' remuneration.
Remuneration committee
A committee of the board of directors of the company; and has functions relating to the remuneration of key management personnel
for the company.
Remuneration consultant
A person:
a) Who makes a remuneration recommendation under a contract for services with the company to whose key management
personnel the recommendation relates; and
b) Who is not an officer or employee of the company.
A remuneration recommendation
(a) A recommendation about either or both of the following:
a) For one or more members of the key management personnel for a company;
how much the remuneration should be;
i.
ii. what elements the remuneration should have; or
b) A recommendation or advice about a matter or of a kind prescribed by the regulations.
21
ASIC may by writing declare that s.9B(1) of the Corporations Act 2001 above does not apply to a specified recommendation or
specified advice but may do so only if ASIC is satisfied that it would be unreasonable in the circumstances for the advice or
recommendation to be a remuneration recommendation. The declaration has effect accordingly. The declaration is not a legislative
instrument.
What is not a remuneration recommendation?
None of the following is a remuneration recommendation (even if it would otherwise be covered by subsection (1)):
a) Advice about the operation of the law (including tax law);
b) Advice about the operation of accounting principles (for example, about how options should be valued);
c) Advice about the operation of actuarial principles and practice;
d) The provision of facts;
e) The provision of information of a general nature relevant to all employees of the company;
f) A recommendation, or advice or information, of a kind prescribed by the regulations.
AGM
Means an annual general meeting of a company that section 250N requires to be held.
END OF AUDITED REMUNERATION REPORT
Directors’ meetings
Given the size and scale of operations of the Company, the full Board undertook the responsibilities of the Audit and Risk Committee,
Remuneration Committee and Nomination Committee.
The Directors attendances at Board meetings held during the financial year were:
Director
Peter Rubinstein
Sam Lee
Toby Hicks1
Stephen Roberts2
Leigh Travers
1 Toby Hicks resigned effective 7 September 2018.
2 Stephen Roberts was appointed effective 3 April 2019.
Shares under option
Board Meetings
Number eligible to attend
11
11
2
4
11
Number attended
11
9
2
4
11
As at the date of this report, there are 32,348,997 options to subscribe for unissued ordinary shares in the Company, comprising:
Date options granted
Vesting
Date
Option class
Exercise price of
options
Expiry date of
options
Number of shares
under option
22
1 September 2018
8 September 2018
18 September 2018
10 December 2018
10 December 2018
10 December 2018
17 May 2019
11 July 2019
-
-
-
-
-
-
-
-
Unlisted
$0.0324
1 September 2020
6,172,840
Unlisted
$0.0324
8 September 2020
6,107,755
Unlisted
$0.0324
18 September 2020
8,800,000
Unlisted
Unlisted
Unlisted
$0.22
$0.25
$0.30
10 December 2023
2,000,000
10 December 2023
3,000,000
10 December 2023
4,000,000
Unlisted
$0.0847
17 May 2022
2,768,382
Unlisted
$0.10
30 June 2024
2,500,000
The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the
Company or any other body corporate or registered scheme.
Shares issued on exercise of options
During the financial year, and to the date of this report, the Company issued 27,877,778 Ordinary Shares, on exercise of options.
Date
7 August 2018
8 October 2018
1 July 2019
Details
Unlisted
Unlisted
Unlisted
Issue Price A$
Number of Shares
0.0324
0.0324
0.0324
3,086,420
100,000
24,691,358
Shares under convertible notes
As at the date of this report, there are no convertible notes issued that are convertible to ordinary shares in the Company as all
outstanding notes have converted subsequent to 30 June 2019 as set out in the table below:
Shares issued on conversion of convertible notes
During the financial year, and to the date of this report, the Company issued 46,296,294 Ordinary
Convertible notes.
Shares, on
conversion of
Date
Notes converted
Value of note
Number of Shares
Issue Price A$
18 September 2018
44
$AUD10,000
16,296,295
0.027
Indemnification of officers and auditors
During the financial period, the Company paid a premium in respect of a contract ensuring the Directors, secretary and officers of the
Company and of any related body corporate against a liability incurred as such a Director, Secretary or Officer 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.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the
officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in
connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by
the officers or the improper use of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs
and those relating to other liabilities.
23
The Company has executed a Deed of Protection for each of the Directors. The Company has not otherwise, during or since the
financial period, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a
liability incurred as such an officer or auditor.
Non-audit services
Amounts of $AUD36,996 were paid to the auditor for non-audit, tax compliance services provided during the period. No amounts are
payable as at the date of this report. Full details of amounts paid to the auditor, Grant Thornton Audit Pty Ltd, are set out in Note C3.
The Board of Directors has considered the position and are satisfied that the provision of the non-audit services is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
provision of non-audit services by the auditor, as noted above, did not compromise the auditor independence requirements of the
Corporations Act 2001 none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
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 on page 26.
Auditor
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
The Directors’ Report is signed in accordance with a resolution of the Directors made pursuant to Section 298(2) of the Corporations
Act 2001.
On behalf of the Board of Directors.
Leigh Travers
Executive Director
Perth, 30 September 2019
24
In the opinion of the Directors of DigitalX Limited (the ‘Company’):
(a) The financial statements, notes and the additional disclosures of the consolidated entity set out on pages 30 to 88 are in
accordance with the Corporations Act 2001 including:
(i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its performance for the
period then ended; and
(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001.
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
(c) The financial statements and notes thereto are in accordance with International Financial Reporting Standards, as stated in Note
B1 to the financial statements.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A
of the Corporations Act 2001 for the financial period ended 30 June 2019.
Signed in accordance with a resolution of the Directors made pursuant to Section 295(5) of the Corporations Act 2001.
On behalf of the Directors
25
Leigh Travers
Executive Director
Perth, 30 September 2019
26
27
28
29
Revenue from operations
Net gain on digital assets
Other Income
Professional and consultancy fees
Settlement costs
Brokerage costs
Corporate expenses
Advertising, media and investor relations
Employee benefit expenses
Share based payments – employee benefits
Depreciation
Intangible asset impairment
Realised and unrealised foreign exchange losses
Impairment/loss on non-financial assets
Fair value movement of financial assets
Interest expense
Finance costs
Other expenses
Equity accounted share of profit/(loss) from joint venture
Profit/(Loss) before tax
Income tax benefit/(expense)
e
t
o
N
C2
C2
C2
C3
E2
C3
D5
C4
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
1,013,096
1,511,247
30,696
(464,690)
(526,068)
(69,920)
(188,101)
(266,414)
(1,520,014)
(700,044)
(53,883)
(50,000)
(191,370)
(69,944)
14,450
(70,074)
-
(838,128)
(38,442)
8,211,408
1,685,053
9,398
(475,229)
-
(1,545,670)
(334,831)
(249,875)
(1,597,924)
(1,285,386)
(12,295)
-
(270,259)
(463,184)
(47,874)
(54,268)
(682,036)
(521,697)
37,144
30
(2,477,603)
2,402,473
-
-
Profit/ (Loss) after income tax from continuing operations
(2,477,603)
2,402,473
Profit/(Loss) from discontinued operations
-
40,748
Profit/(Loss) for the period
(2,477,603)
2,443,221
Profit/(Loss) attributable to:
Members of the parent entity
Non-controlling interests
(2,524,151)
46,548
(2,477,603)
2,595,834
(152,613)
2,443,221
e
t
o
N
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
Profit/(Loss) for the period
(2,477,603)
2,443,221
Other comprehensive income for the period
Items that may be reclassified to profit or loss
Exchange differences on translation of operations
Other comprehensive income for the period, net of tax
19,126
19,126
(2,561)
(2,561)
Total comprehensive income for the period
(2,458,476)
2,440,660
Total comprehensive income/(loss) attributable to:
Members of the parent entity
Non-controlling interests
Profit/(Loss) per share attributable to the ordinary equity holders
of the parent:
Basic earnings/(loss) per share (cents)
Earnings per share from continuing operations
Earnings per share from discontinued operations
Total
Diluted earnings/(loss) per share (cents)
Earnings per share from continuing operations
Earnings per share from discontinued operations
Total
C5
C5
(2,486,844)
28,368
(2,458,476)
2,579,947
(139,287)
2,440,660
31
(0.005)
0.000
(0.005)
(0.005)
0.000
(0.005)
0.006
0.000
0.006
0.005
0.000
0.005
The accompanying notes form part of these financial statements.
e
t
o
N
D3
C2
D4
D5
D5
E1
E2
C3
C3
D6
F1
F2
F2
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
5,160,689
266,469
7,115,373
5,772,287
1,295,844
4,500,282
12,542,531
11,568,413
518,313
16,259
297,490
-
832,062
-
56,581
502
49,519
106,602
13,374,593
11,675,015
32
1,029,974
188,128
-
1,218,102
574,696
-
281,446
856,142
1,218,102
856,142
12,156,491
10,818,873
33,662,319
1,384,860
30,431,588
832,033
(23,483,498)
(20,959,347)
11,563,681
592,810
12,156,491
10,304,274
514,599
10,818,873
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Digital assets
Total Current Assets
NON-CURRENT ASSETS
Investments
Investments – Equity Accounted
Property, plant and equipment
Intangible assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Contract liabilities
Finance liabilities
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS/(NET ASSET DEFICIENCY)
EQUITY
Contributed equity
Reserves
Retained earnings/(losses)
Capital & reserves attributable to owners of DigitalX
Non-controlling interests
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other income
Interest paid
Payment for purchase of bitcoin
Payments for power and hosting
Net cash provided by/(used in) operating activities
Cash flows from investing activities
Acquisition of property plant and equipment
Payment for investments
Payment for digital assets in fund
Payment for deposits
Loan to related party
Net cash provided by/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of equity securities
Proceeds from issue of units in fund
Proceeds from issue of convertible notes
Payments for share issue costs
Net cash provided/(used in) by financing activities
e
t
o
N
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
1,271,834
(3,512,924)
48,010
(12,168)
-
-
(2,205,248)
(347,992)
(506,796)
(495,817)
-
(17,538)
(1,368,143)
3,226,941
97,500
-
(176,548)
3,147,893
4,585,891
(2,532,763)
212,493
(60,000)
(135,068)
(5,000)
2,065,553
(1,883)
(487,540)
(961,995)
33
(11,683)
-
(1,463,101)
3,762,469
1,366,773
225,188
(180,550)
5,173,840
Net increase/(decrease) in cash and cash equivalents
(425,498)
5,776,292
Cash and cash equivalents at beginning of period
Foreign exchange movement in cash
Cash and cash equivalents at end of period
D3
5,772,287
(186,100)
5,160,689
232,225
(236,230)
5,772,287
The accompanying notes form part of these financial statements.
Reconciliation of operating cash flows to net profit
Profit/(loss) after income tax
Non-cash flows in profit/(loss)
Net fair value (gain)/ loss on digital assets
Intangible asset impairment
Depreciation
Non-cash legal settlement
Employee share issue
Fair value adjustment of investments
Finance costs
Equity account share of profit/(loss) from joint venture
Other non-cash (income)/expenses including foreign exchange
Change in assets and liabilities, net the effects of purchase of
subsidiaries
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade payables and accruals
(Decrease)/increase in contract liabilities
(Decrease)/increase in tax payable
e
t
o
N
C2
E2
E1
C3(B)
F1 & F2
D6
D5
C2
C3
C3
C4
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
(2,477,603)
2,443,221
(1,511,247)
(1,685,053)
50,000
53,883
245,233
700,044
69,494
69,906
38,442
222,190
(2,539,208)
259,375
(113,542)
188,128
-
-
12,295
-
1,285,386
511,059
682,036
(37,144)
(152,032)
3,059,768
(1,206,524)
212,310
-
-
34
Net cash provided by/(used in) operating activities
(2,205,248)
2,065,553
Non-cash investing and financing activities
Current year
In addition to the above, the Group also had the following non-cash investing and financing activities that impacted on the
Statement of Profit and Loss and Other Comprehensive Income and the Statement of Financial Position.
• Shares issued on conversion of convertible note – Note D4 and Note F1; and
• Options issued to advisors for capital raising – Note F2.
Prior Year
During the 2018 year the Group announced that it had invested $AUD750,000 into the DigitalX Fund. This amount comprised
$AUD631,000 in cash payment included in the consolidated cashflows under payment for investments including digital assets in fund.
The remaining amount of $AUD131,000 was invested by way of cryptocurrencies. As the Group controls the DigitalX Fund this amount
is eliminated on consolidation in accordance with principles set out in Note G1.
Consolidated Group
Balance at 1 July 2018
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive income for the period
Shares issued during the period 3
Units issued during the period2
Share issue costs
Share based payment expense
Share options issued
Share options and performance rights converted
Contributed
Equity
$USD
30,431,588
-
-
-
3,224,128
-
(294,002)
300,605
-
-
Reserves1
$USD
Retained
Earnings/(Losses)
$USD
Total
$USD
Non-controlling
interest
$USD
Total
$USD
832,033
(20,959,346)
10,304,274
514,600
10,818,874
-
(2,524,151)
(2,524,151)
46,548
(2,477,603)
37,307
-
37,307
(18,181)
19,126
37,307
(2,524,151)
(2,486,844)
28,368
(2,458,476)
-
-
116,081
399,439
-
-
-
-
-
-
-
-
3,224,128
-
3,224,128
35
-
49,843
49,843
(177,921)
700,044
-
-
35
11,563,681
-
-
-
-
(177,921)
700,044
-
-
592,810
12,156,491
Balance at 30 June 2019
33,662,319
1,384,860
(23,483,498)
1 Refer to Note F2 for reconciliation of reserve balances.
2 Balance is net of issues, redemptions and change of ownership.
3 Refer to Note F1 for details of shares issued during the financial year.
The accompanying notes form part of these financial statements.
Consolidated Group
Balance at 1 July 2017
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive income for the period
Shares issued during the period
Units issued during the period
Share issue costs
Share based payment expense
Share options issued
Contributed
Equity
$USD
22,653,332
-
-
-
7,759,367
-
(394,036)
-
-
Share options and performance rights converted
375,754
(375,754)
Equity component of convertible note
Early conversion of convertible note
-
37,171
78,465
(15,785)
Reserves1
$USD
Retained
Earnings/(Losses)
$USD
Total
$USD
Non-controlling
interest
$USD
Total
$USD
396,194
(23,555,180)
(505,653)
-
(505,653)
-
2,595,834
2,595,834
(152,613)
2,443,221
(15,887)
-
(15,887)
13,326
(2,561)
(15,887)
2,595,834
2,579,947
(139,287)
2,440,660
-
-
-
350,294
414,506
-
-
-
-
-
-
-
-
7,759,367
-
7,759,367
36
-
653,887
653,886
(394,036)
350,294
414,506
-
36
78,465
21,386
-
-
-
-
-
-
(394,036)
350,294
414,506
-
78,465
21,386
Balance at 30 June 2018
30,431,588
832,033
20,959,346
10,304,274
514,600
10,818,874
1 Refer to Note F2 for reconciliation of reserve balances.
The accompanying notes form part of these financial statements.
The notes to the financial statements have been set out under the following main headings:
A. Legend
B. Basis for preparation (B1)
C. Key operating & financial results (C1 to C5)
D. Capital & risk management (D1 to D6)
E. Financial position (E1 to E2)
F. Equity (F1 to F2)
G. Group structure (G1 to G3)
H. Other disclosures (H1 to H4)
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.
Critical judgements in developing and applying accounting policies
The following are the critical judgements, apart from those involving estimations (see Notes below), that the Directors
have made in the process of applying the Group’s accounting policies and that have the most significant effect on the
amounts recognised in the consolidated financial statements.
37
• Note C2 – Revenue recognition
• Note D4 – Digital assets
• Note D4 – Fair value of digital assets
• Note G1 – Consolidation of DigitalX Fund
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
• Note C4 – Multijurisdictional taxation of operations
• Note F2 – Valuation of share-based payments
KEY AUDIT MATTER
Item is a key audit matter referenced in the Auditor’s Report on Page 27.
ADDITIONAL COMMENTARY
Additional management commentary on the item has been provided above what is required under legislation or
accounting standards for stakeholders to understand the financial report
The section below includes information regarding how the overall financial statements are prepared including the key accounting
policies and accounting standard frameworks applied.
CORPORATE INFORMATION
The consolidated historical financial statements of DigitalX Limited and its controlled entities (collectively, the Consolidated Entity or
Group) for the year ended 30 June 2019 were authorised for issue in accordance with a resolution of the Directors on 30 September
2019.
DigitalX Limited (the Company or the parent) is a company limited by shares incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange. The Company is a for-profit entity.
The nature of the operations and principal activities of the Group are described in the Directors’ Report. Information on the Group’s
structure is provided in Note G1. Information on other related party relationships is provided in Note H1.
The Company’s Corporate Governance Statement for the 2019 financial year can be accessed at: https://DigitalX.com/corporate-
governance/.
B1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in the preparation of the financial report are set out below and the preceding notes. These
policies have been applied consistently to all periods presented in the financial report excepted as described in Note C2 & Note D2.
These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.
Basis of preparation
38
The financial report is a general-purpose financial report which has been prepared in accordance with Australian Accounting Standards
(AASBs) and interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. All amounts
are presented in United States Dollars, unless otherwise noted.
Compliance with IFRS
The consolidated financial report of the Group also complies with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
The consolidated financial report has been prepared under the historical cost convention, except for digital assets that are measured
at fair value at the end of each reporting period, as explained in the accounting policies below. Cost is based on the fair value of the
consideration given in exchange for assets.
Going concern
At the date of this report the Consolidated Entity’s has a strong working capital position and its cash flow forecast indicates that it
expects to be able to meet its minimum commitments and working capital requirements for the twelve-month period from the date
of signing the financial report.
Presentation and functional currency
Presentation currency
The consolidated financial report is presented in United States Dollars.
Functional currency
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which
the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial
position of each group entity are expressed in United States dollars (‘$USD’), which is the functional currency of the Company and the
presentation currency for the consolidated financial statements. Due to the nature of these activities for all entities in the Group the
functional currency has been determined to be $USD.
In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the
date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated.
The Group continues to monitor its exposure and dealings in various currencies including $USD, $AUD, $HKD and has considered
that for the year ended 30 June 2019 that $USD is the most appropriate currency for the Group’s reporting as the predominant
currency for revenue generating activities has been $USD combined with the material US operations. The Group will continue to
assess the relevant of that assessment each reporting period.
Current and non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is:
expected to be realised or intended to be sold or consumed in normal operating cycle;
•
• held primarily for the purpose of trading;
•
•
expected to be realised within twelve months after the reporting period; or
cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
The Group classifies all other assets as non-current.
A liability is current when it is:
expected to be settled in normal operating cycle;
•
• held primarily for the purpose of trading;
• due to be settled within twelve months after the reporting period; or
•
there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
39
The section below includes information regarding how the Group performed during the financial year including segment analysis
and detailed breakdowns of items in the Statement of Profit or Loss and Other Comprehensive Income.
This section includes the following disclosures:
C1 Segment Information (Page 41)
C2 Revenue & Receivables (Page 44)
C3 Expenses, Payables & Other Payables (Page 46)
C4 Income Tax (Page 48)
C5 Earnings Per Share (Page 51)
40
C1 SEGMENT INFORMATION
Segment reporting
AASB 8 requires operating segments to be identified based on internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to
allocate resources to the segment and to assess its performance.
Based on the information used for internal reporting purposes by the Chief Operating Decision Maker (CODM), being the Board, which makes strategic decisions, at 30 June 2019 the Group
operated three segments: Advisory, Funds Under Management, and Technology. The Group does report media and marketing as a segment as the Group’s interest in these activities is via a joint
venture as disclosed in Note D5. In the previous corresponding period (period ended 30 June 2018) the Group had three reportable segments: ICO Advisory, Funds Under Management, and
Technology.
Segment description
ADVISORY
The Group provides advisory services specialising in four main categories; consulting,
technical due diligence, development, marketing and promotion, and introductions
to DigitalX’s network.
FUNDS UNDER MANAGEMENT (FUM)
The FUM division was setup in 2018 to give high net worth and institutional investors
access to a portfolio of digital assets. DigitalX’s first fund invests predominantly in the
leading digital assets, with a smaller allocation towards special trading opportunities.
41
TECHNOLOGY
The Group has previously been engaged in the development of a mobile application
remittance software, “AirPocket”. The development activities are part of an internal
project, with costs incurred both by an internal software development team and
through the outsourcing of development activities to external contractors.
OTHER
Amounts disclosed in the segment primarily relates to Group-level functions including
governance, finance, legal, risk management, company secretarial and management
of the corporate entity.
SEGMENT PERFORMANCE
Segment reporting ($USD)
ADVISORY
30 June
2019
30 June
2018
FUNDS UNDER
MANAGEMENT2
30 June
2019
30 June
2018
TECHNOLOGY
OTHER
TOTAL
30 June
2019
30 June
2018
30 June
2019
30 June
2018
30 June
2019
30 June
2018
Results
Segment revenue
Intersegment revenue
Segment result
Income tax expense/(benefit)
914,557
8,211,408
26,048
-
-
-
-
-
-
-
-
-
72,492
-
-
-
1,013,096
8,211,408
-
-
(185,351)
6,441,782
(737,676)
(141,391)
(206,311)
(123,075)
(1,135,866)
(3,745,422)
(2,265,204)
2,431,893
Profit/(Loss) from discontinued operations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40,748
Segment result after tax
(185,351)
6,441,782
(737,676)
(141,391)
(206,311)
(123,075)
(1,135,866)
(3,745,422)
(2,265,204)
2,472,641
42
Reconciliation to profit/loss after tax
Equity accounted share of profit from joint venture
-
-
-
-
-
-
-
-
Interest
Depreciation
Amortisation & impairment
Taxation
Profit/(loss) after income tax
(2,265,204)
2,472,641
(38,442)
(70,074)
(53,883)
(50,000)
-
37,143
(54,268)
(12,295)
-
-
(2,477,603)
2,443,221
1Revenue earned from external customers by geography and major customer information is not able to be disclosed as the information is not available to the Group.
2 For the purpose of segment reporting the Funds Under Management segment does not include the operating results, segment assets or segment liabilities of the DigitalX Fund as CODM reviews the fund on a fair value basis of the Group’s
interest in the fund as disclosed in Note D5.
SEGMENT POSITION
Segment reporting ($USD)
Assets
Segment assets
Total assets
ADVISORY
FUNDS UNDER
MANAGEMENT
TECHNOLOGY
OTHER
TOTAL
30 June
2019
30 June
2018
30 June
2019
30 June
2018
30 June
2019
30 June
2018
30 June
2019
30 June
2018
30 June
2019
30 June
2018
53,377
53,377
965,113
965,113
22,477
22,477
-
-
-
Assets pertaining to discontinued operations
-
-
-
Liabilities
Segment liabilities
Total liabilities
Liabilities pertaining to discontinued operations
580
580
-
23,136
23,136
1,183
1,183
24,666
24,666
-
-
-
-
-
-
-
-
-
49,519
13,298,739
10,660,383
13,374,593
11,675,015
49,519
13,298,739
10,660,383
13,374,593
11,675,015
-
-
-
-
-
-
-
-
1,216,339
1,216,339
808,399
808,399
1,218,102
1,218,102
856,141
856,141
43
-
-
-
-
C2 - REVENUE & RECEIVABLES
Policy - Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received
or receivable; taking into account contractually defined terms of payment, if any, and excluding taxes or duty.
Revenue is recognised when the specific recognition criteria described below have been met:
A. Advisory & Consulting
The Group provides consulting services for its customers, assisting in the customers’ sale of its digital assets, with the sale being
conducted as a token sale or pre token sale. In either case, these services are rendered until the close of the sale. For the provisioning
of its consulting services, the Group is remunerated by its customers through the distribution of cash, the customers’ digital asset,
other digital assets, or a combination of these sources.
Performance Obligations
The Group recognises token sale consulting revenue as a point in time obligation when its services have been fully rendered under
contract and the Group no longer has any continuing involvement in the sale of digital assets by its customers and the consideration
becomes payables. If the Group is entitled to consideration on a pro rata basis or for works complete, then the Group shall recognise
revenue over time by reference to the work completed.
The Group recognises revenue from fund raising at the time the customer receives the benefits of the fund raising. Depending on the
nature of the individual agreement with the customer, this may be through-out the duration of the token sale or at the completion of
the token sale and funds are received by the customer.
Transaction Price
Where the contract provides for payment in the customers digital assets, the digital asset’s fair value is determined:
44
•
•
by referencing publicly available pricing data from digital asset exchanges; or
for those digital assets not yet listed on exchanges, by referencing the results of the sale (i.e. the unit price of a digital asset can
be measured by dividing the dollar amounts raised in the sale by the number of units issued in the sale).
From 1 July 2018 the Group adopted AASB 15: Revenue from Contracts with Customers. Previously, the Group measured advisory
revenue including the receipt of digital assets at the fair value of consideration received. Furthermore, Management only identified
one engagement which has spanned across the financial year ended 30 June 2018 into the financial year ending 30 June 2019. Under
the new standard, Management have assessed the performance obligations within the contract and have determined the revenue
shall be recorded at the point in time the obligation is satisfied which occurred during the period. Given the above, Management have
deemed no adjustments to the prior period balances were required.
B. Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the
loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical
experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess credit risk characteristics based on the days
past due. The Group allows 1% for amounts that are 30 to 60 days past due, 1.5% for amounts that are between 60 and 90 days past
due and impair any amounts that are more than 90 days past due.
C. Interest revenue
Interest income is recognised on a time proportion basis that takes into account the effective yield on the financial asset.
Revenue
Advisory
Consulting
Asset Management Fees
Licensing
Total revenue
Year ended
30 June 2019
$USD
859,743
126,517
18,293
8,543
11,013,096
1 Revenue recognised at point in time included in the total for the year ended 30 June 2019 was $691,979.
Trade and other receivables
Trade receivables (gross)1
Loss allowance
Trade receivables – Net
Other receivables
Statutory tax receivable
Loan to a related party
Deposits
Other
Total trade and other receivables
Year ended
30 June 2019
$USD
57,012
-
57,012
13,621
26,099
68,745
100,992
266,469
Year ended
30 June 2018
$USD
8,035,852
175,556
-
-
8,211,408
Year ended
30 June 2018
$USD
1,037,624
-
1,037,624
86,972
5,932
11,682
153,634
1,295,844
45
1 Included in the balance at 30 June 2018 is an amount $USD770,000 for token to be received from a customer pending a token
generation event (TGE) that had not yet occurred. These tokens were received during the financial year 30 June 2019.
Other Income
Interest received
Other income
Net fair value gain on digital assets held1
1 Refer to Note D4 for further information on Digital Assets
Year ended
30 June 2019
$USD
30,696
-
30,696
Year ended
30 June 2019
$USD
1,511,247
Year ended
30 June 2018
$USD
-
9,398
9,398
Year ended
30 June 2018
$USD
1,685,053
C3 - EXPENSES, PAYABLES & OTHER PAYABLES
Policy - Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.
They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Policy - Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that 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 reporting
date, taking into account the risks and uncertainties surrounding the obligation.
Policy - Employee benefits
Short-term and long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick
leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate
expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash
outflows to be made by the Group in respect of services provided by employees up to reporting date.
46
Policy - Goods and services, Value Added Tax, or Sales Tax
Amounts are recognised net of the amount of associated GST or VAT, except:
• where the GST or VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which
case the GST or VAT is recognised as part of the cost of acquisition of the asset or part of the expense item as applicable; and
receivables and payables are stated with the amount of GST or VAT.
•
The net amount of GST or VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the balance sheet.
Cash flows are presented on a gross basis. The GST or VAT component of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.
(A) Professional and Consultancy fees
Legal fees
Consulting fees
Tax consulting fees
Audit fees
Total professional and consultancy fees
Year ended
30 June 2019
$USD
177,108
209,280
28,708
49,594
464,690
Year ended
30 June 2018
$USD
122,051
247,909
14,167
91,102
475,229
(B) Settlement costs
Settlement costs1,2
Total other expenses
Year ended
30 June 2019
$USD
526,068
526,068
Year ended
30 June 2018
$USD
-
-
1 The balance relates solely to the finalisation of legal proceedings following the Group entering into a settlement deed. The terms of
settlement were $AUD750,000 payable in $AUD400,000 cash and $AUD350,000 shares as announced to the market on 7 May 2019
which is expected to be a non-recurring amount. Included in the total is an amount of $245,233 that was settled with shares in 3
tranches.
2The Group also incurred $USD66,830 in legal fees for this matter included in the total legal fees disclosed above in (A).
(C) Other expenses
Office and administration
Bank charges
Other expenses
Total other expenses
Current liabilities – trade & other payables
Trade payables
Accrued expenses1
PAYG withholding payable
Share applications
Total trade & other payables
Year ended
30 June 2019
$USD
344,186
11,193
482,749
838,128
Year ended
30 June 2019
$USD
242,723
209,426
16,086
561,739
1,029,974
47
Year ended
30 June 2018
$USD
201,906
5,866
313,925
521,697
Year ended
30 June 2018
$USD
377,682
187,768
9,244
-
574,694
1 Included in this is an amount of $AUD150,000 for the second tranche of the legal settlement reference above in Note C3 (B).
Contract liability for services to be rendered
Contract liability
Year ended
30 June 2019
$USD
188,128
188,128
Year ended
30 June 2018
$USD
-
-
Remuneration of Auditors
Remuneration of the auditors of the Company for:
Grant Thornton Audit Pty Ltd
Audit and review of financial reports
Non-audit services – tax compliance
C4 INCOME TAX
Policy - Income tax
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
49,594
28,708
78,302
78,626
12,476
91,102
48
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income or tax loss based on the
applicable income tax rate for each jurisdiction.
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the
consolidated statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or
deductible in other periods and items that are never taxable or deductible. The Group’s current tax is calculated using tax rates that
have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable
profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities
are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled
or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting
period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly
in equity, respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the
accounting for the business combination.
Tax consolidation
The Company and its wholly-owned Australian tax resident entities are part of a tax-consolidated group under Australian taxation law.
The head entity within the tax-consolidated group is DigitalX Limited. Digital CC Holdings joined the DigitalX Limited tax consolidation
group on 26 May 2014.
Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-
consolidated group are recognised in the separate financial reports of the members of the tax-consolidated group using the 'separate
taxpayer within group's approach, by reference to the carrying amounts in the separate financial reports of each entity and the tax
values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the wholly-owned entities are assumed
by the head entity in the tax-consolidated group and are recognised as amounts payable (or receivable) to (or from) other entities in
the tax-consolidated group in conjunction with any tax funding arrangement amounts. The head entity recognises deferred tax assets
arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-
consolidated group will be available against which the assets can be utilised.
Estimates & Judgement – Taxation
Income taxes
The Group operates in a newly emerging industry and the application of taxation laws in Australia, the United States, Hong Kong and
previously Iceland (the principal countries in which the Group currently operates) in relation to the Group’s activities may change
from time to time. Changes in the taxation laws or in assessments or interpretation or decisions in respect of, but not limited to the
following, may have a significant impact on the Group’s results:
Jurisdiction in which and rates at which income is taxed;
Jurisdiction in which and rates at which expenses are deductible;
•
•
• The nature of income taxes levied, for example whether taxes are assessed on the revenue account or on the capital account;
• Requirements to file tax returns; and
• The availability of credit for taxes paid in other jurisdictions, for example through the operation of double taxation treaties.
49
In recognition of the limited trading and tax history of the Group, management do not consider there is sufficient evidence of
probability of the ability to utilise temporary differences and tax losses and hence no deferred tax asset has been recognised as at 30
June 2019 in relation to these assets. The Group will continue to assess the performance and may in the future recognise some or all
of these assets.
The Group has taken the approach to calculate income tax expense on the basis that all revenue and expenses attributable to its
operations are taxable in Australia and all revenue and expenses attributable to its trading operations are taxable in the United States
in addition to certain employee costs incurred in the United States plus an appropriate mark-up.
A.
Income tax expense
Current tax expense / (benefit)
Deferred tax expense / (benefit)
Total income tax (benefit) in profit or loss
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
-
-
-
-
-
-
B. Numerical reconciliation of tax expense to prima facie tax payable
Profit/(Loss) before tax from continuing operations
Profit/(Loss) before tax from discontinued operations
Profit/(Loss) before tax
Year ended
30 June 2019
$USD
(2,477,603)
-
(2,477,603)
Year ended
30 June 2018
$USD
2,402,473
40,748
2,443,221
Tax at the Group’s statutory income tax rate of Australia: 27.5% (2018:
27.5%)
(681,341)
671,886
Tax effect of amounts which are not deductible or assessable (taxable) in
calculating taxable income:
Non-deductible share-based payment
Non-deductible settlement fees
Non-deductible impairment losses
Non-deductible finance costs – convertible note
Profit from equity accounted investments
Other
Effect of different tax rates of subsidiaries operating in other jurisdictions
Unrealised gain on foreign exchange
Effect of timing expenses that are not deductible
Deferred tax assets not recognised1
Distribution to trust beneficiaries
Previously unrecognised tax losses now recouped to reduce tax expense
Income tax expense/(benefit)
Income tax expense/(benefit) is attributable to:
Profit/(Loss) from continuing operations
Profit/(Loss) from discontinued operations
192,512
67,439
13,750
19,131
(10,571)
265
59,309
(214)
(54,451)
417,489
(23,318)
-
-
-
-
-
50
353,481
-
13,165
148,803
10,214
1,580
10,627
1,010
7,434
202,888
-
(1,421,088)
-
-
-
-
1 Amount relates to tax losses incurred in US operations that cannot be applied to profits generated in Australia or entities outside
the tax consolidated group.
C. Current tax assets and liabilities
Current tax liability
Income tax payable
Total current tax liability
D. Deferred tax assets and liabilities
-
-
-
-
-
-
As at 30 June 2019 the Group has tax losses available to be applied in the future periods in the United States and Australia estimated
to be $USD5.9 million and $USD4.2 million respectively. The losses in respect of the Group’s operations in Hong Kong are immaterial.
In addition, the Group has gross capital losses in Australia estimated at $USD1.1 million at 30 June 2019.
The Group reviews the recoverability of tax losses each reporting period by reviewing the continuity of ownership test (COT) or Same
Business Test (SBT) and no adjustments have been made for the year ended 30 June 2019. Other than those noted above and tax
losses there are no other material temporary differences.
E. Other tax information
The tax rate used for the reconciliation above is the corporate tax rate of 27.5% payable by Australian corporate entities on taxable
profits under Australian tax law for entities with gross consolidated turnover of less than $AUD25,000,000.
Franking Account
Amounts recognised directly in equity
Future Developments
-
-
-
-
(i) The Group notes that from the 2019 financial year on, the corporate tax for Hong Kong will use a two-tier regime where profits
will be assessed at 8.25% for the first $HK2,000,000 and 16.5% (2018: 16.5%) above $HK2,000,000. The Group’s operations in
Hong Kong are immaterial and the effective of the rate is expected to immaterial.
(ii) The Group completed a transfer pricing update review between the Australian and US operations, the impact to the consolidated
results arising from the difference in tax rates was immaterial.
C5 - EARNINGS PER SHARE (EPS)
Earnings per share
51
Basic earnings per share
Basic earnings per share is calculated by dividing the profit/(loss) after tax attributable to equity holders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for bonus elements in ordinary shares issued or
cancelled during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in 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 additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
Basic earnings/(loss) per share (cents)
From continuing operations
From discontinued operations
Total
Diluted earnings/(loss) per share (cents)
From continuing operations
From discontinued operations
Total
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
(0.005)
0.000
(0.005)
(0.005)
0.000
(0.005)
0.006
0.000
0.006
0.005
0.000
0.005
The earnings/(loss) used in the calculation of basic and diluted loss per share
are as follows:
From continued operations
From discontinued operations
Weighted average number of ordinary shares on issue during the period
used in the calculation of basic EPS
Adjustments for calculation of diluted EPS
Options
Performance rights
Convertible notes
Weighted average number of ordinary shares on issue during the period
used in the calculation of diluted EPS
(2,524,151)
-
2,555,086
40,748
512,099,007
421,293,051
60,240,335
9,000,000
-
42,858,373
1,000,000
8,800,000
581,339,342
473,951,423
1 Potential ordinary shares in the form of share options and rights are not considered to be dilutive. As the Group made a loss for the
prior period, diluted earnings per share is the same as basic earnings per share for that period.
52
The section below includes information regarding how the Group manages it capital assets including the positions at year end as
well as outlining the risks arising from market, price, liquidity and credit exposures. Finally, the section covers how the Group
manages its equity position and movements during the year.
The section includes the following disclosures:
D1 Capital management (Page 54)
D2 Financial risk management (Page 54)
D3 Cash and cash equivalents (Page 59)
D4 Digital assets (Page 60)
D5 Investments (Page 61)
D6 Finance Liabilities (Page 63)
53
D1 - CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to:
•
Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and
benefits for other stakeholders; and
• Maintain an optimal capital structure to reduce the cost of capital.
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.
D2 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Policy - Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement requirements. It makes major
changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’
model for impairment of financial assets. In adopting AASB 9, none of the recognition and measurement requirements have impacted
the Group’s opening retained earnings or balances and transactions presented as at 30 June 2018 or in the half-year comparative
period ended 31 December 2017.
However, in adopting AASB 9 Financial Instruments, the Group’s policies have changed to be brought in-line with that of the
requirements of the standards.
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial
instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through
profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are
described below.
54
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial
asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price
in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments,
are classified into the following categories upon initial recognition:
financial assets at amortised cost;
financial assets at fair value through profit or loss (FVPL);
a)
b)
c) debt instruments at fair value through other comprehensive income (FVOCI); and
d) equity instruments at fair value through other comprehensive income (FVOCI).
Classifications are determined by both:
•
•
The entity’s business model for managing the financial asset; and
The contractual cash flow characteristics of the financial assets.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance
income or other financial items, except for the allowance for expected credit loss which is presented within other expenses.
a) Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows;
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the
effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of
financial instruments as well as government bonds that were previously classified as held-to-maturity under AASB 139.
b) Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than “hold to collect” or “hold to collect and sell” are categorised at fair
value through profit and loss. Further, irrespective of business model, financial assets whose contractual cash flows are not solely
payments of principal and interest are accounted for at FVPL. All derivative financial instruments fall into this category, except for
those designated and effective as hedging instruments, for which the hedge accounting requirements apply.
c) Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest and held within a business model
of collecting the contractual cash flows and selling the assets are accounted for at FVOCI.
Any gains or losses recognised in OCI will be recycled upon derecognition of the asset. This category includes bonds that were
previously classified as ‘available-for-sale’ under AASB 139.
d) Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be measured
at FVOCI. Under this category, subsequent movements in fair value are recognised in other comprehensive income and are never
reclassified to profit or loss. Dividend income is taken to profit or loss unless the dividend clearly represents return of capital.
Impairment of financial assets
AASB 9’s new impairment model use more forward looking information to recognize expected credit losses - the ‘expected credit
losses (ECL) model’. The application of the new impairment model depends on whether there has been a significant increase in
credit risk.
55
The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past
events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of
the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low
credit risk (‘Stage 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is
not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the
second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life
of the financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records
the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its
historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision
matrix.
The Group assess impairment of trade receivables on a collective basis as they possess credit risk characteristics based on the days
past due. The Group allows 1% for amounts that are 30 to 60 days past due, 1.5% for amounts that are between 60 and 90 days past
due and impair any amounts that are more than 90 days past due.
Financial assets at fair value through other comprehensive income
The Group recognises 12 months expected credit losses for financial assets at FVOCI. As most of these instruments have a high
credit rating, the likelihood of default is deemed small. However, at each reporting date the Group assesses whether there has been
a significant increase in the credit risk of the instrument.
In assessing these risks, the Group relies on readily available information such as the credit ratings issued by the major credit rating
agencies for the respective asset. The Group only holds simple financial instruments for which specific credit ratings are usually
available. In the unlikely event that there is no or only little information on factors influencing the ratings of the asset available, the
Group would aggregate similar instruments into a portfolio to assess on this basis whether there has been a significant increase in
credit risk.
In addition, the Group considers other indicators such as adverse changes in business, economic or financial conditions that could
affect the borrower’s ability to meet its debt obligation or unexpected changes in the borrowers operating results.
Should any of these indicators imply a significant increase in the instrument’s credit risk, the Group recognises for this instrument or
class of instruments the lifetime expected credit losses.
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial liabilities were not
impacted by the adoption of AASB 9. However, for completeness, the accounting policy is disclosed below.
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and
financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss
(other than derivative financial instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included
within finance costs or finance income.
56
Risk Management
The Group’s activities expose it to a variety of financial risks including but not limited to:
Foreign exchange risk;
Liquidity risk;
Interest rate risk;
•
•
•
• Credit risk; and
• Digital asset price risk.
The Group’s and the Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different
types of risks to which it is exposed. The method used is sensitivity analysis for each of foreign exchange risk, liquidity risk and interest
rate risk.
The capital structure of the Group consists of equity attributable to equity holders of the Company, comprising issued capital, reserves
and retained earnings.
The Group holds the following financial assets and financial liabilities:
Financial Assets
Cash and cash equivalentsAC
Investments (Convertible Note Receivable)FV
Trade receivablesAC
Financial liabilities
Trade and other payablesAC
Interest bearing liabilitiesAC
AC – Amortised Cost
FV – Fair value through profit or loss
Foreign exchange risk
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
5,160,689
195,651
57,012
5,413,352
5,772,287
-
1,037,624
6,809,911
242,723
-
242,723
377,682
281,446
659,128
The Group and the parent entity operate internationally, and during the period were exposed to foreign exchange risk arising from
currency exposures, primarily with respect to the USD/AUD dollar rates.
Foreign exchange risks arise from future commercial transactions and recognised assets and liabilities that are denominated in a
currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
Management regularly monitors exposure to foreign exchange risk, but do not have a current hedging policy in place. It is intended
that this policy will be continuously assessed in line with funding requirements for each of the investment opportunities.
As of 30 June 2019, the Group had exposure to foreign currency risk within its recognised assets and liabilities. The cash and cash
equivalents held $AUD7,227,463 (2018: $AUD7,556,476) in bank accounts. The Group has no derivative liabilities in $AUD (2018: $nil)
and nil interest-bearing liabilities (2018: $AUD440,000).
57
Group sensitivity – Foreign exchange risk
Based upon the financial instruments held as at 30 June 2019, had the Australian dollar weakened/strengthened 10% against the US
dollar with all other variables held constant, the following impact on profit and or loss in noted:
Impact on profit of loss – 2019
Impact on profit or loss – 2018
Interest rate risk management
Fluctuation
+10%
$USD
(719,596)
(322,471)
-10%
$USD
719,596
322,471
The Group is exposed to interest rate risk as entities in the Group deposit funds at both short-term fixed and floating rates of interest.
The Group’s exposure to interest rates on financial assets and liabilities is detailed in the liquidity risk management section of this
note.
Interest rate sensitivity
A change in interest rates would not have a material impact on the profit and equity for the current and previous periods of the Group
or the Parent entity.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who oversee a liquidity risk management
framework for the management of the Group’s funding and liquidity management requirements.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring there are appropriate plans
in place to finance these future cash flows.
Weighted
average
effective
interest rate
%
-
10
-
-
-
-
-
2019
Cash and cash equivalents
Convertible note
Other receivables
Other payables
2018
Cash and cash equivalents
Other receivables
Other payables
Interest bearing liabilities
15
Less than 1
month
Interest
bearing -
variable
$USD
1 to 3
months
Interest
bearing -
variable
$USD
More than 3
months
Interest
bearing
liabilities
Less than 1
month
Non-interest
bearing
1 to 3 months
Non-interest
bearing
More than 3
months
Non-interest
bearing
$USD
$USD
$USD
$USD
5,160,689
-
-
-
5,772,287
-
-
-
-
-
-
-
-
-
-
(281,446)
-
195,651
-
-
-
-
-
-
-
-
57,012
(242,723)
-
-
(377,682)
-
-
-
-
-
-
-
-
-
-
-
267,624
770,000
-
-
-
-
The liquidity and interest rate risk table above has been drawn up based on the undiscounted cash flow (including both interest and
principal cash flows expected) using contractual maturities of financial assets and the earliest date on which the Group can be required
to pay financial liabilities. Amounts for financial assets include interest earned on those assets except where it is anticipated cash will
occur in a different period.
Credit Risk
58
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to
customers, including outstanding receivables.
Credit risk is managed on a group basis. For banks and financial institutions, the Group aims to hold deposit with independently rated
parties with a rating of ‘A’ or above based on S&P ratings. From time to time the Group may hold deposits with unrated institutions
(i.e. exchanges) after trading in digital assets. The Group’s credit risk exposure is set out below
Due to the nature of the customers the Group engages with ratings are not commonplace. Credit risk is therefore factored into the
transaction price for services often in the form of bonus tokens or a discount to public token sale rate. At 30 June 2019 no customers
had a published credit rating.
Credit risk by rating
AA-
A
Unrated
Rating
AA-
A
Unrated
Total
$USD
5,123,335
3,956
286,060
5,413,351
Fair value measurement
The Group measures financial instruments and non-financial assets at fair value at each balance sheet date. Also, fair values of financial
instruments measured at amortised cost are disclosed. Fair value is 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.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Group. The fair value of an asset or a liability is measured
using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in
their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use
the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
•
•
•
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers
have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
59
At 30 June 2019 all assets carried at fair value are deemed to be level 1 based on observable prices in an active market with the
exception of the convertible note receivable of $195,651 which is deemed to be level 2, further detail is disclosed below in Note D5
and unlisted Digital Assets disclosed in Note D4.
Fair value estimation
The Directors consider that the carrying amount of financial assets and financial liabilities, as recorded in the financial statements,
represent or approximate their respective fair values.
D3 CASH AND CASH EQUIVALENTS
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, cash held with bitcoin exchanges, other short-term, highly liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Cash and cash
equivalents do not include the Group’s holdings of digital assets which are classified as inventory (refer to D4).
Cash at bank
Cash deposits at call1
Total cash and cash equivalents
Year ended
30 June 2019
$USD
5,160,614
75
5,160,689
Year ended
30 June 2018
$USD
5,772,211
76
5,772,287
1Cash deposits at call include cash balances on exchanges. The balance originates following a liquidation of digital assets. Refer to
Note D2 for information on liquidity and credit risk.
D4 - DIGITAL ASSETS
Digital Assets
Digital assets are assets such as Bitcoin and Ethereum, which use an open-source software-based online system where transactions
are recorded in a public ledger (blockchain) using its own unit of account. The Group measures digital assets at its fair value less costs
to sell, with any change in fair value less costs to sell being recognised in profit or loss in the period of the change. Amounts are
derecognised when the Group has transferred substantially all the risks and rewards of ownership. As a result of the various
blockchain protocols, costs to sell are immaterial in the current period and no allowance is made for such costs.
Digital assets are derecognised when the Group disposes of the inventory through its trading activities or when the Group otherwise
loses control and, therefore, access to the economic benefits associated with ownership of the digital asset.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained below.
Estimates & Judgements
(a) Digital assets
Management note that the topic of digital assets and the accounting for digital assets continues to be considered by the International
Accounting Standards Board (IASB) and continues to monitors new comments and interpretations released by the Board and other
standard setters from around the world.
In line with this, the Group has considered its position for the year ending 30 June 2019 and has determined that the Group’s digital
assets fall into 3 categories:
•
•
•
Inventory method (historical method used by the Group)
Intangible asset method (the method noted by the IASB in its most recent deliberations3)
Financial asset method (used where the digital asset meets the criteria of a financial asset)
60
Management notes that under the 3 methods noted above, the treatment continues to be to measure digital assets at fair value
(unless otherwise disclosed) under the respective accounting standards.
(b) Fair value of Digital Assets
Digital assets (including bitcoin inventory) is measured at fair value using the quoted price in United States dollars on from a number
of different sources with the primary being Coin Market Cap (www.coinmarketcap.com) at closing Coordinated Universal Time.
Management considers this fair value to be a Level 1 input under the AASB 13 Fair Value Measurement fair value hierarchy as the
price on the quoted price (unadjusted) in an active market for identical assets.
Management uses a number of exchanges including Binance, KuCoin, Independent Reserve and others in order to provide the Group
with appropriate size and liquidity to provide reliable evidence of fair value for the size and volume of transactions that are reasonably
contemplated by the Group.
Unlisted digital assets are fair valued using a combination of Level 2 and Level 3 techniques.
Bitcoin1
Other listed digital assets1,2
Non listed digital assets3
Total Digital Assets
Year ended
30 June 2019
$USD
4,661,772
1,121,074
1,332,527
7,115,373
Year ended
30 June 2018
$USD
2,764,706
1,494,484
241,092
4,500,282
1 Digital assets were measured at fair value using at 30 June 2019. Refer to Note H4 for prices at the date of this report.
2 Includes all tokens that are not bitcoin that are listed on an exchange. The amount includes $USD891,907 held by the DigitalX Fund.
3 Includes all tokens not listed on an exchange. The amount includes $USD150,071 held by the DigitalX Fund.
3 https://www.ifrs.org/news-and-events/updates/ifric-updates/june-2019/#8
Inventory method
Intangible asset method
Financial asset method
Total Digital Assets
D5 – INVESTMENTS
Investments in joint ventures
Year ended
30 June 2019
$USD
4,661,772
1,633,577
820,024
Year ended
30 June 2018
$USD
2,764,706
1,735,576
-
7,115,373
4,500,282
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of
the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in these consolidated financial statements using the equity
method of accounting.
Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated statement of
financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income
of the associate or joint venture. When the Group's share of losses of an associate or a joint venture exceeds the Group's interest in
that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in
the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to
the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
61
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee
becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of
the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as
goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the
identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the
period in which the investment is acquired.
The requirements of AASB 9 are applied to determine whether it is necessary to recognise any impairment loss with respect to the
Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including
goodwill) is tested for impairment in accordance with AASB 136 ‘Impairment of Assets’ as a single asset by comparing its recoverable
amount (higher of value in use and fair value less costs of disposal) with its carrying amount.
Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases.
Investments - Equity accounted joint venture
Investment in Coincast - Equity accounted joint ventureA
Investments
Investment in DigitalX FundB/C
Investment in DX Americas LLCD
Investment in Futuredge Pty LtdE
Investment in Bullion Asset Management Pte LtdF
Convertible note receivableG
Year ended
30 June 2019
$USD
16,259
16,259
Year ended
30 June 2018
$USD
56,581
56,581
-
-
-
322,663
195,650
518,313
-
-
-
-
-
56,581
A.
Investment in Digital Multiplier Pty Ltd (“Coincast”)
During the prior period the Group entered into a 50:50 joint venture with Multiplier Pty Ltd by way of a $USD19,437 ($AUD25,000)
investment to launch a new blockchain business news website and online blockchain education platform and television show. For the
period ended 30 June 2019 the joint venture generated a loss of $76,884 (2018: profit of $USD74,288).
Opening balance
Initial investment
DigitalX share of profit/(loss) – 50%
Foreign exchange movement
30 June 2019
$USD
56,581
-
(38,442)
(1,880)
16,259
30 June 2018
$USD
-
19,437
37,144
-
56,581
B.
Investment in DigitalX Funds Management Pty Ltd
On 16 February 2018, the Group incorporated a new subsidiary, DigitalX Funds Management Pty Ltd, to act as the fund manager for
the DigitalX Fund and any future funds the Group may launch. The Group holds a 73% interest and has deemed it has control. The
results for DigitalX Funds Management Pty Ltd are immaterial for the period.
C.
Investment in DigitalX Fund
On 26 of April 2018, the Group provided seed capital to the DigitalX Fund (a unit trust) for the purpose of investing in and generating
returns digital assets. At 30 June 2019, the Group has an interest in the fund of 43% (2018: 46%), however, as DigitalX also provides
fund management services for the fund it is deemed that the Group meets the definition of control under AASB10: Consolidated
Financial Statements and as a result, the fund has been included in the Group’s consolidated financial statements. The Group will
continue to assess its position with respect to control of the fund at each reporting period.
62
The net asset value (NAV) of the Group’s units in the fund at 30 June 2019 is $AUD 0.85 (2018: $0.79).
D. DX Americas LLC
On the 23rd of November 2018, the Group announced a joint venture with US investment bank AmerX, DX Americas LLC with DigitalX’s
ownership at 50%. The entity is an equity accounted joint venture, the results for the period are immaterial.
E. Futuredge Capital Pty Ltd (Formerly FutureICO Pty Ltd)
On the 18th of September 2018, the Group announced a joint venture, FutureICO (now Futuredge Capital) with DigitalX’s ownership
at 44.9%. The entity is an equity accounted joint venture, the results for the period are immaterial.
F.
Investment in Bullion Asset Management Pte Ltd
On 16th of April 2019, the Group announced its equity investment into Bullion Asset Management Pte Ltd, the management company
for xbullion (gold backed stable coin project) for $AUD450,000 and 9,411,764 DigitalX shares at an issue price of $AUD0.085. The
DigitalX shares have not yet been issued.
G. Convertible note receivable
During the period, the Group entered into a convertible note with YPB Systems Ltd (ASX:YPB) based on the terms and conditions in
the announcement.
•
•
•
3-year fixed term, repayable only at maturity, non-redeemable;
Conversion at any time to ordinary equity at the lower of A$0.018 or a 50% discount to the price at which YPB shares were
subscribed for pursuant to the most recent capital raising of YPB preceding the date of conversion (not including the present
equity placement), provided that the deemed price is no lower than $0.009
Free attaching unlisted option with an exercise price of $0.025. Option expiry 18 months from the date of conversion of the
convertible note to shares
At year end the Group valued the note at fair value using a weighted average of the fair value using the redemption method of the
note and the fair value of holding the note to maturity. Under this methodology the fair value (level 2) of the note was deemed to
be $USD195,650. The key inputs were:
• Coupon rate – 10%
• Market interest rate – 8.8%
• Risk free rate – 0.96%
• Volatility – 130%
•
• Conversion price - $0.009
Share price at valuation date - $0.005
D6 – FINANCE LIABILITIES
Convertible notes – debt-liability component
Convertible loan2
Convertible Notes – derivative liability component
Net carrying amount
Reconciliation
Carrying amount at beginning of period
Convertible note – debt liability component
Convertible note – transaction costs
Convertible note – derivative liability component
Fair value adjustment of derivative liability component
Amortisation of debt liability component
Convertible loan
Conversion of loans & notes
Carrying amount at end of period
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
-
-
-
-
-
281,446
-
-
-
-
69,566
-
(351,012)
-
63
281,446
-
281,446
-
281,446
535,198
360,459
(360,459)
-
-
294,976
-
(548,728)
281,446
The section below includes information regarding the financial position of the Group (excluding non-operating assets & liabilities
covered under Section C and Working Capital covered under Section D).
The section includes the following disclosures:
E1 Property, plant and equipment (Page 65)
E2 Non-current assets - Intangible assets (Page 66)
64
E1 - PROPERTY, PLANT AND EQUIPMENT
Policy
Plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Plant and equipment are depreciated or amortised on a reducing balance or straight-line basis at rates based upon their expected
useful lives as follows:
•
•
Computer equipment – 3 years
Leasehold improvements – 5 years
Depreciation is recognised to write off the cost or valuation of assets (other than freehold land) less their residual values over their
useful lives. The estimated residual value of plant and equipment has been assessed to be zero. The estimated useful lives, residual
values and depreciation method are reviewed at the end of each reporting period, with the effect of any change in estimate accounted
for on a prospective basis.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. Gains and losses
on disposals are determined by comparing proceeds with their carrying amount.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
The Group as lessor
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the
leases. Finance lease income is allocated to accounting periods to reflect a constant periodic rate of return on the Group’s net
investment outstanding in respect of the leases.
65
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a
straight-line basis over the lease term.
Property Plant & Equipment
Cost
Accumulated depreciation
Net Carrying amount
Reconciliation
Carrying amount at beginning of period
Additions
Disposals
Depreciation charge for the period
Net carrying amount at end of period
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
351,352
(53,862)
297,490
502
351,352
(481)
(53,883)
297,490
15,922
(15,420)
502
10,832
1,965
-
(12,295)
502
E2 - NON-CURRENT ASSETS - INTANGIBLE ASSETS
Internally generated intangible assets - Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally generated intangible
asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following
have been demonstrated:
The technical feasibility of completing the intangible asset so that it will be available for use or sale;
The intention to complete the intangible asset and use or sell it;
The ability to use or sell the intangible asset;
•
•
•
• How the intangible asset will generate probable future economic benefits;
•
The availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
The ability to measure reliably the expenditure attributable to the intangible asset during its development.
•
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when
the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised,
development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and
accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Capitalisation of development costs
The Group has been engaged in the development of its mobile application remittance software, “AirPocket”. The development
activities are part of an internal project, with costs incurred both by an internal software development team and through the
outsourcing of development activities to external contractors. The total cost capitalised on the project at 30 June 2019 is
$USD2,016,187.
66
An intangible asset arising from the development phase of an internal project shall be recognised if, and only if, an entity can
demonstrate all of the following:
•
•
•
•
The technical feasibility of completing the intangible asset so that it will be available for use or sale;
Its intention to complete the intangible asset and use or sell it;
Its ability to use or sell the intangible asset;
How the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the
existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible
asset; and
Its ability to measure reliably the expenditure attributable to the intangible asset during its development.
•
•
The Company has evaluated the criteria required to be satisfied for an intangible asset arising from the development phase of an
internal project to be recognised and conclude in respect to AirPocket that all conditions required to recognise an intangible asset
generated from development of an internal project have been demonstrated.
The Company has evaluated the future economic benefit by modelling the expected future cash flows to estimate a value of the asset.
The Company has previously raised a $USD2,016,188 impairment provision against the costs capitalised for its AirPocket intangible
asset as a result of a lack of historical data with respect to the estimates used in determining the fair value of AirPocket. The provision
is to be reassessed at the next reporting date with anticipation that more information will be available to assess the recoverable
amount of the asset.
Intellectual property
Cost
Accumulated amortisation
Provision for Impairment2
Net Carrying amount
Reconciliation
Carrying amount at beginning of period
Additions
Write down of Intangible Assets
Provision of impairment of Intangible Assets
Net carrying amount at end of period1
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
2,016,188
-
(2,016,188)
-
49,519
481
(50,000)
-
-
2,016,188
-
(1,966,669)
49,519
49,519
-
-
-
49,519
1 Net of accumulated amortisation and provision for impairment
2 The Group has raised a $USD2,016,188 impairment provision against the costs capitalised for its AirPocket intangible asset.
AirPocket’s gross capitalised cost totals $USD2,016,188. This provision was recorded in the prior period as a result of a lack of
historical data with respect to the estimates used in determining the fair value of AirPocket. The provision is to be reassessed at the
next reporting date with anticipation that more information will be available to assess the recoverable amount of the asset.
67
The section below includes information regarding the Group’s equity structure including movements in contributed equity from
share transactions and movements in reserves.
The section includes the following disclosures:
F1 Contributed Equity (Page 69)
F2 Reserves & Non-Controlling Interest (Page 72)
68
F1 – CONTRIBUTED EQUITY
(a) Issued and paid up Capital
Fully paid ordinary shares – 571,525,427
(2018: 486,865,628)
(b) Movement in Ordinary Share Capital
Date
Details1
30-Jun-18
Closing Balance
5-Jul-18
Vesting of Performance Rights
10-Jul-18
Share issue costs
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
33,662,319
30,431,588
Issue Price A$
$USD2
Number of
Shares
486,865,628
1,000,000
-
-
-
7-Aug-18
Issue of Shares on exercise of options
3,086,420
0.0324
8-Aug-18
Share issue costs
18-Sep-18
Issue of shares on exercise of convertible notes
18-Sep-18
Issue of shares to employees
20-Sep-18
Share issue costs
-
16,296,295
3,441,000
-
-
0.027
0.12
-
8-Oct-18
Issue of Shares on exercise of options
100,000
0.0324
10-Oct-18
Share issue costs
-
-
13-May-19
Issue of Shares for settlement
1,895,453
0.0616
14-May-19
Share Issue costs
15-May-19
Issue of Shares under Share Purchase Plan
36,321,122
0.0677
1,701,610
16-May-19
Share Issue costs
(6,960)
17-May-19
Issue of Shares under top up placement
19,046,519
0.0677
887,500
17-May-19
Share Issue costs
21-May-19
Share Issue costs
27-May-19
Issue of Shares for settlement
1,576,568
0.0740
28-May-19
Share Issue costs
18-Jun-19
Issue of Shares for settlement
1,896,422
0.0615
24-Jun-19
Share Issue costs
30-Jun-19
Closing Balance
571,525,427
33,662,319
30,431,588
-
(1,426)
73,757
(1,397)
317,108
300,606
(3,571)
2,341
(1,336)
81,301
(1,368)
69
(270,745)
(4,459)
80,714
(1,368)
79,796
(1,372)
Date
Details1
Number of
Shares
Issue Price
$AUD
$USD2
30-Jun-17
Opening Balance
212,044,933
-
22,653,332
16-Aug-17
Issue of Shares to Leigh Travers - CEO and Managing Director
500,000
16-Aug-17
Share Issue costs
-
0.038
-
14,900
-1,456
31-Aug-17
Issue of Shares to Ironside Capital as consideration under the
Capital raising services and mandate fees
7,772,745
0.041
253,176
31-Aug-17
Issue of Subscription shares
74,074,074
0.027
1,547,318
31-Aug-17
Share Issue costs
-
-
-298,888
31-Aug-17
Issue of Loan Conversion Shares
31-Aug-17
Shares Issued on conversion of Convertible Notes
1-Sep-17
Issue of Shares in part consideration for capital raising services
1-Sep-17
Issue of Subscription shares
1-Sep-17
Share Issue costs
1-Sep-17
Shares Issued on conversion of Convertible Notes
1-Sep-17
Issue of Shares on exercise of Options
5-Sep-17
Shares Issued on conversion of Convertible Notes
5-Sep-17
Share Issue costs
11,111,111
9,629,629
988,867
25,370,003
-
8,888,889
500,000
7,407,407
-
0.027
0.027
0.027
0.027
-
0.027
0.08
0.027
-
236,940
204,119
20,656
529,949
-46,322
188,418
31,594
157,015
-5,004
70
8-Sep-17
Issue of Subscription shares
32,804,142
0.027
685,239
8-Sep-17
Share Issue costs
-
-
-4,374
8-Sep-17
Issue of Shares on exercise of Incentive options
5,700,000
0.0324
292,037
8-Sep-17
Early conversion of convertible note
12-Sep-17
Shares Issued on conversion of Convertible Notes
12-Sep-17
Share Issue costs
12-Sep-17
Issue of Shares on exercise of Incentive options
14-Sep-17
Issue of Subscription shares
14-Sep-17
Share Issue costs
-
370,370
-
4,000,000
600,000
-
-
0.027
-
0.0324
0.027
-
14-Sep-17
Issue of Shares on exercise of Incentive options
600,000
0.0324
14-Sep-17
Early conversion of convertible note
22-Sep-17
Issue of Shares on exercise of Incentive options
22-Sep-17
Issue of Shares on exercise of Incentive options
22-Sep-17
Share Issue costs
-
1,000,000
4,000,000
-
-
0.0324
0.0324
-
4-Oct-17
Issue of Shares on exercise of Incentive options
246,914
0.0324
4-Oct-17
Share Issue costs
6-Oct-17
Issue of Shares to Director Faisal Khan
6-Oct-17
Share Issue costs
-
250,000
-
-
0.056
-
7,953
7,851
-1,632
103,766
24,776
-12,496
15,569
13,433
45,484
103,696
-1,720
20,233
-1,425
10,857
-1,430
9-Oct-17
Issue of Shares on exercise of Incentive options
31-Oct-17
Issue of Shares on exercise of options
3-Nov-17
Issue of Shares on exercise of options
3-Nov-17
Issue of Shares on exercise of options
8-Nov-17
Issue of Shares on exercise of options
14-Nov-17
Issue of Shares on exercise of options
917,284
9,597,284
3,725,000
620,000
4,450,000
4,357,500
0.0324
0.0324
0.08
0.0324
0.08
0.08
14-Nov-17
Issue of Shares on exercise of options
17,000,000
0.0324
14-Nov-17
Shares Issued on conversion of 10 Convertible Notes
17-Nov-17
Issue of Shares on exercise of options
3,703,704
405,000
0.027
0.08
17-Nov-17
Issue of Shares on exercise of Incentive options
11,308,519
0.0324
23-Nov-17
Issue of Shares to Directors
24-Nov-17
Issue of Shares on exercise of options
24-Nov-17
Issue of Shares on exercise of Incentive options
24-Nov-17
Issue of Shares on exercise of Incentive options
1-Dec-17
Issue of Shares on exercise of options
1-Dec-17
Issue of Shares on vesting of Tranche 3 of Performance Rights
12-Dec-17
Issue of Shares on exercise of options
12-Dec-17
Issue of Employee Incentive Shares
22-Dec-17
Issue of Shares on exercise of options
22-Dec-17
Share Issue costs
9-Jan-18
Issue of Shares on exercise of options
2,000,000
375,000
6,700,000
2,000,000
700,000
1,000,000
160,000
1,300,000
685,000
-
35,000
0.2
0.08
0.0324
0.0324
0.08
0.215
0.08
0.24
0.08
-
0.08
9-Jan-18
Issue of Shares on exercise of options
246,914
0.0324
19-Jan-18
Issue of Shares on exercise of options
25-Jan-18
Issue of Shares on exercise of options
4,220,000
595,000
0.08
0.08
23,107
549,422
225,621
71,193
291,927
158,686
232,166
29,316
25,700
547,073
304,840
11,379
244,958
52,274
45,557
162,626
10,375
235,030
44,800
-1,615
2,190
6,256
269,307
37,971
25-Jan-18
Share Issue costs
-
-
(17,674)
2-Feb-18
Issue of Shares on exercise of options
16-Feb-18
Issue of Shares on exercise of options
1-Mar-18
Issue of Shares on exercise of options
14-Mar-18
Issue of Shares on exercise of options
11-Apr-18
Issue of Shares on exercise of options
215,000
517,500
1,000,000
246,914
925,925
0.08
0.08
-
0.0324
0.0324
13,578
32,683
-
6,164
23,114
30-Jun-18
Closing Balance
486,865,628
30,431,588
1 Refer to the corresponding Appendix 3B for full details of each issue.
2 Based on AUD/USD as at the date of transaction.
3 Refer to Note H4 for any issues subsequent to the end of the reporting period.
71
Rights Attaching to Shares
The rights attaching to fully paid ordinary shares arise from a combination of the Company’s constitution, statute and general law.
Fully paid ordinary shares carry one vote per share and carry a right to dividend.
Dividends
There are no dividends paid or declared during the period.
F2 – RESERVES & NON-CONTROLLING INTEREST
Nature of reserves & non-controlling interest
Option premium and share-
based payment reserve
Reserve is established to record balances pertaining to share options and performance rights
granted for services provided to the Company by employees and vendors.
Convertible note reserve
Foreign Exchange Reserve
Non-controlling interest
Reserve is established to record amounts required to be recognised in equity for convertible notes
that meet the definition of compound instruments.
Exchange differences arising on translation of the foreign controlled entity are recognised in other
comprehensive income and accumulated in a separate reserve within equity. The cumulative
amount is reclassified to profit or loss when the net investment is disposed of.
This is used to record transactions with non-controlling interests that do not result in a loss of
control.
Option premium
e
t
and share-based
o
N
payment reserve1
Convertible Note
Reserve
Foreign Exchange
Reserve
Non-Controlling
Interest
72
62,680
(15,887)
514,600
30 June 2018
Share based payment expense
Share options issued2
Conversion of options & rights
Conversion of foreign operations
NCI share of profit or loss
P&L
NCI net units issued in Unit Trust3
NCI share in translation difference
785,240
399,439
116,081
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,307
-
-
-
-
-
-
-
46,548
49,843
(18,181)
592,810
30 June 2019
1,300,760
62,680
21,420
1 Ordinary share issues treated as share-based payments that have no vesting conditions are recognised directly in equity.
2 Options issued to advisor, recognised as share issue costs in the Consolidated Statement of Changes in Equity.
3 Balance is the net amount inclusive of issues, redemptions and changes in interest in the DigitalX Fund.
Option premium
e
t
and share-based
o
N
payment reserve1
Convertible Note
Reserve
Foreign Exchange
Reserve
Non-Controlling
Interest
30 June 2017
Share based payment expense
Share options issued
Conversion of options & rights
Equity portion of convertible note
Early conversion of convertible note
Conversion of foreign operations
NCI share of profit or loss
NCI units issued in Unit Trust
P&L
G2
NCI share in translation difference
396,194
350,294
414,506
(375,754)
-
-
-
-
-
-
-
-
-
-
78,465
(15,785)
-
-
-
-
-
-
-
-
-
-
(15,887)
-
-
-
30 June 2018
785,240
62,680
(15,887)
-
-
-
-
-
-
(152,613)
653,887
13,326
514,600
Share based payments
Employees and consultants of the Group receive remuneration in the form of share-based payments, whereby employees render
services as consideration for equity instruments (equity-settled transactions).
73
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model. That cost is recognised, together with a corresponding increase in other capital reserves in equity, over the period
in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised
for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired
and the Group’s best estimate of the number of equity instruments that will ultimately vest. The statement of profit or loss expense
or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is
recognised in employee benefits expense.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions, for which vesting is conditional
upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting
condition is satisfied, provided that all other performance and/or service conditions are satisfied.
Valuation of options and performance rights
The fair value of the share options and performance rights at grant date are determined using a binomial option pricing method that
takes into account the exercise price, the term of the option, the probability of exercise, the share price at grant date and expected
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The following tables list the inputs to the model used for valuation of the options:
Options issued to Directors
Item
Volatility (%)
Risk-free interest rate (%) – range
Expected life of option (years)
Exercise price per terms & conditions
Underlying security spot price
Valuation date
Expiry date
Valuation per option
Tranche 1
134.81%
2.33%
5
$0.22
$0.06
22 Nov 2018
10 Dec 2023
$0.046
Tranche 2
134.81%
2.33%
5
$0.25
$0.06
22 Nov 2018
10 Dec 2023
$0.046
Tranche 3
134.81%
2.33%
5
$0.30
$0.06
22 Nov 2018
10 Dec 2023
$0.045
Options issued to Advisors
Item
Volatility (%)
Risk-free interest rate (%) – range
Expected life of option (years)
Exercise price per terms & conditions
Underlying security spot price
Valuation date
Expiry date
Valuation per option
Valuation of performance rights
159.20%
1.18%
3
$0.0847
$0.074
17 May 2019
16 May 2022
$0.061
The fair value of performance rights with market-based conditions at grant date are determined using a Monte-Carlo simulation
method that takes into account the market conditions, the term of the vesting period, the share price at grant date and expected
volatility of the underlying share across a number of simulations.
Item
Market based condition – Share price target over 5 days
Volatility (%)
Expected vesting period
Underlying security spot price
Valuation date
Expiry date
Valuation per right
Tranche 2
$0.25
134.81%
5
$0.06
22 Nov 2018
10 Dec 2023
$0.04
Tranche 3
$0.30
134.81%
5
$0.06
22 Nov 2018
10 Dec 2023
$0.04
74
Performance rights with non-market conditions are measured by reference to the share price at grant date $0.06 and then adjusted
for the probability of the number of instruments expected to vest.
Date of Issuance - Inputs
30 June 2018
Item
Volatility (%) (see below)
Risk-free interest rate (%) – range
Expected life of option (years)
Exercise price per terms & conditions
Underlying security spot price
Valuation date
Expiry date
Valuation per option
Valuation of options and performance rights on issue or owed as at 30 June 2019
Details
Share options
Performance rights
Number
11,168,382
9,000,000
Issue Date
Nov 18 to May 19
10 Dec 2018
14 Sep 2017
119.96%
1.78%
2
$0.0324
$0.074
14 Sep 2017
14 Sep 2019
$0.0561
30 June 2019
$USD
578,871
460,000
1,038,871
Valuation of options and performance rights on issue or owed as at 30 June 2018
Details
Share options
Performance rights
Number
15,840,000
3,000,000
Issue Date
14 Sep 2017
23 Nov 2017
30 June 2018
$USD
414,506
231,836
646,342
75
The section below includes information regarding the Group organisational structure and information related to the parent entity as
required by the Corporations Act 2001.
G1 - PRINCIPLES OF CONSOLIDATION
The consolidated financial report incorporates the assets and liabilities of all subsidiaries of DigitalX Limited (Company or Parent Entity)
as at period end and the results of all subsidiaries for the period then ended. DigitalX Limited and its subsidiaries together are referred
to as the Group or the Consolidated Entity.
The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities)
controlled by the Company and its subsidiaries. Control is achieved when the Company:
• Has power over the investee;
•
• Has the ability to use its power to affect its returns.
Is exposed, or has rights, to variable returns from its involvement with the investee; and
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above. The Company considers all relevant facts and circumstances in assessing whether
or not the Company's voting rights in an investee are sufficient to give it power, including:
The size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
Potential voting rights held by the Company, other vote holders or other parties;
•
•
• Rights arising from other contractual arrangements; and
• Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.
76
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date
when the Company ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the
Group's accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
G2 - CONTROLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in Note G1. All controlled entities are included in the consolidated annual final report. The parent
entity does not guarantee to pay the deficiency of its controlled entities in the event a winding up of any controlled entity. The period
end of the controlled entities is the same as that of the parent entity, except for the US companies listed below which use 31 December
year end.
Name of Controlled Entity
Place of Incorporation
% of Shares Held
2019
% of Shares Held
2018
Digital CC Management Pty Ltd
Digital CC Trading Pty Ltd
Digital CC IP Pty Ltd
Digital CC Limited
Digital CC IP Limited
Australia
Australia
Australia
Hong Kong
Hong Kong
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Name of Controlled Entity
Place of Incorporation
% of Shares Held
2019
% of Shares Held
2018
Digital CC Holdings USA Inc
Digital CC USA LLC
Digital CC USA Services LLC
Digital CC Ventures Pty Ltd
Pass Petroleum Pty Ltd
Airpocket International Pty Ltd
United States
United States
United States
Australia
Australia
Australia
AirPocket LLC
United States
DigitalX Funds Management Pty Ltd
DigitalX Fund Unit Trust
DigitalX Asset Management Pty Ltd
DigitalX New Tech Fund Inc.
Australia
Australia
Australia
Panama
DigitalX (BVI) Limited
British Virgin Isles
Digital Asset Administration Cayman Limited
British Virgin Isles
Year ended 30 June 2019
100%
100%
100%
100%
100%
100%
100%
73%
43%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
73%
46%
-
-
-
-
77
There were no changes to the controlled entities during the year ended 30 June 2019 except for those noted below:
• DigitalX Asset Management Pty Ltd;
• DigitalX (BVI) Limited;
• Digital Asset Administration; and
• DigitalX New Tech Fund Inc.
All of the entities above were incorporated as part of the ongoing development and execution of the Group’s asset management
strategy. The results for the entities above are immaterial for the period.
Year ended 30 June 2018
There were no changes to the controlled entities during the year ended 30 June 2018 except for those noted below:
Investment in DigitalX Funds Management Pty Ltd
On 16 February 2018, the Group incorporated a new subsidiary, DigitalX Funds Management Pty Ltd, to act as the fund manager for
the DigitalX Fund and any future funds the Group may launch. The Group holds a 73% interest and has deemed it has control. The
results for DigitalX Funds Management Pty Ltd are immaterial for the period.
Investment in DigitalX Fund (DigitalX Fund Unit Trust)
On the 26 April 2018, the Group provided seed capital to the DigitalX Fund (a unit trust) for the purpose of investing in and generating
returns digital assets. At 30 June 2018, the Group has an interest in the fund of 46%, however, as DigitalX also provides fund
management services for the fund it is deemed that the Group meets the definition of control under AASB10: Consolidated Financial
Statements and as a result, the fund has been included in the Group’s consolidated financial statements. The Group will continue to
assess its position with respect to control of the fund at each reporting period.
G3 - PARENT ENTITY INFORMATION
The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the
same as those applied in the consolidated financial statements. Refer to Summary Note A for a summary of the significant accounting
policies relating to the Group.
Parent entity financial information
The financial information for the parent entity, DigitalX Limited, disclosed below has been prepared on the same basis as the
consolidated financial statements, except as set out below:
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of DigitalX
Limited.
Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the
fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
Tax consolidation legislation
DigitalX Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head
entity, DigitalX Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax
amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in
its own right. In addition to its own current and deferred tax amounts, DigitalX Limited also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate DigitalX Limited
for any current tax payable assumed and are compensated by DigitalX Limited for any current tax receivable and deferred tax assets
relating to unused tax losses or unused tax credits that are transferred to DigitalX Limited under the tax consolidation legislation. The
funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity,
which is issued as soon as practicable after the end of each financial period. The head entity may also require payment of interim
funding amounts to assist with its obligations to pay tax instalments.
78
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the group. Any difference between the amounts assumed and amounts receivable or
payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated
entities.
(a) Summary of financial information
Financial position
Assets
Current assets
Non-Current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Contributed Equity
Retained earnings
Reserves
-
-
Share based payment
Convertible note
Total equity
Financial performance
Profit/(loss) for the year and other comprehensive income/(loss)
Total comprehensive income/(loss)
30 June 2019
30 June 2018
$USD
$USD
10,836,041
15,817,255
26,653,296
7,599,816
4,637,480
12,237,296
(606,925)
(745,997)
(1,352,922)
(702,532)
(715,889)
(1,418,421)
69,224,477
(49,253,794)
5,267,011
62,680
25,300,374
65,993,746
(59,178,587)
3,941,035
62,680
10,818,875
(1,449,920)
(1,449,920)
5,225,186
5,225,186
(b) Commitments and Contingent Liabilities of the parent
The parent entity did not have any contingent liabilities or commitments, as at 30 June 2019 other than those disclosed below
in Note H2.
(c) Guarantees entered into the parent entity
There were no guarantees entered into by the parent entity other than those disclosed in Note H2.
79
The section below includes information regarding other disclosures relevant to users of the financial statement in understanding
other transactions and the impact of future standards or events that may impact the Group.
The section includes the following disclosures:
H1 Related Party Transactions (Page 81)
H2 Commitments and contingents (Page 81)
H3 New Accounting Standards and Interpretations (Page 82)
H4 Events after reporting date (Page 86)
80
H1 - RELATED PARTY TRANSACTIONS
(a) Subsidiaries
Interests in subsidiaries are set out in Note G2. Balances and transaction between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and are not disclosed in this note.
(b) Transactions with Key Management Personnel
Short term employee benefits
Salaries and fees
Director fees
Other benefits
Post-Employment Benefits
Superannuation
Share-based payments
Shares granted
Share, options and performance rights1
Total Remuneration
Year ended
30 June 2019
$USD
Year ended
30 June 2018
$USD
265,062
101,003
34,520
260,034
105,780
88,082
17,681
25,964
43,680
350,472
812,419
423,165
534,813
1,437,838
81
1 Refer to Note F1 for details of the events relating to performance rights and options effecting key management personnel.
(c) Transactions with Director related entities
Year ended 30 June 2019
• During the year, the Group paid Steinepreis Paganin, a law firm of which former Non-Executive Director Toby Hicks is a partner,
$5,533 for legal services rendered on various matters. This amount relates to the period of the financial year that Mr Hicks was a
Director of the Company. At 30 June 2019, Steinepreis Paganin is not considered a related party as Mr Hicks was not a Director
at 30 June 2019.
• During the year, the Group recognised an expense and paid Blockchain Global Ltd, a company of which Messrs Rubinstein and
Lee served as Directors of during the year, of $1,211 for reimbursement of costs. The Company notes that both Mr Rubinstein
and Mr Lee resigned as Directors of Blockchain Global during the year and the Company no longer considers Blockchain Global to
be a related party on that basis. Messrs Rubinstein and Lee were appointed Directors of the Company as nominees of Blockchain
Global Ltd.
• During the year, Mars Capital Australia Pty Ltd, a company controlled by Non-Executive Director Sam Lee, converted 14
convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, to 5,185,185 ordinary shares. As part
of the conversion 2,800,000 options exercisable at $AUD0.0324 expiring 18 September 2020 were also issued. During the year,
$AUD5,236 of interest was paid, and recognised as an expense, on the convertible notes held. At 30 June 2019, no amounts were
owed to Mars Capital.
• During the year, Irwin Biotech Nominees Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein, converted
17 convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, to 6,796,296 ordinary shares. As
part of the conversion 3,400,000 options exercisable at $AUD0.0324 expiring 18 September 2020 were also issued. During the
year, $AUD6,358 of interest was paid, and recognised as an expense on the convertible notes held. At 30 June 2019, no amounts
were owed to Irwin Biotech.
• During the year, the Group paid Value Admin Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein,
$USD50,509 as part of Non–Executive Director fees.
Year ended 30 June 2018
• During the financial year 2,546,000 unlisted options exercisable at $AUD0.08, expiring on 30 June 2018, lapsed unexercised.
• During the year, the Group paid Steinepreis Paganin, a law firm of which former Non-Executive Director Toby Hicks is a partner,
$AUD116,607 for legal services rendered on various matters. At 30 June 2018, the Group owed $AUD2,545 to Steinepreis Paganin.
• During the year, the Group recognised an expense and paid Blockchain Global Ltd, a company of which Mr Lee served as a Director
of for the year, $USD469,623 for services related to initial coin offerings. At 30 June 2018, no amounts were owed to Blockchain
Global Ltd. Messrs Rubinstein and Lee were appointed Directors of the Company as nominees of Blockchain Global Ltd.
• During the year, Mars Capital Australia Pty Ltd, a company controlled by Non-Executive Director Sam Lee, was issued 14
convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, as approved by Shareholders on 25
August 2017. Each convertible note was entitled to 100,000 incentive options, exercisable at $AUD0.0324 and expiring 8
September 2019. During the year, $AUD11,737 of interest was paid, and recognised as an expense, on the convertible notes held.
At 30 June 2018, the Group owed $AUD5,236 to Mars Capital Australia Pty Ltd for unpaid interest.
• During the year, Irwin Biotech Nominees Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein, was issued
17 convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, as approved by Shareholders on 25
August 2017. Each convertible note was entitled to 100,000 incentive options, exercisable at AUD0.0324. During the year,
$AUD16,422 of interest was paid, and recognised as an expense on the convertible notes held. At 30 June 2018, the Group owed
$AUD6,357 to Irwin Biotech for unpaid interest.
• During the year, Rip Opportunities Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein, was issued 10
convertible notes, with a face value of $AUD10,000 each, convertible at $AUD0.027 each, as approved by Shareholders on 25
August 2017. Each convertible note was entitled to 100,000 incentive options, exercisable at $AUD0.0324 and expiring 14
September 2019. Convertible notes have been converted during the year. During the year, $AUD2,589 of interest was paid on
the convertible notes held. At 30 June 2018, no amounts were owed to Rip Opportunities Pty Ltd as the notes have been converted
during the year.
82
• During the year, the Group paid Value Admin Pty Ltd, a company controlled by Non-Executive Chairman Peter Rubinstein,
$USD22,231 as part of non–executive director fees.
H2 – COMMITMENTS AND CONTINGENCIES
Commitments of the Group
During the year entered into a 5-year lease for premises at 66 Kings Park Road, West Perth, WA (“The Blockchain Centre”). At 30
June the amount due within 12 months was $132,655 and the committed between 12 months and 5 years was $411,894. There
were no commitments greater than 5 years.
The Group did not have any commitments (other than those set out in note D2 & D5) and above, as at 30 June 2019 (2018: Nil).
Guarantees entered into by the Group
There were no guarantees entered into by the Group as at 30 June 2019 other than for the lease noted above (2018: Nil).
Contingent Liabilities of the Group
The Group did not have any contingent liabilities as at 30 June 2019 (2018: $1,833,077)
H3 - NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Standards and Interpretations in issue not yet adopted
The following table lists Australian Accounting Standards and Interpretations that have been recently issued or amended but are not
yet effective and have not been early adopted by the Company for the reporting period ended 30 June 2018. These particular
standards are considered relevant to the entity based on the balances and transactions presented within these financial statements.
Management are in the process of determining the potential impact of the initial application of the Standards and Interpretations.
These Standards and Interpretations will be first applied in the financial report of the Group that relates to the annual reporting period
beginning on or after the effective date of each pronouncement.
New / revised
pronouncement
Superseded
pronouncement
Nature of the change
AASB 16 Leases
AASB 117 Leases
Int. 4 Determining
whether
an
Arrangement contains
a Lease
AASB 16:
• replaces AASB 117 Leases and some lease-related Interpretations
• requires all leases to be accounted for ‘on-balance sheet’ by
lessees, other than short-term and low value asset leases
• provides new guidance on the application of the definition of lease
Effective
date
1 January
2019
and on sale and lease back accounting
• largely retains the existing lessor accounting requirements in AASB
117 requires new and different disclosures about leases
Int. 115 Operating
Leases—Lease
Incentives
Int. 127 Evaluating the
Substance
of
Transactions Involving
the Legal Form of a
Lease
Likely impact on initial application
Based on the entity’s assessment, it is expected that the first-
time adoption of AASB 16 for the year ending 30 June 2020 will
have a material impact on the transactions and balances
recognised in the financial statements, in particular:
•
•
•
•
lease assets and financial liabilities on the balance sheet will
increase by $437,474 and $460,120 respectively (based on
the facts at the date of the assessment) with the difference
recognised in opening retained earnings
the reported equity will reduce as the carrying amount of
lease assets will reduce more quickly than the carrying
amount of lease liabilities
EBIT in the statement of profit or loss and other
comprehensive income will be higher as the implicit interest
in lease payments for former off-balance sheet leases will
be presented as part of finance costs rather than being
included in operating expenses
83
operating cash outflows will be lower and financing cash
flows will be higher in the statement of cash flows as
principal repayments on all lease liabilities will now be
included in financing activities rather than operating
activities. Interest can also be included within financing
activities
None
AASB 2014-10 Amendments
to Australian Accounting
Standards – Sale or
Contribution of Assets
between an Investor and its
Associate or Joint Venture
The amendments address a current inconsistency between AASB 10
Consolidated Financial Statements and AASB 128 Investments in
Associates and Joint Ventures.
1 January
2022
When these amendments are first adopted for the year ending
30 June 2023, there will be no material impact on the financial
statements.
The amendments clarify that, on a sale or contribution of assets to a
joint venture or associate or on a loss of control when joint control or
significant influence is retained in a transaction involving an associate
or a joint venture, any gain or loss recognised will depend on whether
the assets or subsidiary constitute a business, as defined in AASB 3
Business Combinations. Full gain or loss is recognised when the assets
or subsidiary constitute a business, whereas gain or loss attributable
to other investors’ interests is recognised when the assets or
subsidiary do not constitute a business.
This amendment effectively introduces an exception to the general
requirement in AASB 10 to recognise full gain or loss on the loss of
control over a subsidiary. The exception only applies to the loss of
control over a subsidiary that does not contain a business, if the loss
of control is the result of a transaction involving an associate or a joint
venture that is accounted for using the equity method. Corresponding
amendments have also been made to AASB 128.
*The mandatory effective date of AASB 2014-10 has been deferred to
1 January 2022 by AASB 2017-5.
AASB 2017-4 amends AASB 1 First-time Adoption of Australian
Accounting Standards to add paragraphs arising from AASB
Interpretation 23 Uncertainty over Income Tax Treatments.
AASB 2017-6 amends AASB 9 Financial Instruments (2014) to permit
entities to measure at amortised cost or fair value through other
comprehensive income particular financial assets that would
otherwise have contractual cash flows that are solely payments of
principal and interest but do not meet that condition only as a result
of a prepayment feature. This is subject to meeting other conditions,
such as the nature of the business model relevant to the financial
asset. Otherwise, the financial assets would be measured at fair value
through profit or loss.
AASB 2017-7 amends AASB 128 Investments in Associates and Joint
Ventures to clarify that an entity is required to account for long-term
interests in an associate or joint venture, which in substance form part
of the net investment in the associate or joint venture but to which
the equity method is not applied, using AASB 9 Financial Instruments
before applying the loss allocation and impairment requirements in
AASB 128.
AASB 2018-1 makes a number of relatively minor amendments to
AASB 3 Business Combinations, AASB 111 Joint Arrangements, AASB
112 Income Taxes and AASB 123 Borrowing Costs.
AASB 2018-6 amends AASB 3 to clarify the definition of a business,
assisting entities to determine whether a transaction should be
accounted for as a business combination or as an asset acquisition.
The amendments:
•
clarify that to be considered a business, an acquired set of
activities and assets must include, at a minimum, an input and a
None
None
AASB 2017-4 Amendments to
Australian Accounting
Standards – Uncertainty over
Income Tax Treatments
AASB 2017-6
Amendments to Australian
Accounting Standards –
Prepayment Features with
Negative Compensation
None
AASB 2017-7 Amendments to
Australian Accounting
Standards – Long-term
Interests in Associates and
Joint Ventures
AASB 2018-1
Annual Improvements to
IFRS Standards 2015–2017
Cycle
AASB 2018-6 Amendments to
Australian Accounting
Standards – Definition of a
Business
None
None
1 January
2019
When these amendments are first adopted for the year ending
30 June 2020, there will be no material impact on the financial
statements.
1 January
2019
When these amendments are first adopted for the year ending
30 June 2020, there will be no material impact on the financial
statements.
84
1 January
2019
When these amendments are first adopted for the year ending
30 June 2020, there will be no material impact on the financial
statements.
1 January
2019
When this interpretation is adopted for the year ending 30 June
2020, there will be no material impact on the financial
statements.
1 January
2020
When these amendments are first adopted for the year ending
30 June 2021, there will be no material impact on the financial
statements.
•
•
•
substantive process that together significantly contribute to the
ability to create outputs;
remove the assessment of whether market participants are
capable of replacing any missing inputs or processes and
continuing to produce outputs;
add guidance and illustrative examples to help entities assess
whether a substantive process has been acquired;
narrow the definitions of a business and of outputs by focusing
on goods and services provided to customers and by removing
the reference to an ability to reduce costs; and
add an optional concentration test that permits a simplified
assessment of whether an acquired set of activities and assets is not a
business.
AASB 2018-7 principally amends AASB 101 and AASB 108. The
amendments refine the definition of material in AASB 101. The
amendments clarify the definition of material and its application by
improving the wording and aligning the definition across the
Australian Accounting Standards and other publications. The
amendment also includes some supporting requirements in AASB 101
in the definition to give it more prominence and clarifies the
explanation accompanying the definition of material.
AASB 2019-1 amends Australian Accounting Standards,
Interpretations and other pronouncements to reflect the issuance of
the revised Conceptual Framework for Financial Reporting (Conceptual
Framework).
The application of Conceptual Framework is limited to
•
For profit entities that have public accountability
Other for-profit entities that voluntarily elect to apply the Conceptual
Framework
Interpretation 23 clarifies how the recognition and measurement
requirements of AASB 112 Income Taxes are applied where there is
uncertainty over income tax treatments.
The amendments address a current inconsistency between AASB 10
Consolidated Financial Statements and AASB 128 Investments in
Associates and Joint Ventures.
The amendments clarify that, on a sale or contribution of assets to a
joint venture or associate or on a loss of control when joint control or
significant influence is retained in a transaction involving an associate
or a joint venture, any gain or loss recognised will depend on whether
the assets or subsidiary constitute a business, as defined in AASB 3
Business Combinations. Full gain or loss is recognised when the assets
AASB 2018-7 Amendments to
Australian Accounting
Standards – Definition of
Material
None
AASB 2019-1 Amendments to
Australian Accounting
Standards – References to
the Conceptual Framework
None
None
None
Interpretation 23
Uncertainty Over Income Tax
Treatments
AASB 2014-10 Amendments
to Australian Accounting
Standards – Sale or
Contribution of Assets
between an Investor and its
Associate or Joint Venture
1 January
2020
When these amendments are first adopted for the year ending
30 June 2021, there will be no material impact on the financial
statements.
1 January
2020
When these amendments are first adopted for the year ending
30 June 2021, there will be no material impact on the financial
statements.
85
1 January
2019
When this Interpretation is first adopted for the year ending 30
June 2020, there will be no material impact on the transactions
and balances recognised in the financial statements.
1 January
2022*
When these amendments are first adopted for the year ending
30 June 2023, there will be no material impact on the financial
statements.
or subsidiary constitute a business, whereas gain or loss attributable
to other investors’ interests is recognised when the assets or
subsidiary do not constitute a business.
This amendment effectively introduces an exception to the general
requirement in AASB 10 to recognise full gain or loss on the loss of
control over a subsidiary. The exception only applies to the loss of
control over a subsidiary that does not contain a business, if the loss
of control is the result of a transaction involving an associate or a joint
venture that is accounted for using the equity method. Corresponding
amendments have also been made to AASB 128.
*The mandatory effective date of AASB 2014-10 has been deferred to
1 January 2022 by AASB 2017-5.
86
H4 - EVENTS AFTER THE REPORTING DATE
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected the group’s operations, results or state
of affairs, or may do so in future years other than those set out below.
Date of event
1 July 2019
Details of event
On 1 July 2019, 24,691,358 shares were issued at a price of $AUD0.0324 on conversion of 24,691,358
options.
4 July 2019
On 4 July 2019, Mr Stephen Roberts resigned as a Director of the Company.
8 July 2019
On 8 July 2019, Mr Sam Lee resigned as a Director of the Company.
11 July 2019
On 11 July 2019, Mr Toby Hicks was appointed as a Director and Non-Executive Chairman of the
Company.
As part of his appointment to the Board, Mr Hicks (or his nominee) was issued with 7.5 million
performance rights, automatically capable of conversion on the Company’s shares trading on ASX
achieving a volume weighted average trading price of not less than $0.09 for not less than 15
consecutive trading days within three years from the date of issue, and 2.5 million options exercisable
at $0.10 on or before 30 June 2024 (Incentive Securities). Mr Hicks’ Incentive Securities were issued on
11 July 2019 under the Company’s available annual placement capacity under ASX Listing Rule 7.1.
5 September 2019
On 5 September 2019, the Company announced noted it would seek to wind up the Futuredge Capital
Joint Venture (Formerly FutureICO Pty Ltd) and had terminated its Coincast Media joint venture.
87
Refer to the full announcement.
28 September 2019
On 28 September 2019, the Group became aware that a small Chinese based exchange, Coin Tiger, had
listed Bankorus (BKTS) tokens for trading. There was no announcement or marketing from the Company
indicating that a listing was pending. On review, the Group notes that the trading volumes since listing
have been low but considers that it may be indicative of an active market. At the time of the report the
price per token was $0.008 on 24-hour trading volume of $USDT690.
At 30 June 2019, the Group holds Bankorus Tokens at 30 June 2019 totalling $770,000 ($0.93 per token),
this balance may be impaired if the exchange listing is determined to legitimate and an active market
exists.
30 September 2019
Due to the volatile nature and the materiality of the digital assets held, we disclose the value of digital
assets held by the Group, excluding the DigitalX Fund and unlisted digital assets, as at the close date of
the 29 September 2019.
Coin Symbol
Coin Amount
BTC
Altcoins
Total
431
-
-
$USD Spot Price
at 30 June
$10,817.16
-
$USD Spot Price
at 29 Sept
$8,104.19
-
-
$USD Balance
$3,492,905
$31,842
$3,524,747
There were no other reportable subsequent events.
Directors
Toby Hicks
Non-Executive Chairman
Leigh Travers
Executive Director
Peter Rubinstein
Non-Executive Director
Company Secretary
Shannon Coates
ABN
59 009 575 035
Registered Office and Principal Place of Business
Suite 1, Level 2,
66 Kings Park Road
West Perth WA 6005
Tel: +61 (8) 9322 1587
Auditor
Grant Thornton Audit Pty Ltd
Level 43, 152-158 St Georges Terrace
PERTH WA 6000
Tel: +61 (8) 9480 2000
Fax +61 (8) 9322 7787
Stock Exchange Listing
DigitalX Limited shares are listed on the Australian Securities Exchange (ASX Code: DCC)
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
GPO Box D182
Perth WA 6840
Telephone: +61 (8) 9323 2000
Facsimile: +61 (8) 9323 2096
Email: perth.services@computershare.com.au
Website www.digitalx.com
88
The following information is current as at 17 September 2019.
EXCHANGE LISTING
DigitalX Limited shares are listed on the Australian Securities Exchange. The Company’s ASX code is DCC.
DISTRIBUTION OF SHAREHOLDERS
The number of shareholders, by size of holding, are:
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Number of
Holders
186
3,207
1,632
3,446
720
9,191
Number of
Shares
41,226
9,477,282
13,236,133
121,367,596
452,094,548
596,216,785
UNMARKETABLE PARCELS
Holdings of less than a marketable parcel of ordinary shares:
Holders: 5,825
Shares: 15,625
UNQUOTED SECURITIES
For each class of unquoted securities, if a person holds 20% or more of the securities in a class, the name of the holder and number
of securities held is disclosed.
89
UNLISTED OPTIONS AND PERFORMANCE RIGHTS
Unlisted Options exercisable at $0.0324 each on or before 1 September 2020
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1 Ozstudy Group Pty Ltd holds 1,234,568 options comprising 20% of this class.
2 Tirelem Pty Ltd holds 1,234,568 options comprising 20% of this class.
3 WHW Investments Pty Ltd holds 1,234,568 options comprising 20% of this class.
4 YMG International Group Pty Ltd holds 1,234,568 options comprising 20% of this class.
Number of
Holders
-
-
-
-
61-4
6
Number of Options
-
-
-
-
6,172,840
6,172,840
Unlisted Options exercisable at $0.0324 each on or before 8 September 2020
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1ACL Investment Australia Pty Ltd holds 1,327,160 Options comprising 21.73% of this class.
2JGM Investment Group Pty Ltd holds 2,279,013 Options comprising 37.31% of this class.
3Mr Zijing Xu holds 1,234,568 Options comprising 20.21% of this class.
Number of
Holders
-
-
-
1
41-3
5
Number of Options
-
-
-
63,310
6,044,445
6,107,755
Unlisted Options exercisable at $0.0324 each on or before 18 September 2020.
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1 ACL Investment Australia Pty Ltd holds 2,600,000 Options comprising 29.55% of this class.
2 Irwin Biotech Nominees Pty Ltd holds 3,400,000 Options comprising 38.64% of this class.
3 Mars Capital Australia Pty Ltd holds 2,800,000 Options comprising 31.82% of this class.
Unlisted Options exercisable at $0.087 each on or before 17 May 2022.
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Melshare Nominees Pty Ltd holds 2,768,38200,000 comprising 100% of this class.
Unlisted Options exercisable at $0.0324 each on or before 18 September 2020.
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1 ACL Investment Australia Pty Ltd holds 2,600,000 Options comprising 29.55% of this class.
2 Irwin Biotech Nominees Pty Ltd holds 3,400,000 Options comprising 38.64% of this class.
3 Mars Capital Australia Pty Ltd holds 2,800,000 Options comprising 31.82% of this class.
Unlisted Options exercisable at $0.22 each on or before 10 December 2023
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1 Irwin Biotech Nominees Pty Ltd holds 1,000,000 Options comprising 50% of this class.
2 Blockchain Global Ltd holds 1,000,000 Options comprising 50% of this class.
Number of
Holders
-
-
-
-
31-3
3
Number of
Holders
-
-
-
-
1
1
Number of
Holders
-
-
-
-
31-3
3
Number of
Holders
-
-
-
-
21-2
2
Number of Options
-
-
-
-
8,800,000
8,800,000
Number of Options
-
-
-
-
2,768,382
2,768,382
90
Number of Options
-
-
-
-
8,800,000
8,800,000
Number of Options
-
-
-
-
2,000,000
2,000,000
Unlisted Options exercisable at $0.25 each on or before 10 December 2023
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1 Irwin Biotech Nominees Pty Ltd holds 1,500,000 Options comprising 50% of this class.
2 Blockchain Global Ltd holds 1,500,000 Options comprising 50% of this class.
Unlisted Options exercisable at $0.30 each on or before 10 December 2023
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
1 Irwin Biotech Nominees Pty Ltd holds 2,000,000 Options comprising 50% of this class.
2 Blockchain Global Ltd holds 2,000,000 Options comprising 50% of this class.
Unlisted Options exercisable at $0.10 each on or before 30 June 2024
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Performance rights expiring 11 July 2022
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Number of
Holders
-
-
-
-
21-2
2
Number of
Holders
-
-
-
-
21-2
2
Number of
Holders
-
-
-
-
1
1
Number of
Holders
-
-
-
-
1
1
Number of Options
-
-
-
-
3,000,000
2,000,000
Number of Options
-
-
-
-
4,000,000
4,000,000
Number of Options
-
-
-
-
2,500,000
2,500,000
Number of Options
-
-
-
-
7,500,000
7,500,000
91
Performance rights expiring 10 December 2023
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Number of
Holders
-
-
-
-
1
1
Number of Options
-
-
-
-
9,000,000
9,000,000
LISTING OF 20 LARGEST SHAREHOLDERS
The names of the twenty largest registered holders of quoted ordinary shares are:
Name
Number of Shares
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
NRB INTERNATIONAL LLC
ONE CC PTY LTD
MARS CAPITAL AUSTRALIA PTY LTD
BLOCKCHAIN GLOBAL LIMITED
ACL INVESTMENT AUSTRALIA PTY LTD
IRWIN BIOTECH NOMINEES PTY LTD
VALUE ADMIN.COM PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
IRWIN BIOTECH NOMINEES PTY LTD
MR TE-CHIHTERRY CHEN
MR NICK KAROPOULOS
MR NEEL KRISHNAN
MR COREY PINCHAS SILVER
MR ADAM MICHAEL BIANCO
JINARK PTY LTD
MRS LISA JANINE DE MEIO
BELTAPE PTY LTD
MR MARK DANIEL NEEDHAM + MRS PIENGJAI NEEDHAM
37,007,802
21,158,672
15,553,702
14,973,785
10,500,000
10,096,296
8,843,734
8,696,295
7,796,296
7,200,000
5,871,061
5,470,000
5,144,022
5,000,000
4,857,500
4,830,653
4,418,023
4,300,000
4,042,000
4,000,000
4,000,000
Percentage of
Shares
6.21
92
3.55
2.61
2.51
1.76
1.69
1.48
1.46
1.31
1.21
0.98
0.92
0.86
0.84
0.81
0.81
0.74
0.72
0.68
0.67
0.67
TOTAL
193,759,841
32.50
SUSTANTIAL SHAREHOLDERS (HOLDING 5% OR MORE)
There were no substantial shareholders holding 5% or more of the voting shares in the Company as at 17 September 2019.
VOTING RIGHTS
All ordinary shares carry one vote per share without restriction. No voting rights are attached to Options.
ON MARKET BUY BACK
There is no current on-market buy-back.
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement for the 2019 financial year can be accessed at:
https://digitalx.com/corporate-governance/