2017 Annual Report
DomaCom Limited and its Controlled Entities
ABN 69 604 384 885
DOMACOM LIMITED
ABN 69 604 384 885
Table of Contents
Chairman’s Report
CEO’s Report
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Information
2
3
6
22
23
24
25
26
27
50
51
55
57
1
DOMACOM LIMITED
ABN 69 604 384 885
CHAIRMAN’S REPORT
30 JUNE 2017
Dear Shareholder
On behalf of the Board it is with pleasure I present the Annual Report for the year ended 30 June 2017.
In our short period since listing, DomaCom has continued to make good progress. Whilst dealing within the time
frames of government, the legal system and legislators (which is a fact of business) we have continued to push
ahead knowing that DomaCom has the solution for many of the challenges facing the changing investment and
social issues outlined below.
DomaCom is at the forefront of change occurring within financial services and the rapid take up of technology.
DomaCom is a pioneer in the development of the fractional investment platform which represents a combination
of a well proven legal structure and a technology layer that allows retail investors to obtain access to
investments in asset classes, such as direct property, that are relatively difficult for retail investors to access due
to their investment size and/or illiquidity.
Crowdfunding for property assets is still a relatively new phenomenon in Australia, however when we look to
global markets we can see that funds under management for global property crowdfunding grew from $20
million to $2.5 billion from 2010 to 2015 (Source: 2015CF The Crowdfunding Industry Report
Uhttp://reports.crowdsourcing.org/U
(2
very well positioned to take advantage of this trend.
T). We believe that we will continue to see growth in this area and DomaCom is
The last financial year has been a difficult one for the whole DomaCom community, working tirelessly to educate
and then implement this fantastic new process. As many of you would know any ground-breaking technology,
system or product takes time and we are step by step getting greater acceptance and use of our platform for
fractional investment. We continue to build strong and solid foundations for future growth. I specifically want to
refer to the following achievements:
The listing of the Company on the Australian Securities Exchange on the 7P
Industry Award for the Fintech Crowdfunder of the Year
(cid:120)
(cid:120)
(cid:120) Growth in the number of Properties that have been transacted within the DomaCom Fund has grown
P of November 2016
th
from 17 Properties at the end of 30 June 2016 to 43 Properties currently held on the platform.
The first public crowdfunding rural property was completed on the platform in February of this year.
(cid:120)
(cid:120) DomaCom is the leading Australian Property Crowdfunder with capital raised for properties across
Residential, Rural, and Commercial sectors and with properties situated in all 6 states of Australia.
Looking to the future DomaCom is very well placed to continue to take advantage of major trends that are
confronting Australia:
(cid:120)
(cid:120)
Affordable Housing – DomaCom’s fractional Investment platform allows all types of investors to take a
fractional interest in property and in particular allows Generation X and Y to take their first steps of
getting onto the property ladder. Furthermore, DomaCom offers a shared equity model (allowing
different equity participants) thus allowing long term renters an opportunity to seek equity participation
over time.
Ageing and Retirement savings – The Australian population is getting older and living longer with a
concern that many may outlive their savings. DomaCom has a Senior Equity Release product that is in
the final stages of obtaining approval from ASIC.
(cid:120) DomaCom business model is flexible to allow crowdfunding for all types of property (subject to
appropriate Due Diligence), therefore facilitating capital to flow into areas such as Rural and Alternative
Energy that may otherwise find it difficult to raise funds through traditional sources of finance.
The DomaCom platform whilst originally for property interests is flexible enough to accommodate
fractionalisation of many different asset classes and investments.
(cid:120)
We thank you for your support. Our interests are aligned, those of the board, shareholders, management and
staff. Everyone looks forward to making DomaCom not only a successful investment but a business which adds
value to the community through its innovative opportunities.
Grahame Evans
Chairman
31 August 2017
2
6
T
2
6
DOMACOM LIMITED
ABN 69 604 384 885
CEO’S REPORT
30 JUNE 2017
Dear Shareholder
Overview
FY2017 was a year of considerable progress for DomaCom, as we lay the foundations for the company’s future
as the leading property crowdfunding platform in Australia.
DomaCom successfully listed on the Australian Securities Exchange on 7 November 2016, raising $7.3 million.
The DomaCom Fund, for which DomaCom acts as the Investment Manager, has already acquired 43 property
assets across the diverse property sectors of residential, commercial and rural, resulting in over 1,240 accounts
held by over 860 investors.
DomaCom continues to gain traction in its primary distribution channel of Independent Financial Planners (‘IFAs’
and has now been approved by 43 different adviser groups, giving access to over 1,200 advisers and their end
clients.
Also during the year, we took the strategic decision to create a new channel for investment opportunities by
accessing the considerable untapped potential of the direct investment market. We have received considerable
feedback that many investors have an appetite to invest directly into the property sector rather than dealing
through an IFA. Accordingly, we have adapted our business model to enable direct investors to access
crowdfunding opportunities, opening a new route to market for the Company.
The process to implement this is well underway and we expect it will be achieved by the end of the calendar
year.
Financial Results
For the full year we reported a loss of $6.1 million ($6.1 million loss 2016), which is in line with expectations and
reflects our position as an early stage company.
The major expense items included employee benefits that were 14% lower than the previous year, representing
a reduction of $0.5 million from $3.5 million for FY2016 to $3.0 million for FY2017. The depreciation expense
increased to $664,000 from $311,000 in FY2016 as a result of taking a more conservative view of the
depreciation of the DomaCom platform; this has been altered to a more prudent 5-year period rather than over a
10-year period initially adopted in 2016.
As at the end of the FY2017 the Company has a robust cash position of $2.7 million and anticipates receiving a
further $1.0m in Q3 2017 through a Research and Development grant.
Our Business
The DomaCom Fund leverages its proprietary cloud-based technology platform to deliver a range of important
differentiating functions for investors in our sub-funds:
(cid:120) Campaign functions enabling investors to pool together to acquire any property asset (“crowdfunding”).
(cid:120)
(cid:120) Greater choice, by being able to search properties through our platform and bid on individual assets
Liquidity through the ability to buy and sell on the platform.
(cid:120)
they deem attractive.
An ability to invest alongside family and friends via an enhancement to our platform we are rolling out in
the fourth quarter of this year. This will enable a group of family and friends to select a property of their
choosing and co-invest together.
Outlook
The concept of fractional investment in property is proving highly attractive to investors globally, evidenced by
the growth in global funds invested from $20 million to $2.5 billion between 2010 and 2015 (source: The
3
DOMACOM LIMITED
ABN 69 604 384 885
CEO’S REPORT
30 JUNE 2017
Crowdfunding Industry Report 2015). While the concept is still in its infancy in Australia, there are a range of
macro-economic drivers in place which give us significant confidence in the long-term prospects of the industry.
The DomaCom Fund is well positioned to benefit from a number of the macro themes that are currently
prevalent in Australia. These include:
(cid:120) Housing affordability;
(cid:120)
(cid:120)
(cid:120)
Ageing population and concerns over level of retirement savings;
Energy crisis and need for alternative sources of energy; and
Social infrastructure and regional community development.
DomaCom has a number of diverse crowdfunding projects in the pipeline that address these challenges and
provide a range of investment opportunities for advisers and investors.
One example of these opportunities is an investment in renewable energy infrastructure in regional Australia:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
The project involves crowdfunding of the construction of a bio-energy infrastructure development which
will be subsequently leased to an energy company, Utilitas. Utilitas aggregates organic waste and
waste water to produce energy, water and other bioproducts.
The first project is the development of a biofuels plant in Casino, NSW, with the investment being
valued at approximately $4.3 million, representing the value of the land and the cost of developing the
bio-energy plant.
There is a targeted 20% capital uplift during the development phase for investors after which a lease will
be put in place with Utilitas to provide a regular, ongoing rental income stream of approximately 8% to
the investors.
As a socially responsible investment, this attracts a new group of potential investors to DomaCom.
This bio-energy theme represents a potentially significant source of assets for DomaCom as it is estimated that
there are approximately 100 projects in the pipeline with a potential value of around $700 million over five years.
The diagram below illustrates the scale of the opportunities that we have identified. We remain highly focused
on growing funds under management, which in turn delivers revenue to DomaCom Limited in the form of
management fees.
Key milestones achieved Near term focus Future potential opportunities
$22m funds under management
$16 million in adviser campaigns
$25 million investment awaiting debt $21 million in next 4 bioHub projects
$12 million in public campaigns
$90 million Melbourne sub-division
$13 million in next Akuna project
$23 million in smaller projects
4
DOMACOM LIMITED
ABN 69 604 384 885
CEO’S REPORT
30 JUNE 2017
DomaCom has also been working on a number of key initiatives that have the potential to transform our
company:
Debt for Residential Investments
Another key opportunity we are working on is to create a mechanism by which our sub-funds can hold debt thus
opening a raft of new product opportunities for the Company. This is a direct response to feedback from
investors and will facilitate the creation of a range of exciting new products. We expect to have this
implemented within 12 months.
We believe that this will be a key driver of future growth given the strong preference from advisers and investors
to incorporate debt when investing in property, particularly given the tax efficiencies of doing so.
Senior Equity Release
DomaCom’s Senior Equity Release (‘SER’) product has significant potential in terms of attracting a large new
demographic of investors; the SER product will enable retirees to help fund their retirement by releasing equity
from their homes to investors. This is particularly relevant to the ‘Baby Boomer’ generation, and will also enable
IFAs to include property in multi-generational wealth planning.
This product is currently going through the regulatory approval process and if successful it is anticipated that we
will have the product available in the first quarter of 2018.
Federal Court SMSF Ruling
Another early stage opportunity DomaCom is advancing is aimed at creating a mechanism for investors to
access their own superannuation savings to invest in a property in which they also live.
While considerable barriers exist to achieving this goal, a key element is to seek a ruling in the Federal Court
which could facilitate this change and the Company has commenced proceedings in the Federal Court towards
this aim. We expect the hearing to be set in September 2017 and we will update shareholders in due course.
Clearly success with this initiative would create a significant opportunity by creating a credible solution to the
housing affordability crisis and opening up the vast resources within the superannuation system. This would be
a significant opportunity, particularly for younger Australians to get on the property ladder earlier.
We have taken the advice of Senior Counsel who believes we have a strong case but we will need of course to
await the decision of the court.
Conclusion
DomaCom is a pioneer in property crowdfunding, which is only in its infancy in Australia and has significant
opportunity for growth. With 43 deals already completed, we have underway a number exciting and diverse
crowdfunding projects, in addition to some highly targeted legislative and structural initiatives that have the
potential to significantly broaden DomaCom’s appeal to investors and drive funds under management. We look
forward to updating shareholders on our progress in the coming year as these projects and new products come
to fruition.
Arthur Naoumidis
Chief Executive Officer
31 August 2017
5
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
Your directors present their report on DomaCom Limited (the “Company”) and its Controlled Entities (the
“Group”) for the year ended 30 June 2017.
1.
Directors
The names of the directors in office throughout the year and to the date of this financial report are Mr David H
Archbold, Mr Graeme A Billings, Mr Peter C Church, Mr Grahame D Evans, Mr Ross A Laidlaw and Mr Arthur
Naoumidis. The name of the company secretary in office throughout the year and to the date of this financial
report is Mr Philip J R Chard. Details of qualifications, experience and special responsibilities of the Directors
are as follows:
Grahame D Evans – Chairman and Independent Non-Executive Chairman
Grahame has been extensively involved with the financial services industry for over 30 years. He has held a
variety of board positions including Chairman of Australian, Canadian, Singaporean & Chinese investment &
advisory businesses and also as a director of Malaysian and New Zealand companies. He is a regular speaker
at conferences both in Australia and overseas and holds an MBA from the prestigious Australian Graduate
School of Management, voted in the top 10 management schools in the Asian region. Grahame's executive
roles have included CEO Investments for Tower Australia, Managing Director, AMP Consulting and Group
Managing Director of Centrepoint Wealth. He is currently an executive director of GPS Wealth. Grahame has
been a director of DomaCom Limited since 23 February 2015.
Arthur Naoumidis – Chief Executive Officer
After 20 years as an IT consultant, Arthur spent 5 years at JB Were and BNP Paribas building and operating
investment administration systems and businesses. Using the combined technology and investment
administration background, Arthur founded the now ASX Listed Praemium (ASX:PPS). Arthur grew Praemium
into a business with 500 client firms (accountants, financial planners, stockbrokers, SMSF administrators and
institutions) in Australia administering over $43 Billion as well as partnering with Blackrock Australia to launch
Australia’s first online separately managed account (SMA) platform. As a result of listing Praemium on the ASX,
Arthur took the Praemium SMA concept to the UK and successfully launched the SMA platform business of
Praemium UK.
Arthur is now taking some of the advanced equity concepts he pioneered in the equity markets during his
Praemium days into a market that has been relatively untouched by technology and business process
improvements – the property market. Arthur has been a director of DomaCom Limited since 23 February 2015.
David H Archbold – Independent Non-Executive Director
David has over 45 years’ experience in the property industry in Australia. Prior to the establishment of
International Property Group Pty Limited in 1991, David was Executive Director - International, for Colliers
Jardine and Executive General Manager of Hooker Corporation. For 17 years prior he was Managing Director of
Baillieu Knight Frank (SA) Pty Ltd, then Managing Director of Baillieu Knight Frank (NSW) and a
Director/Partner of the Australian Company.
David has extensive experience in property consultancy throughout Australia and South East Asia with
Corporate and large family owned businesses. David has been a director of DomaCom Limited since 23
February 2015.
Graeme A Billings – Independent Non-Executive Director
Graeme has been a chartered accountant since 1980. He retired from PricewaterhouseCoopers in 2011 after 34
years where he was a senior partner in the Assurance practice. Graeme is a former head of the Melbourne
Assurance practice as well as leading the Firm's Australian and Global Industrial Products businesses. He has
extensive experience in providing assurance, governance, transaction and consulting services to multi-national
and national companies in the automotive, manufacturing, consumer goods and construction industries.
Graeme was also a regular media commentator on the Industrial Products sector.
Graeme is now an advisor to various companies as well as acting as a non-executive director for a number of
public and private companies in the financial services, manufacturing, retail and construction sectors. Graeme
has been a director of DomaCom Limited since 23 February 2015.
6
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
Peter C Church OAM – Independent Non-Executive Director
Peter Church OAM FAICD is a lawyer and corporate adviser who has spent much of his career in South East
Asia and India where he advises a wide range of clients. He has written a number of books on the region and is
an Adjunct Professor in the Business School of Curtin University. He was awarded the Medal of the Order of
Australia (OAM) in 1994 by the Australian Government for the promotion of business relations between
Australian and South East Asia. He is also a Fellow of the Australian Institute of Company Directors (FAICD).
His current appointments include Executive Chairman of AFG Venture Group, Special Counsel to the English
law firm, Stephenson Harwood, Non-Executive Director of OM Holdings Limited (ASX), Elara Capital PLC and
the Singapore international Chamber of Commerce Limited. Peter has been a director of DomaCom Limited
since 26 August 2015.
Ross A Laidlaw – Executive Director
Ross has spent over 25 years in Financial Services, and has deep and expansive experience within markets in
Australasia, Europe and America. His strength lies in the development of start-up or green field developments
and driving them into fully fledged and profitable businesses. Ross was CEO of the successful Skandia Platform
for over 7 years, developing it into a leading Platform that was well supported by independent financial advisers.
Prior to being transferred to Skandia's European business the business had grown organically to over $5 billion
in assets under management and employed over 200 staff. Ross has held a number of directorships including
the Australian businesses, Skandia's joint venture in Mainland China, Skandia's Fund Management Company in
Ireland and American Skandia's Broker Dealer group.
Ross is qualified Chartered Accountant, and Fellow of the Financial Services Institute of Australasia and his key
role at DomaCom is as Chief Operating Officer. Ross has been a director since 23 February 2015.
Philip JR Chard – Chief Financial Officer, Company Secretary
Philip has over 25 years of experience in the financial services industry. As a senior manager at Deloitte he
provided assurance and advisory services within the funds management and investment banking sectors.
Subsequently he has held a broad range of financial control and reporting positions within the property, funds
management and banking sectors. He has a strong understanding of the requirements of highly regulated
industries and the reporting obligations of listed companies. He has a proven track record of designing and
implementing robust internal control and reporting systems.
2.
Directors meetings
The number of Directors’ meetings and the number of meetings attended by the Directors of the Company
during the year ended 30 June 2017 were:
Board of Directors
Attended
Held
13
16
15
16
14
16
16
16
16
16
16
16
Audit Committee
Held
3
3
3
-
3
-
Attended
3
3
3
-
3
-
Risk Management
Attended
Held
1
1
1
1
1
1
1
1
1
1
1
1
Mr David H Archbold
Mr Graeme A Billings
Mr Peter C Church
Mr Grahame D Evans
Mr Ross A Laidlaw
Mr Arthur Naoumidis
3.
Principal activity
During the year, the principal activities of entities within the Group were the development of a software platform
to be used for the trading of fractional interests in property.
4.
Operating results
The Group has incurred an operating loss of $6,136,417.
7
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
5.
Distributions paid or declared
No distributions were declared or paid in the current year.
6.
Review of operations and financial results
The Group is a participant in the financial services market in Australia.
DomaCom Limited is the holding company and DomaCom Australia Limited, DomaCom Platform Services Pty
Ltd and DomaCom Singapore Private Limited are 100% owned subsidiaries of the DomaCom Group.
DomaCom Australia Limited is the investment manager of the DomaCom Fund (“the Fund”) (Managed
Investment Scheme). The Fund allows investors to hold fractional interests in properties, that they themselves
have selected or their advisers on their behalf. The Fund allows investors to obtain exposure to properties that
they could not afford to buy outright themselves due to the price of property in Australia or would not wish to buy
100% outright from an asset allocation perspective. DomaCom allows investors and their advisers to
appropriately allocate their property exposure across a range of different types of property asset classes such
as Residential, Commercial, Industrial, Retail and Rural and also geographically across the major capital cities
in Australia and regional areas.
The Fund has successfully completed 43 property crowdfunding transactions and has 1240 investor accounts
P of July 2017. DomaCom continues to gain traction across its primary distribution
across 864 investors as at 17P
channel of independent financial advisers. It is now represented on the Approved Product List of 43 financial
planning organisations that represent over 1,200 advisers and approximately 240,000 clients. The Fund has
been rated by Lonsec, SQM and PIR research houses, which are critical for the Fund’s ability to continue to
gather support amongst financial planners.
th
From a macro perspective DomaCom is very well placed to continue to grow its funds under management. In
accordance with an International report on Crowdfunding undertaken by Massolution.com global property
crowdfunding grew from $20 million to $2.5 billion in assets from 2010 to 2015. The Fund is also very well suited
as a vehicle to tackle national themes that are currently affecting Australia and they are namely:
(cid:120) Housing Affordability
(cid:120)
(cid:120)
(cid:120) Community Based projects
Ageing and Retirement Savings
Alternative Energy sources supporting the reduction of energy prices
DomaCom currently has a number of public campaigns underway and products under development that touch
on one or more of the above themes:
(cid:120)
Akuna Cobram Lifestyle Community – Affordable Housing and Retirement Lifestyle: this represents the
development of 148 homes in Cobram in a community style setting allowing retirees to purchase
affordable housing. Project worth approximately $6 million.
(cid:120) Casino Biohub Plant – Alternative Energy: creating energy from waste, which is helping regional areas
find a solution to the rising energy prices. We are working with Utilitas who are looking to operate the
Biofuels plant. This project value is approximately $4.3 million. DomaCom will look to replicate this
project in many other regional areas.
Senior Equity Release product a solution to help the ageing population and directed to baby boomers
that own their own home but have a low level of retirement savings. This product is currently going
through the regulatory approval process and if successful it is anticipated that we will have the product
available in the first quarter of 2018.
(cid:120)
In accordance with the theme of Affordable Housing DomaCom is actively progressing a challenge against the
Australian Taxation Office in the Federal Court seeking a ruling in relation to Self-Managed Superannuation
Funds (“SMSF”). DomaCom is seeking confirmation that the legislation allows SMSFs to invest in a DomaCom
sub-fund that owns a residential property that is rented by a related party (i.e. family member). DomaCom is
seeking court confirmation that DomaCom is one widely held trust and does not breach the sole purpose test. If
successful the ruling would open the entire SMSF industry to property investment in a way that has not been
8
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
possible before and support generation X and Y in tackling the affordability of housing issue. We would expect
this case to be heard and a decision determined before the end of the year.
Other key upcoming milestones for DomaCom
(cid:120)
Family and Friends Campaign - DomaCom is currently enhancing the platform technology which will
allow us to promote Family and Friends campaigns. This will allow investors and their friends to
undertake a property campaign on the DomaCom platform. This allows you and your friends to buy a
property together and we in turn manage the property, find a tenant and pay the rental income to you
and your friends.
(cid:120) Debt available for residential investments expected to be implemented 4P
P quarter. This will allow loans
to be raised on the platform and used as gearing directly against properties that are onboarded onto the
platform. We expect this to increase transaction volumes considerably.
th
7.
Significant Changes in State of Affairs
DomaCom successfully listed on the Australian Securities Exchange on 7 November 2016, raising $7.3 million.
There were no other significant changes in the state of affairs of the Group during the year.
8.
Post Balance Date Events
Subsequent to balance date and prior to the issuing of this report, the following events have occurred:
-
The Group’s Research and Development tax incentive claim is currently being lodged with AusIndustry
for an amount of $952,925.
No other matters or circumstances have arisen since the end of the year which significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the
Group in future financial years.
9.
Future Developments
The Group is expected to continue to develop its software platform and increase the level of assets under
management in the DomaCom Fund (Managed Investment Scheme) for which the Group will earn management
fees for its role as Investment Manager.
9
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
10. Unissued shares under Performance Rights
Date Granted
Expiry Date
Exercise price
of shares ($)
Number of shares under
Performance Rights
14 December 2015
29 September 2016
30 November 2018
30 November 2018
$nil
$nil
702,735
21,278
Performance Rights were issued under the programs described in Note 12 to the financial statements. No other
options were granted or are outstanding at the date of this report.
11.
Shares issued during or since the end of the year as a result of exercise of Performance Rights
During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of
Performance Rights as follows (there were no amounts unpaid on the shares issued):
Date Granted
14 December 2015
Issue Price of
Shares ($)
$nil
Number
issued
of
shares
1,361,512
10
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
12. Remuneration Report (audited)
The Directors present the Remuneration Report for Non-Executive Directors, Executive Directors and other Key
Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations
Regulations 2001.
The Remuneration Report is set out under the following main headings:
a Principles used to determine the nature and amount of remuneration;
b Details of remuneration;
c Service agreements;
d Share-based remuneration; and
e Other information
a) Principles used to determine the nature and amount of remuneration
The principles of the Group’s executive strategy and supporting incentive programs and frameworks are:
-
-
-
to align rewards to business outcomes that deliver value to shareholders
to drive a high performance culture by setting challenging objectives and rewarding high performing
individuals; and
to ensure remuneration is competitive in the relevant employment market place to support the
attraction, motivation and retention of executive talent.
A remuneration framework has been structured that is market competitive and complementary to the reward
strategy of the Group.
The remuneration structure that has been adopted by the Group consists of the following components:
-
-
-
fixed remuneration being annual salary;
short term incentives (STI), being cash-based sales bonuses; and
long term incentives (LTI), being equity-based incentive plans.
Short Term Incentives (STI)
Short term incentives have been established to reward members of the sales department. The non-discretionary
incentives are structured to reward performance against financial targets, including Funds Under Management.
Long Term Incentives (LTI)
The Group has established a long term equity-based incentive plan for Directors and staff in order to:
-
-
assist in the retention and motivation of directors and employees; and
provide an incentive to grow shareholder value by providing an opportunity to receive an ownership
interest in the Company.
The plan provides for the award of both Employee Share Options and Employee Performance Rights to
Directors, executives, employees and consultants.
As the Group listed on the ASX on 7P
included for this year and the prior year.
th
P November 2016 historical performance indicators have only been
Earnings/(Loss) Per Share ($)
Net Profit/(loss) ($’000)
Share price ($) *
* Price at 30 June 2017
2017
(0.06)
(6,136)
0.11
2016
(0.06)
(6,061)
-
11
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
b) Details of remuneration
Short-term
employee
benefits
Post-
employment
benefits
Long-term
benefits
Year
Cash salary
and fees
Superannu-
ation
Long
service
leave
Share-
based
payments
Perform-
ance
Rights
Total
Executive Directors
Arthur Naoumidis
Director and CEO
2017 240,482
301,370
2016
22,846
28,630
2,085
3,566
-
-
265,413
333,566
Ross Laidlaw
Director and COO
2017 213,090
2016 273,972
20,244
26,028
1,057
4,501 17,114
-
234,391
321,615
Non-executive directors
Perform-
ance
based % of
remune-
0%
0%
0%
5%
Grahame Evans
Chairman &
Independent
Director
David Archbold
Independent
Director
Graeme Billings
Independent
Director
Peter Church
Independent
Director (1)
2017
60,000
2016
60,000
-
-
2017
36,614
3,478
2016
36,614
2017
36,614
3,478
2016
36,614
2017
40,000
2016
33,333
-
-
-
-
-
-
-
-
-
-
-
60,000
0%
21,393
81,393
26%
-
40,092
14,295
50,909
-
40,092
14,295
50,909
-
40,000
14,295
47,628
0%
28%
0%
28%
0%
30%
Other Key Management Personnel
Philip Chard
2017 141,167
13,411
1,895 10,639
167,112
6%
CFO / Company
Secretary (2)
2017 Total
2016 Total
767,967
741,903
63,457
54,658
5,037 10,639
8,067 81,392
847,100
886,020
(1) Appointed 1 August 2015
(2) Appointed as CFO on 9 May 2017
12
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Employee
Fixed
Remuneration
At risk: Short Term
Incentives
At risk: Performance
Rights (i)
Executive Directors
Arthur Naoumidis
Ross Laidlaw
Non-Executive
Directors
Other Key Management
Personnel
Philip Chard
100%
100%
100%
94%
(i) based on the value of $0.50 at grant date.
-
-
-
-
-
-
-
6%
Remuneration and other terms of employment for executive directors and senior executives are formalised in
letters of employment that provide for various conditions in line with market practice including:
-
-
-
an annual remuneration package and benefits including superannuation;
the basis of termination or retirement and the benefits and conditions as a consequence; and
agreed provisions in relation to annual leave and long service leave, confidential information and
intellectual property.
The compensation for termination benefits was $nil (2016: $nil).
c) Service agreements
No key management personnel are employed under a service agreement.
d) Share-based remuneration
Performance Rights granted to employees during the year ended 30 June 2017 under the Long Term Incentive
Plan have an exercise price of $nil, were granted at no cost to the recipient and carry no dividends or voting
rights. The vesting condition of listing on the Australian Securities Exchange was satisfied on 7 November 2016.
Vesting gives the holder of a Performance Right the right to convert into ordinary shares on a one-for-one basis.
The Performance Rights issued to employees under the Long Term Incentive Plan expire on 30 November 2018
and may be exercised at any time after the Company listed up to the expiry date.
Details of Performance Rights that were granted as remuneration during the year ended 30 June 2017 to key
management personnel are set out below.
Employee
Number
granted
Grant
date
Philip Chard
21,278
29/9/16
Value per
Performance
Right at grant
date ($)
$0.50
Number
vested
Exercise
Price ($)
Vesting and
first exercise
date
Last
exercise
date
21,278
-
7/11/16
30/11/18
No Performance Rights were forfeited, lapsed or exercised by Directors or key management personnel during
the year ended 30 June 2017.
13
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
e) Other information
The number of Performance Rights in the Company held during the financial year ended 30 June 2017 held by
key management personnel, including their related parties, are set out below:
Balance at
start of year
Granted as
remuneration
Exercised
Vested and
exercisable at
the end of the
reporting period
Executive Directors
Grahame Evans
David Archbold
Graeme Billings
Peter Church
Non-Executive
Directors
Arthur Naoumidis (i)
Ross Laidlaw
Executives
Philip Chard
42,786
28,590
28,590
28,590
31,234
213,929
-
-
-
-
-
-
106,975
21,278
-
-
-
-
-
-
-
42,786
28,590
28,590
28,590
31,324
213,929
128,253
(i) Performance Rights granted to Kathryn Naoumidis (related party) only as an employee of the Company.
The number of ordinary shares in the Company held during the financial year ended 30 June 2017 held by key
management personnel, including their related parties, are set out below:
Balance at
start of year
Granted as
remuneration
Received on
exercise
Other
changes
Held at end of
reporting period
Executive Directors
Grahame Evans
David Archbold
Graeme Billings
Peter Church
Non-Executive
Directors
Arthur Naoumidis
Ross Laidlaw
687,500
250,000
375,000
50,000
18,913,323
1,625,000
-
-
-
-
-
-
-
-
-
-
-
-
130,000
-
-
-
817,500
250,000
375,000
50,000
-
-
18,913,323
1,625,000
There were no loans to key management personnel during the year.
There were no other transactions with key management personnel during the year.
End of audited Remuneration Report.
14
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
13.
Environmental Issues
The Group’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth and State.
14.
Indemnification and insurance of Officers or Auditor
During or since the end of the financial year, the Group has given indemnity or entered into an agreement to
indemnify, or paid or agreed to pay insurance premiums as follows:
During the year, the Group has paid premiums in respect of an insurance contract to indemnify officers against
liabilities that may arise from their position as officers of the Group. Officers indemnified include all directors and
all executive officers participating in the management of the Group.
Further disclosure required under section 300(9) of the Corporations Act 2001 is prohibited under the terms of
the contract.
15.
Proceedings on Behalf of the Group
No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all
or any part of their proceedings. The Group was not a party to any such proceedings during the year.
DomaCom Australia, a subsidiary of DomaCom Limited, is supporting an action in the Federal Court for a
determination that DomaCom sub-funds are not inhouse assets or related trusts for the purposes of the SIS
(Superannuation Industry Supervision) Act. The ruling would confirm that Self-Managed Superannuation Funds
(“SMSFs”) can invest in property sub-funds where the tenant of the underlying property is a related party of the
SMSF. At the date of this report the determination is ongoing.
16. Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required by section 307C of the Corporations Act 2001 is
set out in the following report.
15
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
17. Corporate Governance Statement
The Board of DomaCom has adopted the following Corporate Governance policies and practices which are in
accordance with the ASX Corporate Governance Council’s “Corporate Governance Principles and
Recommendations (3rd Edition)” (ASX Guidelines) unless otherwise stated.
Role and responsibility of the Board (Principle 1.1)
The Board is responsible for the overall corporate governance of the Company, including establishing and
monitoring key performance goals. The Board monitors the operational and financial position and performance
of the Company and oversees its business strategy, including approving the strategic goals of the Company and
considering and approving an annual business plan (including a budget). The Board is committed to maximising
performance, generating appropriate levels of Shareholder value and financial return and sustaining the growth
and success of the Company. In conducting the Company’s business with these objectives, the Board seeks to
ensure that the Company is properly managed to protect and enhance Shareholder interests, and that the
Company and its Directors, officers and personnel operate in an appropriate environment of corporate
governance. Accordingly, the Board has created a framework for managing the Company, including adopting
relevant internal controls, risk management processes and corporate governance policies and practices which it
believes are appropriate for the Company’s business and which are designed to promote the responsible
management and conduct of the Company.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
The Board is responsible for the strategic direction of the company.
The Board reviews and approves the Company's proposed strategy. The objectives of the Company are
clearly documented in a long term corporate strategy and an annual business plan together with
achievable and measurable targets and milestones.
The Board approves budgets and other performance indicators and reviews performance against them
and initiates corrective action when required.
The Board ensures that risks facing the company have been identified, assessed and that the risks are
being properly managed.
The Board ensures that policies on key issues are in place and are appropriate. The Board also reviews
compliance with policies.
The Board adopts the most effective structure that best assists the governance process. The selection of
Directors is based on obtaining the most relevant and required skills, while also recognising the need to
have a diversity of skills and experience on the Board.
The Board approves and fosters an appropriate corporate culture matched to the Company's values and
strategies.
The Board appoints the Managing Director and evaluates his or her ongoing performance against
predetermined criteria. (Principle 1.6)
The Board approves remuneration for the Managing Director and remuneration policy and succession
plans for the Managing Director and senior management. (Principle 1.6)
Board Charter (Principle 1.1)
A Board charter prepared having regard to the ASX Corporate Governance Principles and Recommendations,
has been adopted by the Board and covers the independence of directors, the Board’s responsibility for overall
governance of the Company, the Board members’ roles, powers, and responsibilities.
A copy of the Company’s Board Charter is available on the Company’s Website at:
T.
Twww.domacom.com.au/investor-relations2
Board Committees (Principle 1.2)
The Board has established 1 standing committee to facilitate and assist the Board in fulfilling its responsibilities.
It may also establish other committees from time to time to assist in the discharge of its responsibilities.
16
2
6
6
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
Audit Committee (Principle 4)
The Board has established a Board Audit Committee.
The purpose of the Committee is to assist the Board in the effective discharge of its responsibilities in relation to
the external audit function, accounting policies, financial reporting, funding, financial risk management and
certain compliance matters.
The Committee has authority from the Board to review and investigate any matter within the scope of its Charter
and make recommendations to the Board in relation to the outcomes. The Committee has no delegated
authority from the Board to determine the outcomes of its reviews and investigations and the Board retains its
authority over such matters.
The Committee must have at least three members, a majority of whom must be independent non-executive
directors.
At least one member of the Committee should have significant expertise in financial reporting, accounting or
auditing. The Chairman of the Committee should act independently and must not be the Chairman of the Board.
The current Audit Committee members are:
(cid:120) Graeme Billings
(cid:120) David Archbold
Peter Church
(cid:120)
Chairperson and Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
The Board has received declarations from the CEO and CFO that the financial records of the entity have been
properly maintained and that the financial statements comply with the appropriate accounting standards and
give a true and fair view of the financial position and performance of the entity and that the opinion has been
formed on the basis of a sound system of risk management and internal control which is operating effectively.
(Principle 4.2)
A copy of the Company’s Audit Committee Charter is available on the Company’s Website at:
T.
Twww.domacom.com.au/investor-relations2
Remuneration and Nomination Committee (Principle 1.2/ 2.1/ 8.1-8.3)
The Remuneration and Nomination Committee at present comprises the full Board.
The Board considers that at this stage assuming the duties of a Remuneration and Nomination Committee is
appropriate in light of the Company’s operations and size, and the size of the Board. All of the Directors believe
that they will able to, individually and collectively, analyse the issues before them objectively in the best interests
of all shareholders and in accordance with their duties as Directors.
The Board also addresses board succession issues and ensures that it has the appropriate balance of skills,
knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities
effectively.
The Board Charter outlines duties relating to Remuneration and Nomination, and is made available on the
Company website.
The Company has established a long term incentive plan (LTIP) to assist in the motivation, reward and retention
of executive directors and all other employees. The LTIP is designed to align participants’ interests with the
interests of Shareholders by providing participants an opportunity to receive shares through the granting of
performance rights.
Composition of the Board (Principle 2.3, 2.4 & 2.5)
The Board currently comprises six directors (two of whom are also executives of the Company). The names,
biographical details and length of service of the directors are set out above.
17
2
6
6
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
Terms of appointment (Principle 1.3 & 2.6)
The Board has adopted a letter of appointment that contains the terms on which non-executive directors are to
be appointed, including the basis upon which they will be indemnified by the Company. Non-Executive directors
are entitled to take independent advice at the cost of the Company in relation to their role as members of the
Board. In addition, an induction process for incoming directors is coordinated by the Company Secretary. The
Board receives regular updates at Board meetings, industry workshops, meetings with customers and site visits.
These assist directors to keep up-to-date with relevant market and industry developments.
Areas of Competence and skills of the Board of Directors (Principle 2.2)
Area
Competence
Leadership
Business Leadership, public listed company experience
Total out of 6
directors*
6
Business, Finance and
Governance
International
Market & Sales,
Distribution
Technology
Business strategy, competitive business analysis, corporate
advisory, finance and accounting, governance, audit assurance
and risk management
International business management
Financial service expertise
Product Development, product life cycle management
Real Estate
Domestic and International Property market analysis
6
6
3
1
1
*This column represents the number of directors rated as being ‘competent’ or higher in respect of the relevant
skill.
Company Secretary (Principle 1.4)
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with
the proper functioning of the Board. The Company Secretary is responsible for ensuring that Board procedures
are complied with and that governance matters are addressed. The Company Secretary is also responsible for
communications with the ASX about listing rule matters, including making disclosures to the ASX. All directors
have direct access to the Company Secretary. The appointment and removal of the Company Secretary is a
matter for decision by the Board.
Review of Board performance (Principle 1.6 & 1.7)
The Board at least annually reviews the performance of the Board. The evaluation includes a review of:
-
-
-
the Board’s membership and the charters of the Board and its committees (if any);
Board processes and its committees’ (if any) effectiveness in supporting the Board; and
the performance of the Board and its committees (if any).
The performance of the Board was reviewed during the year ended 30 June 2017.
A review of each Director’s performance is undertaken by the Chairman, after consultation with the other
directors, prior to a director standing for re-election.
Policies
The Company has adopted the following policies, each of which has been prepared or revised having regard to
the ASX Corporate Governance Principles and Recommendations and is available on the Company’s website at
T.
Twww.domacom.com.au/investor-relations2
18
2
6
6
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
Continuous Disclosure Policy (Principle 5.1)
The Board has adopted a Continuous Disclosure Policy to ensure that it complies with its disclosure obligations
under the Corporations Act and the ASX Listing Rules, which applies to all Directors, officers, employees and
consultants of the Company. The Board has also delegated the authority to certain authorised spokespersons
to manage the Company’s compliance with its disclosure obligations and the Continuous Disclosure Policy.
Code of Conduct Policy (Principle 3.1)
This policy sets out the standards of ethical behaviour that the Company expects from its Directors, Officers,
and Employees. The Board has adopted a Code of Conduct of which sets out the way in which the Group seeks
to conduct business, namely in an honest and fair manner, acting only in ways that reflect well on the Group and
to act in compliance with all laws and regulations.
Communication Policy (Principle 6.1-6.4)
This policy sets out practices which the Company will implement to ensure effective communication with its
Shareholders.
The Company has informed shareholders of all major developments affecting the Group’s state of affairs as
follows:
(cid:132)
(cid:132)
(cid:132)
(cid:132)
(cid:132)
(cid:132)
(cid:132)
placing all relevant announcements made to the market on the Website after they have been released to
ASX;
publishing all corporate governance policies and charters adopted by the Board on the Company Website;
releasing information provided to analysts or media during briefings to ASX and placing such information
on the Website;
encouraging attendance and participation of shareholders at general meetings to receive updates from the
CEO and Chairman on the Group’s performance, ask questions of the Board and the Company’s auditors
regarding the conduct of the audit and preparation and content of the auditor’s report.
providing investor feedback and encouraging they seek further information about the Company via the
Company website;
Management or Directors being available to meet with shareholders from time to time upon request and
respond to any enquiries they may make; and
Investors being able to communicate with the Company’s registry electronically by emailing the registry or
via the registry’s website.
Diversity Policy (Principle 1.5)
The Diversity Policy sets out the Company’s objectives for achieving diversity amongst its Board, management
and employees and aims:
•
to articulate commitment to diversity within the Company at all levels (including employee level, senior
executive level and Board level);
to establish objectives and procedures which are designed to foster and promote diversity within the
Company; and
ensure a work environment is in place where people are treated fairly and with respect notwithstanding
their gender, ethnicity, disability, age or educational experience.
•
•
The Board has set the following measurable objectives for achieving gender diversity:
(cid:120)
(cid:120)
Increase gender diversity on the Board and senior executive positions and throughout the Group. The
Company currently has 20% female representation across the entire group as at 30 June 2017. The
objective will be to lift this percentage across the company with the intention that a 1/3 (33%) of the
employees are female on a full or part time basis by 30 June 2019.
Promote flexible work practices to provide managers and staff with the tools to tailor flexible work
options that suit both the business and the individual’s personal requirements;
19
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
(cid:120)
(cid:120)
Selection of new staff, the development, promotion and remuneration of staff based solely on their
performance and capability; and
Annually assess gender diversity performance against objectives set by Board.
The Company’s current performance against its diversity policy objectives is as follows:
Gender Representation
30-Jun-17
30-Jun-16
Female Male
Female Male
Non-Executive Directors
0%
100%
0%
100%
Employees
Executive Directors
Managers
Staff
Total Employees
0%
14%
24%
20%
100%
86%
76%
80%
0%
22%
21%
20%
100%
78%
79%
80%
Risk Management Policy (Principle 7.1-7.4)
This policy sets out how the Company evaluates the effectiveness of its risk management framework to ensure
that its internal control systems and processes are monitored and updated on an ongoing basis.
The Board is responsible for reviewing the Company’s risk management framework, including adopting relevant
internal controls, risk management processes and corporate governance policies and practices which it believes
are appropriate for the Company’s business and which are designed to promote the responsible management
and conduct of the Company.
The Board at least annually reports on the effectiveness of the Company’s risk management and internal control
policies and practices. The Company does not currently have an internal audit function. The current structure
for reviewing risks, controls and procedures within the Board is considered appropriate at the Company’s
current stage of growth and size.
The Board has reviewed the risk management framework during the financial year ended 30 June 2017.
The Company monitors its exposure to all risks, including economic, environmental and social sustainability
risks. Material business risks are described in the annual report, which also outlines the Company’s activities,
performance during the year, financial position and main business strategies.
Compliance with ASX Corporate Governance Principles and Recommendations
The Board has evaluated the Company’s current corporate governance policies and practices in light of the ASX
Corporate Governance Principles and Recommendations. A brief summary of the approach currently adopted
by the Company is set out below:
The Company complies with all of the ASX Corporate Governance Principles and Recommendations including,
as not specifically addressed above:
-
That at each AGM, the external auditor attends and is available to answer questions from security holders
relevant to the audit. (Principle 4.3)
That shareholders have the option to receive communications from, and send communications to, the entity
and its security registry electronically. (Principle 6.4)
-
except in relation to the following:
-
Recommendation 2.1.(a) – the Board should establish a nomination committee comprising at least 3
members, a majority of independent directors and chaired by an independent director, and should not be
the same person as the CEO of the entity.
20
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ REPORT
30 JUNE 2017
-
-
Recommendation 7.1.(a) –the Board should have a committee or committees to oversee risks comprising
at least 3 members, a majority of independent directors and chaired by an independent director, and should
not be the same person as the CEO of the entity.
Recommendation 8.1.(a) – the Board should establish a remuneration committee comprising at least 3
members, a majority of independent directors and chaired by an independent director, and should not be
the same person as the CEO of the entity.
The Board has carefully considered its size and composition, together with the specialist knowledge of its
directors, and formed the view that based on its current composition, it has the necessary skills and motivation
to ensure that the Company performs strongly, and there is sufficient accountability in the structure of the Board,
to ensure the outcomes and objectives sought by the ASX Guidelines are achieved. Having regard for the size
of the DomaCom Group, the Board considered that incorporating the risk management and nomination and
remuneration procedures into the function of the Board has been an appropriate way of addressing the
accountability and efficiencies sought to be achieved by the ASX Guidelines.
Signed in accordance with a resolution of the Board of Directors:
Grahame D Evans
Chairman
31 August 2017
Arthur Naoumidis
Director
21
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
to the Directors of DomaCom Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of DomaCom Limited for the year ended 30 June 2017, I declare that, to the best of
my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B L Taylor
Partner - Audit & Assurance
Melbourne, 31 August 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
DOMACOM LIMITED
ABN 69 604 384 885
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Income recognised from research and development incentive
Interest Income
Expenses
Employee benefits expenses
Fund administration
Rent
Depreciation
Insurance
Advertising
Travel expenses
IT expenditure
Telephone expenditure
Professional fees
Finance costs
Director Fees
Other expenses
Total Expenses
Note
4
4
4
12
2017
$
93,045
581,377
56,356
730,778
(2,980,981)
(291,156)
(210,806)
(663,589)
(342,890)
(740,447)
(160,098)
(47,714)
(56,763)
(666,871)
(81,236)
(174,204)
(450,440)
(6,867,195)
2016
$
20,642
888,192
47,240
956,074
(3,460,943)
(293,601)
(237,126)
(310,899)
(114,437)
(1,057,457)
(214,467)
(63,190)
(51,213)
(506,935)
(66,673)
(166,533)
(473,158)
(7,016,632)
Loss before income tax
(6,136,417)
(6,060,558)
Income tax expense
Loss for the period
5
-
-
(6,136,417)
(6,060,558)
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange differences on translating foreign operations
Other comprehensive income for the period
10,895
10,895
(320)
(320)
Total comprehensive loss for the period
(6,125,522)
(6,060,878)
Earnings per share
Basic Loss per share
Diluted Loss per share
15
15
(0.06)
(0.06)
(0.06)
(0.06)
This statement should be read in conjunction with the notes to the financial statements.
23
DOMACOM LIMITED
ABN 69 604 384 885
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Receivables
Prepayments and other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Payables
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Accumulated Losses
TOTAL EQUITY
Note
2017
$
2016
$
6
7
8
9
10
11
11
13
14
2,705,481
1,075,114
158,560
3,939,155
1,746,197
1,417,403
92,803
3,256,403
32,378
2,666,089
2,698,467
51,456
2,795,341
2,846,797
6,637,622
6,103,200
560,418
142,033
702,451
645,464
176,315
821,779
54,800
54,800
59,688
59,688
757,251
881,467
5,880,371
5,221,733
23,754,418
776,794
(18,650,841)
5,880,371
16,791,037
945,120
(12,514,424)
5,221,733
This statement should be read in conjunction with the notes to the financial statements.
24
DOMACOM LIMITED
ABN 69 604 384 885
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Note
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Research and development tax offset received
Finance costs
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire other assets
Payments for plant and equipment
Payments for intangible assets
Interest Received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue (net of costs)
Proceeds from short term loans
Repayment of short term loans
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Net foreign exchange difference
Cash and cash equivalents at the end of period
6
74,550
(5,687,616)
1,276,823
(81,236)
20,642
(5,670,892)
1,186,197
(104,372)
(4,417,479)
(4,568,425)
(12,040)
(7,305)
(881,778)
56,357
(844,766)
6,227,809
700,000
(700,000)
6,227,809
965,564
1,746,197
(6,280)
2,705,481
-
(53,765)
(1,548,615)
47,240
(1,555,140)
7,952,702
-
(800,000)
7,152,702
1,029,037
720,935
(3,775)
1,746,197
This statement should be read in conjunction with the notes to the financial statements.
25
DOMACOM LIMITED
ABN 69 604 384 885
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Issued
Capital
$
16,791,037
6,963,381
-
23,754,418
-
-
23,754,418
Reserves
$
945,120
-
(179,221)
765,899
Accumulated
Losses
$
(12,514,424)
-
-
(12,514,424)
Total
$
5,221,733
6,963,381
(179,221)
12,005,893
-
10,895
776,794
(6,136,417)
-
(18,650,841)
(6,136,417)
10,895
5,880,371
Issued
Capital
$
Reserves
$
8,838,435
250,663
Accumulated
Losses
$
(5,737,388)
(716,478)
Total
$
3,351,710
(716,478)
8,838,435
7,952,602
-
16,791,037
250,663
-
694,777
945,440
(6,453,866)
2,635,232
-
-
7,952,602
694,777
(6,453,866)
11,282,611
2017
Opening balance at 1 July 2016
Issue of share capital
Share based payments
Transactions with owners recorded
directly in equity:
Loss for the period to 30 June 2017
Other comprehensive income
Balance at 30 June 2017
2016
Opening balance at 1 July 2015
Prior period adjustment
Adjusted opening balance at 1 July
2015
Issue of share capital
Share based payments
Transactions with owners recorded
directly in equity:
Loss for the period to 30 June 2016
Other comprehensive income
-
-
-
(320)
(6,060,558)
-
Balance at 30 June 2016
16,791,037
945,120
(12,514,424)
This statement should be read in conjunction with the notes to the financial statements.
(6,060,558)
(320)
5,221,733
26
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1: GENERAL INFORMATION AND STATEMENT OF COMPLIANCE
The financial report includes the financial statements and notes of DomaCom Limited (the “Company”) and its
Controlled Entities (the “Group”).
The consolidated general purpose financial statements of the Group have been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards
results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). DomaCom Limited is a for-profit entity for the purpose of preparing the
financial statements.
Significant Event
Capital raising activities were undertaken during the period with the listing of the company on the Australian
P November 2016, which resulted in the company raising $7.3m to allow for the
Securities Exchange on the 7P
continued commercialization of current products and product development.
The financial statements for the year ended 30 June 2017 were approved and authorised for issue by the Board of
Directors on 31 August 2017.
NOTE 2: ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE AND NOT BEEN ADOPTED EARLY
BY THE GROUP
The following standards and interpretations have been recently issued or amended but are not yet effective, and
have not been early adopted by the Group for the year ended 30 June 2017.
AASB 9 Financial Instruments (December 2014)
AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities and
includes a forward-looking ‘expected loss’ impairment model and a substantially-changed approach to hedge
accounting. These requirements improve and simplify the approach for classification and measurement of financial
assets compared with the requirements of AASB 139. The main changes are:
a) Financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s business
model for managing the financial assets; and (ii) the characteristics of the contractual cash flows.
b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity
instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in
respect of these investments that are a return on investment can be recognised in profit or loss and there is no
impairment or recycling on disposal of the instrument.
c) Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt
instruments.
d) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on them, on different bases.
e) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as
follows:
•
•
the change attributable to changes in credit risk are presented in Other Comprehensive Income (OCI)
the remaining change is presented in profit or loss If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.
27
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2: ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE AND NOT BEEN ADOPTED EARLY
BY THE GROUP (CONTINUED)
Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into
AASB 9:
• classification and measurement of financial liabilities; and
• derecognition requirements for financial assets and liabilities.
AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that
enable entities to better reflect their risk management activities in the financial statements. Furthermore, AASB 9
introduces a new impairment model based on expected credit losses. This model makes use of more forward-
looking information and applies to all financial instruments that are subject to impairment accounting.
When this standard is first adopted for the year ending 30 June 2019, based on detailed analysis there will be no
material impact on the transactions and balances recognised in the financial statements.
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related
Interpretations: AASB 15
-
-
-
-
establishes a new revenue recognition model
changes the basis for deciding whether revenue is to be recognised over time or at a point in time
provides new and more detailed guidance on specific topics (e.g. multiple element arrangements, variable
pricing, rights of return, warranties and licensing)
expands and improves disclosures about revenue
When this standard is first adopted for the year ending 30 June 2019, based on detailed analysis there will be no
material impact on the transactions and balances recognised in the financial statements.
AASB 16 Leases
AASB 16 replaces AASB 117 Leases and some lease-related Interpretations. AASB 16
•
•
•
•
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 and on sale and lease back accounting
largely retains the existing lessor accounting requirements in AASB 117
requires new and different disclosures about leases
Based on a detailed 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:
•
(cid:3)lease assets and financial liabilities on the balance sheet will increase respectively (based on the facts at
the date of the assessment)
there will be a reduction in the reported equity 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
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.
•
•
•
28
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES
(a) Overall considerations
The significant accounting policies that have been used in the preparation of these financial statements are
summarised below.
The financial statements have been prepared using the measurement bases specified by Australian Accounting
Standards for each type of asset, liability, income and expense. The measurement bases are more fully described
in the accounting policies below.
Segmental Reporting
Financial information reported internally used for the allocation of resources and assessing performance is
currently presented without reference to segments. Therefore profit and loss, revenues and expenses and assets
and liabilities have been presented without segmentation.
(b) Basis of consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June
2017. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries
have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Group Companies. Where unrealised losses on intra-group asset sales
are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective.
Amounts reported in the financial statements of Subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the period are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net
assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the Parent and the non-controlling interests based on their respective ownership interests.
(c) Business Combination
The Group applies the acquisition method in accounting for business combinations. The consideration transferred
by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets
transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any
asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of
whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition.
Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the
sum of: (a) fair value of consideration transferred; (b) the recognised amount of any non-controlling interest in the
acquiree; and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date
fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above,
the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately.
29
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(d) Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian Dollars ($AUD), which is also the functional
currency of the Parent Company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the respective Group entity, using the
exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and
losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year
end exchange rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the
exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are
translated using the exchange rates at the date when fair value was determined.
Foreign operations
In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional
currency other than the $AUD are translated into $AUD upon consolidation. The functional currency of the Entities
in the Group has remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into $AUD at the closing rate at the reporting date.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into $AUD at the closing rate. Income and expenses have been
translated into $AUD at the average rate over the reporting period. Exchange differences are charged / credited to
other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign
operation the cumulative translation differences recognised in equity are reclassified to profit or loss and
recognised as part of the gain or loss on disposal.
(e) Revenue
Revenue arises from the investment management services provided to the DomaCom Fund and recognised on an
accruals basis. Interest income and expense are reported on an accruals basis.
The DomaCom Group may be entitled to claim a refundable tax credit for eligible research and development
expenditure (eg the Research and Development Tax Incentive regime in Australia or other investment allowances).
The DomaCom Group accounts for a claim as an offset against eligible capitalised R&D expenditure. To the extent
the claim relates to costs that were expensed as they did not meet the capitalisation criteria under AASB 138
Intangible Assets, this amount is recognised as Other Income.
(f) Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
30
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(g) Intangible assets
Recognition of other intangible assets
Acquired intangible assets
Acquired computer software is capitalised on the basis of the costs incurred to acquire and install the specific
software.
Internally developed intangibles
Expenditure on the research phase of projects to develop the software platform is recognised as an expense as
incurred.
Costs that are directly attributable to a project’s development phase are recognised as intangible assets, provided
they meet the following recognition requirements:
(cid:120) the development costs can be measured reliably
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the project is technically and commercially feasible
the Group intends to and has sufficient resources to complete the project
the Group has the ability to use or sell the asset
the software will generate probable future economic benefits
Development costs not meeting these criteria for capitalisation are expensed as incurred.
Subsequent measurement
All intangible assets, including the internally developed software platform, are accounted for using the cost model
whereby capitalised costs are amortised on a systematic basis over their estimated useful lives, as these assets
are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are
subject to impairment testing. Any capitalised internally developed asset that is not yet complete is not amortised
but is subject to impairment testing. The following useful lives are applied:
-
-
Software: 5 years
Software platform costs: 5 years (see note 3s)
The DomaCom Group may be entitled to claim a refundable tax credit for eligible research and development
expenditure (eg the Research and Development Tax Incentive regime in Australia or other investment allowances).
The DomaCom Group accounts for a claim as an offset against eligible capitalised R&D expenditure to the extent
the claim relates to capitalised expenditure.
Subsequent expenditures on the maintenance of computer software and the software platform will be expensed as
incurred.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the
proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other
expenses.
31
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(h) Property, plant and equipment
Plant and equipment is initially recognised at acquisition cost, including any costs directly attributable to bringing
the assets to the location and condition necessary for it to be capable of operating in the manner intended by the
Group’s management.
Plant and equipment is subsequently measured using the cost model, cost less subsequent depreciation and
impairment losses.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of plant and
equipment. The following useful lives are applied:
-
-
-
Furniture & fittings: 5 years
Plant & office equipment: 5 years
Computer equipment: 3 years
Material residual value estimates and estimates of useful life are updated as required, but at least annually.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between
the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other
income or other expenses.
(i) Leased assets
Operating leases
Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a
straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as
incurred.
(j)
Impairment testing of intangible assets and property, plant and equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment
and some are tested at cash-generating unit level.
Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit's carrying amount
exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine
the value-in-use, management estimates expected future cash flows from each cash-generating unit and
determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for
impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to
exclude the effects of future reorganisations and asset enhancements. Discount factors are determined
individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as
market and asset-specific risks factors.
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-
generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.
With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist.
An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.
32
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(k) Financial instruments
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.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and all substantial risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. After initial recognition, these are measured at amortised cost using the effective interest
method, less provision for impairment. 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.
Individually significant receivables are considered for impairment when they are past due or when other objective
evidence is received that a specific counterparty will default. Receivables that are not considered to be individually
impaired are reviewed for impairment in Companies, which are determined by reference to the industry and region
of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on
recent historical counterparty default rates for each identified company.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include trade and other payables, and related party loans
Financial Liabilities
Financial liabilities are measured subsequently at amortised cost using the effective interest method.
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.
(l)
Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other
comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation
Office (ATO) and other fiscal authorities relating to the current or prior reporting periods, that are unpaid at the
reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the carrying
amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial
recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with
investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be
controlled by the Group and it is probable that reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting
period.
33
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(l) Income taxes (continued)
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future
taxable income, based on the Group’s forecast of future operating results which is adjusted for significant non-
taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities
are always provided for in full.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax
assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or
loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation
of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive
income or equity, respectively.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value.
(n) Equity, reserves and dividend payments
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the
issuing of shares are deducted from share capital, net of any related income tax benefits.
Retained earnings includes all current and prior period retained profits.
Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been
approved in a general meeting prior to the reporting date.
All transactions with owners of the parent are recorded separately within equity.
(o) Employee benefits
Short-term employee benefits
Short-term employee benefits, including annual leave entitlement, are current liabilities included in employee
benefits, measured at the undiscounted amount that the Group expects to pay as a result of the unused
entitlement.
Share-based payments
Share-based compensation benefits are provided to employees via the Group or Shareholders for no cash
consideration.
The fair value of shares granted is recognised as an employee benefit expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised over the period during which the employees
become unconditionally entitled to the shares.
34
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(p) Provisions, contingent liabilities and contingent assets
Provisions for legal disputes, onerous contracts or other claims are recognised when the Group has a present legal
or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be
required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be
uncertain.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most
reliable evidence available at the reporting date, including the risks and uncertainties associated with the present
obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their
present values, where the time value of money is material.
Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation
is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.
In those cases where the possible outflow of economic resources as a result of present obligations is considered
improbable or remote, no liability is recognised.
(q) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of
investing and financing activities, which are disclosed as operating cash flows.
(r) Going Concern
As a developing business the Group has experienced a loss of $6,136,417. The Group has net working capital of
$3,236,704.
The continuing viability of the Group and its ability to continue as a going concern is dependent upon the Group
being successful in continuing to grow Funds under Management (“FUM”) within the DomaCom Fund. A detailed
sales pipeline and forecast is continuously updated and reported to the Board on a regular basis. The strategy for
continued growth includes further expanding the direct to consumer distribution channel that will work alongside
DomaCom’s established financial adviser network. In addition to investor and advisor selected properties,
DomaCom is developing investment strategies portfolio investment opportunities and the ability to introduce
leverage into investments. In addition DomaCom is focused on providing investment opportunities within the
themes of regional investment, affordable housing and renewable energy. These opportunities are constantly
monitored within the sales pipeline review process.
Cash flow forecasts are presented and discussed by the Board on a monthly basis. These include the forecast
receipt of R&D tax claims ($1.0m expected to be received for the year ended 30 June 2017). If the forecast growth
in FUM and R&D tax claims do not provide sufficient cash inflows to cover operating costs, then the options
available to allow DomaCom to meet its ongoing operating commitments are analysed by the Board and alternative
sources of finance and cost control measures are considered.
If these matters are not achieved, there may be significant uncertainty as to whether the Group will continue as a
going concern and, therefore, whether it will realise its assets and settle its liabilities in the normal course of
business and at the amounts stated in the financial report. The Directors believe that the Group will be able to
access sufficient sources of funds and implement cost control measures if required and are satisfied that the
35
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3: SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(r ) Going Concern (continued)
Group will continue as a going concern. Accordingly, the financial report has been prepared on a going concern
basis. No adjustments have been made to the financial report relating to the recoverability and classification of the
asset carrying amounts or the amount and classification of liabilities that might be necessary should the Group not
continue as a going concern.
(s) Significant management judgement in applying accounting policies and estimation uncertainty
When preparing the financial statements, management undertakes a number of judgments, estimates and
assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgments
The following are significant management judgements in applying the accounting policies of the Group that have
the most significant effect on the financial statements.
Capitalisation of internally developed software platform
Distinguishing the research and development phases of the internally developed software platform and determining
whether the recognition requirements for the capitalisation of development costs are met requires judgment. After
capitalisation, management monitors whether the recognition requirements continue to be met and whether there
are any indicators that capitalised costs may be impaired.
Useful economic life of internally developed software platform
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the
expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change
the utility of software. During the year management determined that the remaining useful life of the internally
developed Fractional Property Investing software should be reduced from 9 years to 4 years. In making this
assessment management have taken account of the likelihood of significant development being required after the
remaining 4 years to ensure the platform is able to provide the required functionality in a changing and competitive
technological environment.
The impact of reducing the useful life of the Fractional Property Investing software is to increase the annual
depreciation charge in the current year and the following 3 years by $338,390. Thereafter the Fractional Property
Investing software will be fully depreciated, therefore reducing the depreciation charge in the years 6-10 after it
started being depreciated to zero compared to an annual charge of $270,712 before the reduction in the Useful
Life. The Fractional Property software was first depreciated from 1 July 2015 representing the point at which it
began being used commercially.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the
Group’s future taxable income against which the deferred tax assets can be utilised. In addition, significant
judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax
jurisdictions. No deferred tax assets were recognized due to uncertainty of recoverability.
36
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 4: REVENUE
Management Fees
Income recognised from research and development
incentive
Interest Income
2017
$
93,045
581,377
56,356
730,778
2016
$
20,642
888,192
47,240
956,074
Fees earned for investment management services provided to the DomaCom Fund are calculated based on fixed
percentages applied to the Funds Under Management.
The DomaCom Group claims refundable tax credits for eligible research and development expenditure. The
DomaCom Group accounts for a claim partially as an offset against eligible capitalised R&D expenditure. Income
recognised from research and development incentive represents the amount of the claim that does not meet the
criteria for offset to the extent that it has been received for expenses that did not meet the capitalisation criteria
under AASB 138 Intangible Assets.
NOTE 5: INCOME TAX EXPENSE
Prima facie tax on loss before income tax
Prima facie tax on loss before income tax at
27.5% (2016: 30%)
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Non-deductible research and development
expenses
Non-assessable research & development
income
Other non-deductible expenses
Research and development tax grant received
Effect of different tax rate of subsidiaries
operating in other jurisdiction (17%)
Unused tax losses not recognised as DTAs
Tax offsets not recognised for deferred tax
Income tax expense
Components of tax expense
Temporary differences
(6,136,417)
(6,060,558)
1,687,515
1,818,167
234,887
455,257
159,879
(58,467)
(602,424)
(23,375)
(1,397,034)
(980)
-
266,458
(211,669)
(1,047,385)
(38,837)
(1,244,425)
2,434
-
-
-
-
-
37
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 5: INCOME TAX EXPENSE (CONTINUED)
Deferred taxes arising from temporary differences and unused tax losses calculated at a tax rate of 27.5% (2016:
30%) disclosed in the table below have not been recognised due to uncertainty over future taxable profits in the
consolidated tax group.
Deferred tax assets not recognised at the
reporting date:
Unused tax losses
Equity raising and company restructure costs
Accruals & Provisions
NOTE 6: CASH AND CASH EQUIVALENTS
Cash at bank
Cash on deposit
2017
$
2016
$
3,920,461
128,467
74,456
4,123,384
2,717,260
204,917
97,729
3,019,906
35,596
2,669,885
2,705,481
64,812
1,681,385
1,746,197
Cash and cash equivalents carries a weighted average effective interest rate of 1.5% (2016: 1.9%).
During the reporting period, the Group has used the cash and assets readily convertible to cash that it had at the
time of admission to the ASX in a way consistent with its business objectives as set out in the Replacement
Prospectus issued as part of the listing process.
NOTE 7: RECEIVABLES
CURRENT
Amount receivable from R&D taxation rebate
Amount receivable from related party
Other debtors
952,925
2,805
119,384
1,075,114
1,276,823
29,149
111,431
1,417,403
Receivables are non-interest bearing. There are no receivables where the fair value would be materially different
from the current carrying value.
The Group reviews all receivables for impairment. Any receivables which are doubtful have been provided for.
There are no receivables past due at the reporting date. No receivables have been provided for at the reporting
date.
38
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 8: PLANT AND EQUIPMENT
Furniture &
fittings
Year ended 30 June 2017
Opening net book amount
Additions
Disposal
Depreciation charge
Net exchange differences
Closing net book value
At 30 June 2017
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2016
Opening net book amount
Additions
Exchange differences
Depreciation charge
Closing net book value
At 30 June 2016
Cost
Accumulated depreciation
Net book value
$
2,322
-
-
(1,935)
-
387
9,677
(9,290)
387
4,258
-
-
(1,936)
2,322
9,677
(7,355)
2,322
Plant and
office
equipment
$
1,600
-
(318)
(821)
(21)
440
3,633
(3,193)
440
2,429
-
19
(848)
1,600
4,260
(2,660)
1,600
Computer
Equipment
$
47,534
7,305
(1,936)
(21,352)
-
31,551
66,974
(35,423)
31,551
7,358
53,765
-
(13,589)
47,534
62,616
(15,082)
47,534
Total
$
51,456
7,305
(2,254)
(24,108)
(21)
32,378
80,284
(47,906)
32,378
14,045
53,765
19
(16,373)
51,456
76,553
(25,097)
51,456
39
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 9: INTANGIBLE ASSETS
Year ended 30 June 2017
Opening net book amount at 1 July 2016
Amounts capitalised and additions
Amortisation
Closing net book value at 30 June 2017
At 30 June 2017
Cost
Accumulated depreciation
Net book value
Year ended 30 June 2016
Opening net book amount
Amounts capitalised and additions
Amortisation
Closing net book value
At 30 June 2016
Cost
Accumulated depreciation
Net book value
Software
platform
Computer
software
$
$
Total
$
2,730,532
482,585
(609,102)
2,604,015
64,809
27,645
(30,380)
62,074
2,795,341
510,230
(639,482)
2,666,089
3,483,829
(879,814)
2,604,015
130,057
(67,983)
62,074
3,613,886
(947,797)
2,666,089
2,166,607
834,637
(270,712)
2,730,532
57,534
31,092
(23,817)
64,809
2,224,141
865,729
(294,529)
2,795,341
3,001,244
(270,712)
2,730,532
102,412
(37,603)
64,809
3,103,656
(308,315)
2,795,341
Amortisation methods and useful lives
The Group amortises intangible assets with a limited useful life using the straight-line method over the following
periods:
(cid:120) Software platform costs (all internally generated): 5 years
(cid:120) Computer software 5 years
See Note 3 (s) for management’s judgement applied in determining the useful life of intangible assets.
NOTE 10: PAYABLES
CURRENT
Trade creditors
Sundry creditors and other accruals
2017
$
486,503
73,915
560,418
2016
$
561,625
83,839
645,464
Payables are non-interest bearing.
There are no payables where the fair value would be materially different from the current carrying value.
40
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 11: PROVISIONS
CURRENT:
Employee entitlements
NON-CURRENT
Employee entitlements
NOTE 12: EMPLOYEE REMUNERATION
Wages, salaries
Pensions - defined contribution plans
Share based payments
Other employment benefits
2017
$
2016
$
142,033
176,315
54,800
59,688
$
2,481,672
203,670
203,262
92,377
2,980,981
$
2,310,545
203,883
694,778
251,737
3,460,943
The Director Long Term Incentive Plan and Employee Long Term Incentive Plan (LTIP) was established as a
retention strategy and an incentive for staff and directors to continue to work hard for the DomaCom Group.
Through obtaining equity, staff are motivated to strive to make the DomaCom Group successful as they will
ultimately share in the success.
All Directors (excluding the CEO) and employees who were employed on 14P
granted performance rights. Mr Naoumidis, who is the key founder of DomaCom and as at the Prospectus Date is
its largest shareholder did not participate in the LTIP.
P of December 2015 have been
th
The Performance Rights granted to the non-executive Directors and employees (other than Ross Laidlaw) in
December 2015 will vest if the Company lists on the ASX. Vesting gives the holder of a Performance Right the
right to convert some or all of their Performance Rights into ordinary shares. Each Performance Right entitles its
owner to one ordinary share in the Company on conversion. The performance rights expire on 30 November 2018
and may be exercised at any time after the Company is listed up to that date.
The performance rights under the employee and non-executive director and executive director programs have an
exercise price of $nil.
The Performance Rights granted to the Company’s Chief Operating Officer, Executive Director Ross Laidlaw, will
vest following achievement of each of the following milestones:
(cid:120) the Company is admitted to the official list of ASX;
(cid:120) FUM in the DomaCom Fund has reached $100 million; and
(cid:120) the price at which ordinary shares in the Company have traded has reached $1.00.
41
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 12: EMPLOYEE REMUNERATION (CONTINUED)
Performance rights were granted as follows for the reporting periods presented:
Outstanding at 1 July 2015
Granted
Outstanding at 30 June 2016
Forfeited
Granted
Exercised
Outstanding at 30 June 2017
Employee &
non-executive
director
program
Executive
director
program
Number of rights Number of rights
-
213,929
213,929
-
-
-
213,929
-
1,871,593
1,871,593
(42,556)
42,556
(764,965)
1,106,628
The fair value of performance rights granted under the executive director program was determined using a
variation of the binomial option pricing model that takes into account factors specific to the share incentive plans,
such as the vesting period. The fair value of performance rights granted under the employee and non-executive
director program was based on the estimated share price at grant date. The following principal assumptions were
used in the valuations:
Grant date
Vesting period ends
Share price at date of grant (estimate as unlisted)
Volatility
Performance right life
Dividend yield
Risk free investment rate
Fair value at grant date
Exercise price at grant date
Exercisable from
Exercisable to
Employee &
non-executive
director
program
14 December
2015
Up to 30
November 2018
$0.50
-
Up to 3 years
-
-
$0.50
$0.00
Variable
Up to 30
November 2018
Executive
director
program
14 December
2015
Up to 30
November 2018
$0.50
46%-60%
Up to 3 years
-
1.91-2.06%
$0.08
$0.00
Variable
Up to 30
November 2018
In total, $203,262 (2016: $694,778) of employee remuneration expense (all of which related to equity-settled
share-based payment transactions) has been included in profit or loss and credited to equity compensation
reserve.
42
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 13: ISSUED CAPITAL
Ordinary shares fully paid
(a)
(a) Ordinary shares
2017
Opening balance
Ordinary shares fully paid issued during the period
Share issue cost
Closing balance as at 30 June 2017
2016
Opening balance
Ordinary shares converted from K-class during the
period
Ordinary shares fully paid issued during the period
Share issue cost
Closing balance as at 30 June 2016
2017
$
23,754,418
2016
$
16,791,037
No.
$
100,795,641
10,675,599
-
111,471,240
16,791,037
7,710,024
(746,643)
23,754,418
25,000,000
50
66,605,641
12,560,052
9,190,000
-
4,595,000
(364,065)
100,795,641
16,791,037
(b) K shares
No.
$
2016
Opening balance
K shares fully paid issued during the period
K-class shares converted to Ordinary shares during
the period
58,667,862
7,937,779
8,838,385
3,721,667
(66,605,641)
(12,560,052)
Closing balance as at 30 June 2016
-
-
A resolution was passed in a Special General Meeting on 18 November 2015 to approve the conversion of the K
class preference shares to ordinary shares. On 2 December 2015 each K class preference share was converted
into an ordinary share. The existing rights attaching to the ordinary shares remained unchanged as a result of this
transaction.
The amount of franking credits available for subsequent reporting periods are:
Deferred debit balance of franking account at the
beginning of the reporting period
Deferred debit that will arise from the receipt of
the R&D tax offset for the current year
Balance of franking account adjusted for deferred
debits arising from past R&D offsets received and
expected R&D tax offset to be received for the
current year
2017
$
2016
$
3,744,787
2,457,964
952,925
1,286,823
4,697,712
3,744,787
43
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 13: ISSUED CAPITAL (CONTINUED)
The Group has the capital management objective of ensuring the Group’s ability to continue as a going concern.
Management assesses the Group’s capital requirements in order to maintain an efficient overall financing
structure while avoiding excessive leverage. The Group manages the capital structure and makes adjustments to
it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may issue new shares.
NOTE 14: RESERVES
Share based payment reserve
Equity Compensation Reserve
Foreign Currency Translation Reserve
2017
Opening balance
Recognition of performance rights
issued during the period
Exercise of performance rights
Translation of foreign operation net
assets and results
Closing balance
2016
Opening balance
Recognition of performance rights
issued during the period
Translation of foreign operation net
assets and results
Closing balance
2017
$
249,600
515,556
11,638
776,794
2016
$
249,600
694,777
743
945,120
Share based
payment reserve
($)
Equity
Compensation
Reserve ($)
249,600
-
-
-
694,777
203,262
(382,483)
-
249,600
515,556
Share based
payment reserve
($)
Equity
Compensation
Reserve ($)
249,600
-
-
-
694,777
-
249,600
694,777
Foreign
Currency
Translation
Reserve ($)
743
-
-
10,895
11,638
Foreign
Currency
Translation
Reserve ($)
1,063
-
(320)
743
Share based payment reserve is used to recognise the grant date fair value of shares issued to employees by the
Group or Shareholders. The equity compensation reserve represents amounts expensed over the vesting period
for performance rights issues to staff and directors. Exchange differences relating to the translation of results and
net assets of the Group’s foreign operations from their functional currencies to the Group’s presentation currency
are recognised in other comprehensive income and accumulated in the foreign currency reserve.
44
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 15: EARNINGS PER SHARE
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of
the Parent Company (DomaCom Limited) as the numerator (i.e. no adjustments to profit were necessary in 2017
or 2016). The weighted average number of shares used in the calculation of the earnings per share is as follows:
Amounts in thousands of shares:
- weighted average number of shares used in the
basic earnings per share
2017
2016
107,959
94,016
NOTE 16: RECONCILIATION OF CASH FLOWS
FROM OPERATING ACTIVITIES
$
$
Loss for the period
(6,136,417)
(6,060,558)
Adjustments for:
Depreciation and amortisation
Share based payments
Interest received
Expense recognised in respect of shares issued
Research & development grant offset against
intangible assets
Net foreign exchange (gain)/loss
Changes in assets and liabilities:
(Increase)/decrease in trade and other
receivables
Increase/(decrease) in trade payable and accruals
Increase/(decrease) in employee provisions
663,589
203,262
(56,356)
353,087
371,548
17,197
288,572
(82,790)
(39,171)
310,899
694,778
(47,240)
-
682,886
3,214
(460,515)
204,838
103,273
Net cash used by operating activities
(4,417,479)
(4,568,425)
NOTE 17: AUDITOR REMUNERATION
Audit and review of financial statements
Auditors of DomaCom Limited - Grant Thornton
Australia
Overseas Grant Thornton network firms
Remuneration from audit and review of financial
statements
Other Services
Auditors of DomaCom Limited - Grant Thornton
Australia
- taxation compliance
- investigating accountants report
Total other service remuneration
62,710
8,142
70,852
44,035
7,947
51,982
6,880
21,670
28,550
70,802
30,720
101,522
Total auditor's remuneration
99,402
153,504
45
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 18: RELATED PARTY TRANSACTIONS
Key management personnel compensation
Salaries
Total short term employee benefits
Long service leave
Total other long-term benefits
Pensions - defined contribution plans
Total post-employment benefits
Share based payments
Total remuneration
594,739
594,739
5,037
5,037
56,501
56,501
575,342
575,342
8,067
8,067
54,658
54,658
10,639
17,114
666,916
655,181
The term of the share based payments in the form of performance rights are set out in Note 12. Key management
personnel are employees of DomaCom Australia Limited, a controlled entity of the Company
Transactions between the Group and its related parties
During the financial year ended 30 June 2017, the following transactions occurred between the Group and its
other related parties:
DomaCom Australia Limited, a controlled entity of the Company, received management fees for managing the
DomaCom Fund. Management fees recognised during the financial year were $93,045 (2016: $20,642).
DomaCom Australia Limited held cash in the DomaCom Fund. Interest earned during the financial year was
$35,530 (2016: $32,785). At 30 June 2017, cash held in the DomaCom Fund amounted to $2,629,885 (2016:
$1,681,385).
DomaCom Australia had an unsecured receivable balance with the DomaCom Fund of $2,805 (2016: $29,149)
representing upfront sub-fund set-up costs to be subsequently reimbursed by the DomaCom Fund.
NOTE 19: CONTINGENT LIABILITIES
There are no contingent liabilities at the end of the period.
NOTE 20: COMMITMENTS
Operating lease commitments:
No later than 12 months
Between 12 months and 5 years
Greater than 5 years
Minimum lease payments
2017
$
211,357
17,678
-
229,035
2016
$
221,496
16,901
-
238,397
Operating leases entered into by the Group relate to its office rental obligations (Melbourne and Sydney offices).
46
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 21: INTERESTS IN SUBSIDIARIES
Name of Subsidiary
Country of incorporation
and principal place of
business
Principal activity
Proportion of ownership
interests held by the
Group
DomaCom Australia
Limited
Australia
Provision of Investment
Management Services and
development of platform to
fractionalise assets
DomaCom Singapore
Private Limited
Singapore
Sales and marketing of
fractionalised asset product
DomaCom Platform
Services Pty Ltd
Australia
Development of platform to
fractionalise assets
100%
100%
100%
NOTE 22: FINANCIAL INSTRUMENTS
Categories of financial instruments
Financial Assets
Cash and cash equivalents
Trade and other receivables #
Financial Liabilities
Trade and other payables #
2,705,481
1,075,114
3,780,595
486,503
486,503
1,746,197
1,417,403
3,163,600
561,625
561,625
# Carried at amortised cost and repayable within 6 months
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and
liabilities by category are summarised above. The main types of risks are liquidity risk, credit risk and market risk.
The Company’s risk management is coordinated through the Chief Compliance and Risk Officer, in close
cooperation with the Board of Directors (the “Board”) and the Financial Controller.
Liquidity risk analysis
Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its liquidity
needs by monitoring forecast cash inflows and outflows due in day-to-day business. Net cash requirements are
compared to available cash in order to maintain a cash surplus. Funding for long-term liquidity needs sourced
through additional capital raising.
The Group’s financial liabilities have contractual maturities (including interest payments where applicable) of less
than 6 months.
47
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22: FINANCIAL INSTRUMENTS (CONTINUED)
Credit Risk Analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group’s maximum
exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as
summarised in Note 7.
The Group continuously monitors defaults of customers and other counterparties, identified either by individual or
group and incorporates this information into its credit risk controls. The Group’s policy is to deal only with
creditworthy counterparties.
The Group’s management considers that all the above financial assets that are not impaired or past due for each
of the reporting dates under review are of good credit quality.
In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any
single counterparty or any group of counterparties having similar characteristics.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable
banks with high quality external credit ratings.
Market risk analysis
The Group is exposed to market risk through currency and interest rate risk.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are
disclosed below. The amounts shown are those translated into $AUD at the closing rate:
Foreign Currency Sensitivity
SGD
Financial assets
Financial liabilities
Total Exposure
2017
$
3,110
-
3,110
2016
$
11,837
-
11,837
The following table illustrates the sensitivity of profit and equity in regards to the Group’s financial assets and
financial liabilities and the $SGD/$AUD exchange rate ‘all other things being equal’. It includes only outstanding
foreign currency denominated monetary items and adjusts their translation at the year end for a change in foreign
currency rates. It assumes a +/- 10% change of the $SGD/$AUD exchange rate for the year ended at 30 June
2017 (2016: 10%).
If the $SGD had strengthened against the $AUD by 10% (2015: 10%) this would have had the following impact
through an increase in the Foreign Currency Translation Reserve:
Equity
2017
$
283
2016
$
1,187
For a 10% weakening of $SGD against $AUD there would be a comparable reduction in the Foreign Currency
Translation Reserve.
48
DOMACOM LIMITED
ABN 69 604 384 885
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22: FINANCIAL INSTRUMENTS (CONTINUED)
Interest Rate Sensitivity
The Company’s policy is to minimise interest rate risk exposures. Interest income is earned on deposits held. The
rate is reviewed on a regular basis to ensure it remains in line with the expected rate of return. Interest expense
incurred on any short term borrowings is assessed to ensure it is in line with market expectations. The Company’s
policy is not to enter into any long term borrowing.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates
of +/- 1% (2016: +/- 1%). These changes are considered to be reasonably possible based on observation of
current market conditions. The calculations are based on a change in the average market interest rate for each
period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All
other variables are held constant.
30 June 2017
30 June 2016
NOTE 23: PARENT ENTITY INFORMATION
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Assets
Issued Capital
Share based payment reserve
Equity compensation reserve
Retained earnings
Total Equity
Loss for
the period
$
+1%
(34,373)
(22,897)
2017
$
952,925
23,963,141
-
-
23,963,141
23,754,418
249,600
515,556
(556,433)
23,963,141
Loss for
the period
$
-1%
34,373
22,897
2016
$
1,277,270
17,364,191
-
-
17,364,191
16,791,037
249,600
694,777
(371,223)
17,364,191
NOTE 24: SUBSEQUENT EVENTS
Subsequent to balance date and prior to the issuing of this report, the following events have occurred:
- The Group’s Research and Development tax incentive claim is currently being lodged with AusIndustry for an
amount of $952,925
There have been no other events subsequent to period end that require disclosure.
49
DOMACOM LIMITED
ABN 69 604 384 885
DIRECTORS’ DECLARATION
In the opinion of the directors of DomaCom Limited
a
the consolidated financial statements and notes of DomaCom Limited are in accordance with the
Corporations Act 2001, including:
i
giving a true and fair view of its financial position as at 30 June 2017 and of its performance for the
financial period ended on that date; and
ii complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
there are reasonable grounds to believe that DomaCom Limited will be able to pay its debts as
and when they become due and payable, and
DomaCom Limited has included in the notes to the financial statements an explicit and
unreserved statement of compliance with International Financial Reporting Standards.
b
c
Signed in accordance with a resolution of the directors:
Grahame D Evans
Chairman
31 August 2017
Arthur Naoumidis
Director
50
Independent Auditor’s Report
to the Members of DomaCom Limited
Report on the audit of the financial report
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Opinion
We have audited the financial report of DomaCom Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement
of changes in equity and consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 3(r) in the financial statements, which indicates that the Group incurred
a net loss of $6,136,417 during the year ended 30 June 2017, and as of that date, the Group’s net
working capital was $3,236,704. As stated in Note 3(r), these events or conditions, along with
other matters as set forth in Note 3(r), indicate that a material uncertainty exists that may cast
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section,
we have determined the matters described below to be the key audit matters to be communicated
in our report.
Key audit matter
How our audit addressed the key audit matter
Recognition of R&D tax incentive (Note 5)
The Group accounts for the R&D tax incentive as a
Government Grant.
This area is a key audit matter due to the inherent
subjectivity that is involved in the Group making
judgements in relation to the calculation and
recognition of the R&D tax incentive income and
receivable.
Capitalisation of Software development costs
(Note 9)
The Group capitalises costs that are directly
attributable to the development of intangibles assets
in accordance with AASB 138 Intangible Assets.
AASB 138 Intangible Assets requires that an entity
only capitalise costs that can be directly attributed to
the development of an intangible asset.
This area is a key audit matter due to the inherent
subjectivity required in determining whether the costs
capitalised meet the measurement requirements of
AASB 138 Intangible Assets.
Intangible assets – Useful life (Note 9)
The Company has determined that it has intangible
assets with a finite useful life in accordance with
AASB 138 Intangible Assets.
AASB 138 Intangible Assets requires that an entity
reviews the amortisation period and the amortisation
method for an intangible asset with a finite useful life
annually.
This area is a key audit matter due to the inherent
subjectivity in determining the expected useful life of
the intangible asset and the period over which the
asset is expected to economic benefits.
Our procedures included, amongst others:
• making enquiries with management to obtain and
document an understanding of their process to
calculate the R&D tax incentive;
• evaluation of management’s processes and
controls to determine if it appropriately addresses
the risks;
• obtaining calculations prepared by management
•
•
and agree amounts claimed to supporting
expenditure;
reviewing historical reliability of estimates and
budgets to support the reliability of the estimate;
involving our specialists to perform a review of the
calculation to determine eligibility of costs claimed;
and
• assessing the adequacy of financial statement
disclosures.
Our procedures included, amongst others:
• evaluation of supporting workings and
assumptions provided and used to substantiate the
costs capitalised by management;
• assessing expenditure capitalised to determine
whether costs are directly attributable to the
development of the intangible and meet the
recognition requirements under the accounting
standards;
• assessing the allocation of costs between
separately identifiable intangible assets: and
• corroborating costs capitalised against the R&D
incentive claim lodged to ensure consistency
where appropriate.
Our procedures included, amongst others:
• evaluating management’s assessment of the
expected life of the intangible asset and the key
assumptions that formed the basis of determining
the useful life used.; and
• gaining an understanding of the purpose and
functionality of the intangible asset and how this
supports the useful life.
Key audit matter
How our audit addressed the key audit matter
Intangible assets– Impairment (Note 9)
The Company has an intangible asset recorded on
the Statement of Financial Position totalling
$2,604,015 relating to development costs capitalised
as software intangibles.
AASB 136 Impairment of Assets requires that an
entity shall assess at the end of each reporting period
whether there is any indication that an asset may be
impaired. If any indication exists, the entity shall
estimate the recoverable amount of the asset.
The Company generated operating losses in the
current financial year which is an indication the
intangible asset may be impaired.
This area is a key audit matter due to the inherent
subjectivity required in measuring the recoverable
amount.
Our procedures included, amongst others:
• obtaining and reading management’s assessment
•
of potential impairment indicators;
testing mathematical accuracy of management’s
calculations;
• evaluating the reasonableness of management’s
revenue and cost forecasts;
• assessing historical reliability of budgets and
forecasts to support managements estimation
process; and
• assessing appropriateness of financial statement
disclosures.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 14 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of DomaCom Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
B L Taylor
Partner - Audit & Assurance
Melbourne, 31 August 2017
DOMACOM LIMITED
ABN 69 604 384 885
SHAREHOLDER INFORMATION
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is
set out below. The information is effective as at 30 August 2017.
Substantial shareholders
ARTHUR NAOUMIDIS & KATHRYN NAOUMIDIS
Voting rights
Number of
shares
held
18,359,952
Ordinary Shares: On a show of hands, every member present at a meeting in person or by proxy shall have
one vote and upon a poll each share shall have one vote.
Performance Rights: No voting rights.
Distribution of equity security holders
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-99,999,999,999
Totals
Ordinary
Shares
Performance
Rights
8
215
129
249
163
764
-
-
-
7
3
10
55
DOMACOM LIMITED
ABN 69 604 384 885
SHAREHOLDER INFORMATION
Twenty (20) largest shareholders
ARTHUR NAOUMIDIS & KATHRYN NAOUMIDIS
BNP PARIBAS NOMINEES PTY LTD
UCAN NOMINEES PTY LTD
SONENBERG SUPERANNUATION PTY LTD
MR GRANT RAYMOND SNIBSON & MRS SNIBSON
CATHRYN NOLAN & STEPHEN JOYCE
GOLFER'S DELIGHT PTY LTD
TORONTO COVE PTY LTD
TRADING PURSUITS PTY LTD
MR WARREN GIBSON
ROSS LAIDLAW & SOFIE LAIDLAW
NICHOLAS STANBOULTGIS & KIM MYERS
MCCONNELL SUPERANNUATION PTY LTD
NO TAX BILL PTY LTD
GRAYSON NOMINEES PTY LTD
MCCONNELL SUPERANNUATION PTY LTD
PPA PTY LTD
KRAM NAMDOT PTY LTD
NEMA NOMINEES PROPRIETARY LTD
TELDAR CAPITAL PTY LTD
Total Securities of Top 20 Holdings
Number of
shares
held
% of
issued
shares
18,359,952
5,681,242
4,797,445
4,663,333
3,083,333
3,037,982
2,925,000
2,562,500
2,072,165
1,822,634
1,585,000
1,418,200
1,313,459
1,280,000
1,200,000
1,186,541
1,166,667
1,138,128
1,050,000
954,937
61,298,518
16.38%
5.07%
4.28%
4.16%
2.75%
2.71%
2.61%
2.29%
1.85%
1.63%
1.41%
1.27%
1.17%
1.14%
1.07%
1.06%
1.04%
1.02%
0.94%
0.85%
54.70%
Unissued equity securities
Number of performance rights issued under the Employee & non-executive director program and the
Executive director program: 724,013.
Securities exchange
The Company is listed on the Australian Securities Exchange.
56
DOMACOM LIMITED
ABN 69 604 384 885
CORPORATE INFORMATION
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Level 6
99 Queen Street
Melbourne
VIC 3000
Tel: 01300 365 930
DIRECTORS
Grahame D Evans
Arthur Naoumidis
David H Archbold
Graeme A Billings
Peter C Church OAM
Ross A Laidlaw
COMPANY SECRETARY
Philip JR Chard
SHARE REGISTRY
Boardroom Pty Limited
Level 12, 225 George Street
Sydney
NSW 2000
AUDITOR
Grant Thornton
The Rialto
Level 30, 525 Collins St
Melbourne
VIC 3000
57