(formerly Family Insights Group Limited)
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2020
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ANNUAL REPORT
for the year ended 30 June 2020
DIRECTORS’ REPORT .................................................................................................................... 2
REMUNERATION REPORT (AUDITED) ........................................................................................... 4
DIRECTORS’ REPORT (CONTINUED) .......................................................................................... 10
AUDITOR’S INDEPENDENCE DECLARATION ............................................................................. 18
DIRECTORS’ DECLARATION ...................................................................................................... 19
INDEPENDENT AUDITOR’S REPORT ............................................................................................ 20
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME . 25
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................... 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................ 27
CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................ 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ........................................................ 29
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CORPORATE DIRECTORY
BOARD OF DIRECTORS
Mr Jonathon Wild
Mr Sean Smith
Mr Mathew Walker
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
AUDITORS
Pitcher Partners BA & A Pty Ltd
Level 11, 12-14 The Esplanade
Perth WA 6000
AUSTRALIA
LAWYERS
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6000
AUSTRALIA
SHARE REGISTRY
Automic
Level 2, 267 St Georges Terrace,
Perth WA 6000
AUSTRALIA
1300 288 664 (Telephone)
hello@automic.com.au
www.automic.com.au
REGISTERED OFFICE
Suite 9, 330 Churchill Avenue
Subiaco WA 6008
AUSTRALIA
PRINCIPAL PLACE OF BUSINESS
Suite 9, 330 Churchill Avenue
Subiaco WA 6008
AUSTRALIA
POSTAL ADDRESS
PO Box 866
Subiaco WA 6904
AUSTRALIA
CONTACT INFORMATION
+61 8 6489 1600 (Telephone)
+61 8 6489 1601 (Facsimile)
info@fruglgroup.com
www.fruglgroup.com
EXCHANGE
Australian Securities Exchange (ASX)
Level 40, Central Park
152-158 St George's Terrace
Perth WA 6000
ASX Codes:
FAM (Shares)
FAMO (Options)
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FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
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DIRECTORS’ REPORT
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The directors of Frugl Group Limited (ASX: FAM) (Company or Frugl) submit herewith the annual
financial report of the Company and its controlled entities (Group) for the financial year ended 30
June 2020 (Report).
DIRECTORS
The names and particulars of the directors of the Group in office during the year and until the date
of this report are as follows. Directors were in office for the entire year unless otherwise stated.
MR JONATHON WILD
NON-EXECUTIVE CHAIRMAN
Jon Wild has been a marketing leader for the past twenty years across a diverse range of categories
and companies including Unilever, British Telecom (where he launched the O2 brand in Europe),
Telstra, Orbitz Worldwide and more recently at Groupon (NASDAQ:GRPN) in roles including CMO
(APAC) and VP of Marketing (North America). Jon has extensive mobile, digital and commercial
experience having led marketing strategy from start-ups to large multinational corporate
organisations. His passion for disruptive narratives combined with a strong understanding of how
technology is constantly changing the interaction between people, brands and business have built
Jon’s international reputation for marketing strategy leadership.
Mr Jon Wild has not been a director of any other listed entity in the last three years.
MR SEAN SMITH
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Sean Smith has almost two decades of experience growing and leading teams for a range of
different sized business' including ASX-list Australian companies, NYSE-listed global businesses and
one of Australia’s privately funded start-up success stories. Most recently as Head of Customer
Experience for Woolworth’s Endeavour Drinks Group across its portfolio of liquor brands including
Dan Murphy's, Cellarmasters, Langtons, WineMarket and BWS, Sean built customer experience and
analytics teams focused on increasing customer retention, value and sustained profitability in a fast
paced and crowded market environment.
Sean’s extensive experience in the Australian marketplace includes Head of Marketing for online
restaurant booking app, Dimmi, where he successfully launched the consumer proposition focusing
on customer acquisition, retention and value growth. He led brand, communications and data
strategy for HotelClub, an online hotel booking site owned by multinational travel business Orbitz
Worldwide, where his focus included customer lifecycle strategy, customer experience and owned
media commercialisation. Sean’s experience and expertise includes general management, P&L
responsibility, omni-channel retail, customer experience, data strategy, marketing technology and
marketing strategy.
Mr Sean Smith has not been a director of any other listed entity in the last three years.
MATHEW WALKER (Appointed 9 July 2018)
NON-EXECUTIVE DIRECTOR
Mathew Walker is a businessman and entrepreneur with extensive experience in the management
of public and private companies, corporate governance and in the provision of corporate advice.
In a management career spanning three decades, Mathew has served as executive Chairman or
Managing Director for public companies with operations in North America, South America, Africa,
Eastern Europe, Australia and Asia.
Mathew is the co-founder and Chairman of the Cicero Advisory Services Pty Ltd (Cicero Advisory)
and the former Chairman of Yojee Limited (ASX: YOJ). He is also a director of Corizon Limited (ASX:
CIZ) and co-founder and director of the Stone Axe Pastoral Company.
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Mr Mathew Walker has been a director of the following listed entities in the last three years:
eMetals Limited (formerly Corizon Limited) (appointed 29 July 2012)
Blaze International Limited (appointed 22 July 2020)
MRS LOREN KING
COMPANY SECRETARY (Appointed 30 April 2020)
Mrs King has worked in finance and back office administration roles with ASX listed companies,
stockbroking and corporate advisory services for the past 13 years. During this time, she has gained
invaluable experience in dealing with all aspects of corporate governance and compliance,
specialising in initial public offerings (IPO), backdoor listings, private capital raising and business
development.
As well as being a Director of, Cicero Corporate Services Pty Ltd, Mrs King currently holds the position
of Company Secretary at Brookside Energy Limited (ASX: BRK). Mrs King has a Bachelor of
Psychology, is a Fellow Member of the Governance Institute of Australia holding a Graduate
Diploma of Applied Corporate Governance and has a Certificate IV in Financial Services
(Bookkeeping).
MR QUINTON MEYERS
COMPANY SECRETARY (Resigned 30 April 2020)
Mr. Meyers holds a Bachelor of Commerce, majoring in Accounting and Finance, and has been
working within accounting firms since 2015. Mr. Meyers has performed a range of accounting and
Company Secretarial duties for public and private companies and is experienced in audit
management, preparation of accounts, capital budgeting and ASX listing rules. In addition to his
position at Family Insights Group Limited, Quinton currently serves as Company Secretary for ASX
listed entity Blaze International Limited (ASX: BLZ).
DIRECTORS’ SHAREHOLDINGS
At the date of this report the following table sets out the current directors’ relevant interests in pre-
consolidated shares and options of Frugl Group Limited and the relevant changes since 30 June
2019:
At Ordinary Shares
Options over Ordinary Shares
Directors
Mr Jonathon Wild
Mr Sean Smith
Mr Mathew Walker
At Date of
Report Current
Holdings
2,000,000
165,000
9,000,000
Net increase/
(decrease)*
(48,000,000)
(4,335,000)
(116,000,000)
Holdings at
Date of Report
5,520,000
7,035,000
-
Net increase/
(decrease)*
(68,960,000)
(92,680,000)
-
*Decreases due to a 50:1 consolidation of Company securities on 8 August 2019. Please refer to remuneration report Directors’ Equity holdings
table (i) for further details.
ROUNDING OF AMOUNTS
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, the amounts in the directors’ reports and in the financial report have been rounded to
the nearest dollar.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Information about the remuneration of key management personnel is set out in the remuneration
report on pages 4 - 9. The term ‘key management personnel’ refers to those persons having
authority and responsibility for planning, directing, and controlling the activities of the Group,
directly or indirectly, including any director (whether executive or otherwise) of the Company.
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•
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REMUNERATION REPORT (AUDITED)
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. Share-based compensation
D. Directors’ equity holdings
E. Relationship between the remuneration policy and company performance
The information provided in this remuneration report has been audited as required by section
308(3C) of the Corporations Act 2001.
A. PRINCIPLES USED TO DETERMINE NATURE & AMOUNT OF REMUNERATION
The whole Board form the Remuneration Committee. The remuneration policy has been designed
to align director and executive objectives with shareholder and business objectives by providing a
fixed remuneration component with the flexibility to offer specific long-term incentives based on
key performance areas affecting the Group’s financial results. The Board believes the remuneration
policy to be appropriate and effective in its ability to attract and retain the best directors and
executives to manage the Group.
The Board’s policy for determining the nature and amount of remuneration for Board members and
senior executives is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and
other senior executives, was developed by the Board. All executives receive a base salary
(which is based on factors such as length of service and experience) and superannuation.
The Board reviews executive packages annually and determines policy recommendations by
reference to executive performance and comparable information from industry sectors and
other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options.
The policy is designed to attract and retain the highest calibre of executives and reward them
for performance that results in long term growth in shareholder wealth.
The directors and executives who receive the superannuation guarantee contribution, as
required by the government, received 9.5% of base salary for the year ended 30 June 2020
and do not receive any other retirement benefits.
All remuneration paid to directors and executives is valued at the cost to the Group and
expensed.
The Board policy is to remunerate non-executive directors at market rates for comparable
companies for time, commitment and responsibilities. The Board determines payments to the
non-executive directors and reviews the remuneration annually, based on market practice,
duties and accountability. Independent external advice is sought when required, which
during the year none was required. The maximum aggregate amount of fees that can be
paid to non-executive directors is subject to approval by shareholders at the Annual General
Meeting and is presently limited to $250,000. Fees for non-executive directors are not linked to
the performance of the Group.
In determining the level and make-up of executive remuneration, the Board negotiates a
remuneration to reflect the market salary for a position and individual of comparable
responsibility and experience. Due to the limited size of the Group and of its operations and
financial affairs, the use of a separate remuneration committee is not considered appropriate.
Remuneration is regularly compared with the external market by participation in industry
salary surveys and during recruitment activities generally. If required, the Board may engage
an external consultant to provide independent advice in the form of a written report detailing
market levels of remuneration for comparable executive roles. No external remuneration
consultant was used during the year.
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All remuneration paid to Directors and Executives is valued at the cost to the Group and
expensed. Options are valued using the Black-Scholes methodology.
The remuneration policy has been tailored to increase the direct positive relationship between
shareholders’ investment objectives and directors and executive performance. Currently, this is
facilitated through the issue of options to the directors and executives to encourage the alignment
of personal and shareholder interests. The Group believes this policy will be effective in increasing
shareholder wealth. The Group currently has no performance-based remuneration component built
into director and executive remuneration packages.
NON-EXECUTIVE DIRECTORS
The remuneration of Non-Executive directors consists of directors’ fees, payable in advance.
Remuneration of Non-Executive directors is based on fees approved by the Board of directors and
is set at levels to reflect market conditions and encourage the continued services of the directors.
Non-Executive directors do not receive retirement benefits but are able to participate in share-
based incentive programmes in accordance with Company policy.
The Group’s Non-Executive directors are eligible to receive fees for their services in addition to their
role and the reimbursement of reasonable expenses.
OTHER BENEFITS
No other benefits were paid to Non-Executive directors during the year.
During the year ended 30 June 2019, the Non-Executive directors of the Group implemented an
incentive package for the Group’s Managing Director and Chief Executive Officer, Mr Sean Smith,
to ensure the achievement of short-term operation goals of the Group.
The incentive package consisted of four different tranches of a $15,000 cash payment to Mr Sean
Smith for the total of possible cash payment of $60,000.
The milestones were set by the Non-Executive Directors of the Group, Mr Jon Wild and Mr Mathew
Walker. The Non-Executive Directors accessed the progress against the milestones on a monthly
basis.
Mr Sean Smith achieved all four milestones and received a total of $60,000.
SERVICE CONTRACTS
The Group entered into services agreements with its executive Director and key management
personnel as part of the onboarding process. At the same time, the Group also entered into Non-
Executive Director appointment letters outlining the policies and terms of this appointment including
compensation to the office of Director. The principal terms of the executive service agreements
existing at reporting date are set out below:
MR JONATHON WILD
NON-EXECUTIVE CHAIRMAN
The Group entered into a consultancy agreement with Mr Jon Wild in respect of his appointment
as a Non-Executive Chairman of the Group. Mr Wild is paid a fee of $96,000 per annum for his
services as Non-Executive Chairman and is reimbursed for all reasonable expenses incurred in
performing his duties. Payments for Mr Wild’s services are made to Wild Consulting, a related entity.
The agreement may be terminated:
(a) by providing the Group with written notice allowing reasonable time for the Group to plan for
the departure; or
in accordance with the law or the Company’s constitution.
(b)
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MR SEAN SMITH
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
The Group entered into an employment agreement with Mr Sean Smith in respect of his role as
Managing Director and Chief Executive Officer of the Group. From 1 November 2018, Mr Smith was
paid a salary of $260,000 per annum (excluding superannuation) for his services as Managing
Director and Chief Executive Officer. Prior to November, he was paid a salary of $220,000 per annum
(excluding superannuation). In addition, to this he was paid a total $60,000 in bonuses during the
year. Mr Sean Smith is reimbursed for all reasonable expenses incurred in performing his duties.
The agreement may be terminated:
(a) by either party without cause with 3 months’ written notice or if the Group elects to with
payment in lieu of notice;
(b) by the Group, at any time with written notice and without payment (other than entitlements
accrued to the date of termination) as a result of any occurrence which gives the Group a
right of summary dismissal at common law; or
(c) by Mr Smith immediately, by giving notice, if the Group is in breach of a material term of this
agreement.
MATHEW WALKER
NON-EXECUTIVE DIRECTOR
The Group entered into a consultancy agreement with Mr Mathew Walker in respect of his
appointment as a Non-Executive Director of the Group. Mr Walker is paid a fee of $120,000 per
annum for his services as Non-Executive Director and is reimbursed for all reasonable expenses
incurred in performing his duties. Payments for Mr Walker’s services are made to Great Southern
Flour Mills Pty Ltd, a related entity.
The agreement may be terminated:
(a) by providing the Group with written notice allowing reasonable time for the Group to plan for
the departure; or
in accordance with the law or the Group’s constitution.
(b)
B. DETAILS OF REMUNERATION
Details of remuneration of the directors and key management personnel (as defined in AASB 124
Related Party Disclosures) of Frugl Group Limited are set out below.
The key management personnel of Frugl Group Limited are the directors as listed above.
The Group does not have any other employees who are required to have their remuneration
disclosed in accordance with the Corporations Act 2001.
The table below shows the 2020 figures for remuneration received by the Group’s directors and key
management personnel:
Directors
2020
Jonathon Wild(i)
Sean Smith
Mathew Walker(ii)
Salary &
Fees
$
56,000
260,000
120,000
436,000
Short-term
Employee Benefits
Super-
annuation
$
Reimburse
-ments
$
Other
Benefits
$
Share-
based
Payments
$
Post-
employment
Prescribed
Benefits
$
Total
$
-
24,700
-
24,700
-
-
-
-
-
-
-
-
57,978
72,473
-
130,451
-
-
-
-
113,978
357,173
120,000
591,151
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
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The table below shows the 2019 figures for remuneration received by the Group’s directors and key
management personnel:
Directors
2019
Jonathon Wild(i)
Sean Smith(iii)
Mathew Walker(ii)
Salary &
Fees
$
96,000
246,667
120,000
462,667
Short-term
Employee Benefits
Super-
annuation
$
Reimburse
-ments
$
Other
Benefits
$
Share-
based
Payments
$
Post-
employment
Prescribed
Benefits
$
Total
$
-
23,433
-
23,433
-
-
-
-
-
60,000
-
60,000
138,776
185,035
-
323,811
-
-
-
-
234,776
515,135
120,000
869,911
Director fees for Jonathon Wild were paid to Wild Consulting Pty Ltd, a related entity of Mr Wild.
Director fees for Mathew Walker were paid to Great Southern Flour Mills Pty Ltd, a related entity of Mr Walker.
(i)
(ii)
(iii) Other benefits paid to Sean Smith relate to the achievement of short-term operation goals of the Group..
RELATED PARTY TRANSACTIONS
The Group entered into a mandate with Cicero Corporate Services Pty Ltd (CCS), a company
related to Mr Walker for corporate administration services including financial reporting, company
secretarial services, rent and administrative operations. CCS provided services to the amount of
$120,000 (2019: $120,000). As at 30 June 2020, $10,000 (2019: $Nil amount payable) remains
outstanding.
The Group entered into a mandate with Cicero Advisory Services Pty Ltd (CAS), a company related
to Mr Walker for corporate advisory services. CAS provided services to the amount of $60,000 (2019:
$162,654). As at 30 June 2020, $Nil amount (2019: $Nil amount payable) remains outstanding.
Other than the above, no KMP has received any loan and no balances are outstanding.
C. SHARE-BASED COMPENSATION
Options can be issued to directors and executives as part of their remuneration. The options are not
based on performance criteria, but are issued to align the interests of directors, executives and
shareholders.
During the 2020 financial year, 5,000,0000 and 4,000,000 options exercisable at $0.15 on or before
30 June 2022 were issued to Mr Sean Smith and Mr Jon Wild, respectively.
All options issued fully vested as no performance or service conditions were attached. No further
options have been granted to directors since.
Number of
Options Issued
9,000,000
Grant Date
Expiry Date
Exercise Price
Total Value(i)
Recipient
16 Mar 2020
30 Jun 2022
$0.15
130,451
Directors
Number of
Options
9,000,000
Underlying
share price
(VWAP)
$0.040
Exercise
price
Expected
volatility
Expiry date
(years)
Expected
dividends
Risk free
rate
Probability
of share
issue
Value per
option
$0.15
117%
2.29
Nil
0.53%
Negligible Negligible
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During the 2019 financial year, 2,000,000 and 1,500,000 options exercisable at $0.50 on or before 30
June 2021 were issued to Mr Sean Smith and Mr Jon Wild respectively.
All options issued fully vested as no performance or service conditions were attached. No further
options have been granted to directors since.
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Number of
Options Issued(i)
175,000,000
Grant Date
Expiry Date
Exercise Price
Total Value
Recipient
10 Dec 2018
30 June 2021
$0.01
323,811
Directors
Number of
Options(i)
175,000,000
Underlying
share price
(VWAP)
$0.002
Exercise
price
Expected
volatility
Expiry date
(years)
Expected
dividends
Risk free
rate
Probability
of share
issue
Value per
option
$0.01
262%
2.56
Nil
1.93%
Negligible Negligible
(i)
Pre consolidation of equity on a 50:1 basis.
D. DIRECTORS’ EQUITY HOLDINGS
(i)
Fully paid ordinary shares of Frugl Group Limited:
The following fully paid ordinary shares were held directly, indirectly or beneficially by key
management personnel and their related parties on a pre-consolidated basis during the years
ended 30 June 2020 and 30 June 2019:
Directors
2020
Jonathon Wild
Sean Smith
Mathew Walker
2019
Jonathon Wild
Sean Smith
James Robinson
Mathew Walker
Balance at
1 July
No.
Granted as
remuneration Acquired
No.
No.
Net other
change*
No.
At date of
resignation
No.
Balance at
30 June
No.
50,000,000
4,500,000
125,000,000
2,000,000
3,500,000
2,000,000
50,000,000
1,000,000
1,055,000
(49,000,000) (i)
-
-
(5,390,000) (ii)
- 31,000,000 (147,000,000) (iii)
-
-
-
2,000,000
165,000
9,000,000
- 48,000,000
1,000,000
-
-
-
- 75,000,000
-
-
-
-
-
-
2,000,000
50,000,000
4,500,000
-
- 125,000,000
*Consolidation of equity on a 50:1 basis on 8 August 2019
(i)
(ii)
(iii)
50,000,000 ordinary shares were consolidated with a ratio of 50:1.
Includes 1,000,000 ordinary shares acquired on 10 July 2019. Total of 5,500,000 ordinary shares were consolidated with a ratio of 50:1.
Includes 25,000,000 ordinary shares acquired on 9 July 2019. Total of 150,000,000 ordinary shares were consolidated with a ratio of 50:1.
(ii)
Share options of Frugl Group Limited:
The following options were held directly, indirectly or beneficially by key management personnel
and their related parties on pre-consolidation basis during the years ended 30 June 2020 and 30
June 2019:
Directors
2020
Jonathon Wild
Sean Smith
Mathew Walker
2019
Jonathon Wild
Sean Smith
Mathew
Walker(iii)
Balance at
1 July
No.
Granted as
remuneration
No.
Options
Exercised
No.
Net other
change
No.
At date of
resignation
No.
Balance at
30 June
No.(i)
76,000,000
101,750,000
-
4,000,000(v)
5,000,000(v)
-
6,000,000
11,750,000
-
75,000,000
100,000,000
-
-
-
-
-
-
-
(74,480,000)(iv)
(99,715,000)(iv)
-
(5,000,000)(i)
(10,000,000)(i)
-
-
-
-
5,520,000
7,035,000
-
- 76,000,000(ii)
- 101,750,000(ii)
-
-
Options issued in the year ended 30 June 2018 expired as they were unexercised on 31 August 2018.
(i)
(ii) Options are fully vested and exercisable.
(iii) Mathew Walker was appointed as a Non-executive Director on 9 July 2018.
(iv) Consolidation of equity on a 50:1 basis on 8 August 2019
(v) Options are fully vested and exercisable at $0.15 on or before 30 June 2022.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 8
(iii)
Performance shares of Frugl Group Limited:
There were no performance shares held directly, indirectly or beneficially by the key management
personnel or their related parties during the years ended 30 June 2020 or 30 June 2019.
E. RELATIONSHIP BETWEEN THE REMUNERATION AND COMPANY
PERFORMANCE
Per the Groups remuneration policy, directors remuneration can be linked to either short term or
long term performance conditions. The Board feels that other than the short term incentives for the
Group’s Managing Director and Chief Executive Officer, Mr Sean Smith, currently the terms and
conditions of options and shares currently on issue to the directors are a sufficient incentive to align
the goals of the directors with those of the shareholders to maximise shareholder wealth, and as
such, has not set any performance conditions for the directors of the Group. The Board will continue
to monitor this policy to ensure that it is appropriate for the Group in future years.
The table below sets out summary information about the Group’s earnings and movement in
shareholder wealth for the four years to 30 June 2020:
Revenues from contracts with
customers
Loss from ordinary activities after tax
attributable to members
Net loss for the period attributable to
members
Share price at start of year ($)
Share price at end of year ($)
Basic & diluted profit/(loss) per share
(i) Pre-consolidation basis
(ii) Post-consolidation basis
30 June
2020 (ii)
30 June
2019(ii)
30 June
2018 (i)
30 June
2017 (i)
30 June
2016 (i)
5,772
10,887
12,220
40,195
116,706
(1,365,594) (3,182,653) (6,004,172) (5,073,278) (7,740,266)
(1,365,594) (3,182,653) (6,004,172) (5,073,278)
(7,740,266)
0.05
0.026
(0.02)
0.15
0.05
(0.08)
0.008
0.003
(0.006)
0.019
0.008
(0.007)
0.041
0.03
(0.014)
ADOPTION OF REMUNERATION REPORT BY SHAREHOLDERS
The adoption of the remuneration report for the financial year ended 30 June 2019 was put to the
shareholders of the Group at the Annual General Meeting (AGM) held on 29 November 2019. All
proxies received were in favour of the resolution and the resolution was passed without amendment
on a show of hands. The Group did not receive any specific feedback at the AGM or throughout
the year on its remuneration practices.
- - END OF REMUNERATION REPORT - -
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is included on page 18.
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DIRECTORS’ REPORT (CONTINUED)
DIRECTORS MEETINGS
The following table sets out the number of Directors’ meetings held during the financial year ended
30 June 2020 and the number of meetings attended by each Director. During the period, 5 Board
meetings were held. There is no separate nomination, remuneration or audit committee.
Board Member
Jonathon Wild
Sean Smith
Mathew Walker
Eligible to Attend
5
5
5
Attended
5
5
5
Circular Resolutions Passed
5
5
5
Board of Directors
PRINCIPAL ACTIVITIES
The principal activities of the Group are the sale and distribution, marketing and customer support
of its suite of cyber safety and grocery comparison products and services.
REVIEW OF OPERATIONS
DIRECTORS’ COMMENTS
Frugl Limited (Frugl or the Group) is pleased to present its Audited Final Report for the year ended
30 June 2020 (Period).
The Company has developed technologies that incorporate real-time data capture, cloud-based
storage and advanced cloud-based data analytics. Data intelligence generated is utilised to
power useful consumer mobile applications as well as business intelligence and analytics
capabilities.
During the Period the Company focused activities on development of its mobile application Frugl
Grocery (FRUGL), a grocery comparison application that not only allow families and other shoppers
to find the best prices across major supermarket retailers for the weekly shopping basket, but
introduces tools to help shoppers optimise their shopping lists for health and wellness, incorporating
allergens, ingredients and nutritional value into profile based alerts and warnings.
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The four key focus areas of development on FRUGL were data warehouse architecture, data
collation capabilities, mobile app design and business development.
In addition, the Company developed a Grocery Pricing & Promotion Analytics Platform utilising data
collated since May 2019, with advanced product, category and retail supplier analytics capabilities
in readiness for deployment with retail clients.
In order to accelerate future Company revenue growth, the Frugl child protection application and
content hub have been given minimal development focus to allow a major focus of resources on
the development of FRUGL.
OPERATIONS UPDATE
Following a review of future data storage and analytics requirements in parallel with a review of
currently available data warehouse platforms, the Company commenced the design and build of
its data infrastructure utilising the Snowflake data warehouse platform on cloud-based Amazon
Web Services (AWS) infrastructure.
Snowflake is a data warehouse solution built specifically for cloud-based handling of structured and
semi-structured data, offering full integration with AWS, and utilising separated storage and
processing performance configurations making it easier, faster and cheaper to configure than other
data warehouse platforms as our data requirements develop in the future.
Snowflake is also fully compatible with downstream analytics and Business Intelligence tools from
multiple vendors including PowerBI and Tableau, both heavily used in the retail sector. Furthermore,
Snowflake allows the Company to harness machine learning techniques to further enhance app-
based user experiences and broaden analytics capabilities.
The Company also continued to develop its data acquisition capabilities with full product, pricing,
promotional, nutritional and catalogue data from three major grocery retailers (localised by state
and region) being collated on an ongoing basis.
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The Frugl Grocery mobile application is a supermarket comparison engine that allows shoppers to
compare products across Woolworths and Coles supermarkets, create brand-specific shopping lists
and optimise shopping lists by cheapest prices.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 11
In addition, the Company is overlaying wellness tools for shoppers to enable them to compare
products and optimise shopping lists by nutritional value, ingredient listings, allergen inclusions,
health ratings and product sustainability.
Company resources were focused on customer research and design of FRUGL, with core functional
specifications developed alongside shopper insight collation and data intelligence developed via
ongoing grocery data collation.
On 24 October 2019, the Company announced it had completed development of a limited-
dataset Proof of Concept version of its FRUGL mobile application and was continuing development
of the beta release for iOS and Android users.
On 19 December 2019, the Company announced it had begun User Acceptance Testing (UAT)
within its live production environment for both Android and iOS versions of FRUGL, enabling real time
testing of FRUGL in preparation for a public release in the following quarter.
The Company also announced on 19 December 2019, its development of a Grocery Pricing &
Promotions Analytics platform, Infocus Analytics (IA), an advanced product, category and retailer
analytics platform utilising retail data collected commencing May 2019.
On 31 January 2020 the Company gave investors an update detailing the ongoing UAT testing of
IG in readiness for its public launch in February.
On 11 February 2020, the Company announced the public launch of Version 1.0 of Frugl Groceries
on both iOS and Android platforms. The Group included details of future additional features to be
added to the development roadmap to continue FRUGL’s development, including:
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Filtering by specific diets
•
• Additive pop-ups with descriptions
• Advanced ‘Sort By’ and ‘Filter By’ functionality
• Enhancements to the Product Search capability
• Addition of pre-curated, sharable featured lists to drive user growth
•
Shopper product reviews
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On 9 March 2020 the Company announced a non-binding Memorandum of Understanding with
leading data intelligence company Invigor Group (ASX:IVO) to explore co-developed analytics
and data solutions for BB customers.
On 2 April 2020 the Company announced Austerity Measures and a Company Restructure to
reduce costs in response to the emerging Covid-19 pandemic and the resultant poor prevailing
economic conditions. The measures reduced monthly costs by circa $90,000 and included the
following measures:
• Reduced permanent headcount by 57%
• A move to on-demand delivery of product and software development, technology support
and marketing services
• Reduced overall occupancy and administrative costs in-line with staffing reductions
• Negotiated salary deferrals with Company employees and Directors
Despite the poor economic conditions expected, the Company detailed how the combination of
poor future economic conditions, rising unemployment and increases in online shopping demand
would create strong future growth conditions for FRUGL.
On 29 June 2020 the Australian Securities and Investment Commission (ASIC) recorded the
Company’s change of name from Family Insights Group Limited (ASX:FAM) to Frugl Group Limited
(ASX:FGL), after shareholders approved the name change at a shareholder meeting held on 16
March 020. The Company announced the name change to the market on 2 July 2020.
FINANCIAL UPDATE
The Company announced on 30 July 2019 it had entered into a loan facility agreement (Loan
agreement) with Rocking Horse Pty Ltd (Rocking Horse) (Lender), an unrelated entity of the
Company, for the amount of $500,000 (Loan). As part of the Loan Agreement, the total amount
drawn down under the Loan will be repaid with, and following receipt of, the 2019 financial
year Research & Development Rebate.
On 1 July 2019, the Company lodged its Notification of Consolidation/Split with the ASX. The
Company
received shareholder approval at its general meeting held 5 August 2019 to perform a
consolidation on a 1:50 basis.
On 6 September 2019, the Company announced it had received a Research and Development
Tax Incentive Scheme cash rebate (R&D Refund) from the Australian Tax Office of $846,972 for
the financial year ending 30 June 2020. Following receipt of the R&D Refund, the Group repaid the
Loan to Rocking Horse.
On 1 October 2019, and 4 October 2019 respectively, Mathew Walker and Jonathon Wild signed
letters of deferral of director fees, to defer all accrued fees of service from 1 October 2019 (earlier
amounts to 30 September 2019 having been paid in full) until the completion of a capital raising of
not less than $1,000,000.
On 4 October 2019, Cicero Corporate Services Pty Ltd signed a letter of deferral for corporate
administration fees dated 4 October 2019, to defer the corporate administration fees accruing from
their services from 1 October 2019 for financial reporting, company secretarial services, rental
expense and administrative services (earlier amounts to 30 September 2019 having been paid in
full) until the completion of a capital raising of not less than $1,000,000.
On 16 October 2019, a binding loan facility agreement was entered into with Mathew Walker for
up to $600,000, available on call, unsecured, interest fee and repayable on the earlier of 31 October
2020 and the completion of a capital raising of not less than $1,000,000. If the Director loan remain
unpaid at 31 October 2020, the loan will continue to roll on a quarterly basis until the capital raising
has been completed.
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On 31 January 2020, the Company announced the outcome of a Q2 review of Company costs and
initiated a cost consolidation program to reduce ongoing operational costs of circa $80,000 per
quarter whilst allowing the core Company focus to continue on the development of FRUGL.
The Company also announced that it had entered into a binding local facility agreement with
Mathew Walker, a Company director, for up to $600,000, available on call, unsecured, interest free
and repayable on 1 October 2020. The loan facility was subsequently varied up to $700,000 with all
other terms remaining the same. The Company has not drawn down on this loan.
CHANGES TO SECURITIES
On 11 December 2019, the Company completed a placement issue of 16,000,000 fully paid ordinary
shares at an issue price of $0.062 per Placement Share to subscribers set out in the announcement
of that date, to raise $1,000,000 before costs.
On 6 May 2020 the Company announced that a non-renounceable entitlement issue on a 1 for
basis at $0.02 per fully paid ordinary shares, to raise up to $660,000 before costs, had closed
oversubscribed to existing shareholders.
FINANCIAL REVIEW
For the year ended 30 June 2020 the Group incurred a net loss of $1,365,594 (2019: $3,182,653), a
net operating cash outflow of $1,428,835 (2019: $1,958,806), and has net current liabilities of $530,064
(2019: $379,037) and net liabilities of $567,391 (2019: $929,370).
RISK MANAGEMENT
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis
and that activities are aligned with the risks and opportunities identified by the Board.
The key risks that the Board has currently identified are:
Technology Risk
Intellectual Property Rights
•
•
• Competition Risk
• Reliance on Key Personnel Risk
The Group believes that it is crucial for all Board members to be part of the process of managing
risks through governance and oversight, and as such the Board has not established a separate risk
management committee.
Furthermore, the Board has a number of mechanisms in place to ensure management’s objectives
and activities are aligned to the Board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to
•
meet stakeholders needs and manage business risk.
Implementation of Board approved operating plans and Board monitoring of the progress
against budgets.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
On 1 July 2019, the Group lodged its Notification of Consolidation/Split with the ASX. The Group
received shareholder approval at its general meeting held 5 August 2019 to perform a consolidation
on a 1:50 basis.
The Group issued 16,000,000 shares on the 11th of December 2019 at $0.0625 a share to raise
$1,000,000 before costs.
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The Group also issued 33,000,000 shares on 8 May 2020 at $0.02 a share to raise $660,000 before
costs as part of a non-renounceable entitlement issue on a 1 for 2 basis.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group plans to release a fully operating version of the Frugl data comparison software for
browser and phone-based users. This technology is expected to produce vast amounts of high-
quality data that is valuable to large grocery retailers.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group’s activities to date have not been subject to any particular and significant environmental
regulation under Laws of either the Commonwealth of Australia or a State or Territory of Australia.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 1 July 2020, the Group announced the changed of Company name to Frugl Group Limited
(ASX:FGL) effective from 3 July 2020.
As disclosed in Note 19.2, the Group identified a legal dispute with a previous employee of a
redundant subsidiary, Frugl (Australia) Pty Ltd (Subsidiary) with the Court of Victoria ruling in favour
of the previous employee.
The Subsidiary recently received a cost estimate to pursue a counterclaim against the Former
Employee (Counter Claim) and take that Counter Claim to trial (Trial Cost). As a result of this Trial Cost,
the Group has resolved it is not in the best interest of shareholders to continue the Counter Claim and
to loan monies to the Subsidiary for the purpose of pursuing the Counter Claim and for any other
purpose.
Following a shareholder meeting of the Subsidiaries shareholders on 7 August 2020, it was resolved to
place the Subsidiary into liquidation.
Subsequently Greg Dudley and Jerome Mohen of RSM Australia Partners were appointed liquidators.
The Group would like to advise that there are no assets of the Subsidiary currently deemed to be of
any value to the Group and that all the intellectual property developed by the Company that is being
used to support current operations remain unaffected and are held in a wholly owned Company
subsidiary Family Insights IP Pty Ltd (ACN 633 347 332).
The Group notes that the acquisition terms of the Subsidiary, as announced to the ASX on 30 October
2018 provided for contingent consideration (as defined in Schedule 1 of this release) (Contingent
Consideration). It is the Company’s intention to seek shareholder approval for the re-instatement of
these Contingent Consideration securities at a shareholder meeting to be convened in the near
future.
On 22 September 2020, the Group announced that it has received firm commitments to raise
$1,485,000 through a two-tranche placement to unrelated sophisticated and professional investors.
Frugl will issue a total of 49,500,000 fully paid ordinary shares in the Company at $0.03 per share
(Share)(Placement). Tranche 1 of the Placement was completed on 25 September 2020 raising
$742,500 before cost.
On 28 July 2020, the Group received confirmation of a $750,000 loan facility with a director of the
Group. The facility is available on call, is unsecured and interest free. As at the date of this report,
the full amount of the facility is available for use as no amounts have been drawn. The facility expires
on 31 December 2020.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
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INDEMNITIES AND INSURANCE OF DIRECTORS AND OFFICERS
During the reporting period and up to the date of this report, the Group has paid premiums insuring
all the directors of Frugl Group Limited against costs incurred in defending conduct involving a
breach of duty and/or a contravention of sections 182 or 183 of the Corporations Act 2001, as
permitted by section 199B of the Corporations Act 2001.
The Group has agreed to indemnify all directors and executive officers of the Group against
liabilities to another person (other than the Group or a related body corporate) that may arise from
their position as directors of the Group, except where the liability has arisen as a result of a wilful
breach of duty in relation to the Group. The agreement stipulates that the Group will meet the full
amount of any such liabilities, including costs and expenses. The Group has paid a total of $16,000
in insurance premiums, relating to Director and Officer insurance, during the financial year (2019:
$16,000).
INDEMNITIES OF AUDITORS
No indemnities have been given or insurance premiums paid, during or since the end of the year,
for any person who is or has been an auditor of the Group.
DIVIDENDS
No dividends were paid or declared during the financial year and no recommendation for payment
of dividends has been made.
OPTIONS
During the 2020 financial year, the Group issued 11,000,000 options to key management personnel
(refer to remuneration report for details) and the Group’s Chief Data Officer, Mr Alistair McCall,
exercisable at $0.15 on or before 30 June 2022. The grant dates for the options issues were as follows:
Grant Date
16 March 2020
Expiry Date
Number of Options
Exercise Price
30 June 2022
11,000,000
$0.15
Value per Option
$0.01449
Total Value
$159,441
There were no vesting conditions or exercise conditions attached to the options.
There were 34,048,883 unissued ordinary shares in respect of which options are outstanding at the
end of the year with a weighted average exercise price of $0.055 (2019: $0.010) and a weighted
average remaining contractual life of 548 days (2019: 730 days).
During the 2020 financial year, no options were exercised, lapsed, cancelled or forfeited.
During the 2020 financial year, no performance shares were issued, lapsed or expired (2019:
50,000,000 performance shares lapsed). No performance shares were on issue as at 30 June 2020 or
30 June 2019.
NON-AUDIT SERVICES
The Group may decide to employ the auditor on assignments additional to their statutory duties
where the auditor’s expertise and experience with the Group and/or Group are important. No non-
audit services were provided by the Group’s current auditors, Pitcher Partners BA & A Pty Ltd during
the year (2019: Nil).
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 16
COMPLIANCE
CORPORATE GOVERNANCE STATEMENT
The Board of Directors is responsible for the corporate governance of the Group. The Board guides
and monitors the business affairs of the Group on behalf of the shareholders by whom they are
elected and to whom they are accountable. The Corporate Governance policies and practices of
the Group are reviewed annually in accordance with the standards required of the Group by the
Directors, the ASX, ASIC and other relevant stakeholders, to ensure that the highest appropriate
governance standards are maintained, commensurate with the size and operations of the Group.
The ASX Corporate Governance Council released the fourth edition of its Corporate Governance
Principles and Recommendations on 27 February 2019 to take effect for the first full financial year
commencing on or after 1 July 2020. The Group’s Corporate Governance Statement, and
associated policy documents complies as far as possible with the spirit and intentions of the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations as
appropriate, having regard to the size of the Group and the nature of its enterprise. The Corporate
Governance Statement can be found on the Group’s web site:
www.familyinsightsgroup.com.au
INDEPENDENT PROFESSIONAL ADVICE
Directors of the Group are expected to exercise considered and independent judgement on
matters before them and may need to seek independent professional advice. A director with prior
written approval from the Chairman may, at the Group’s expense obtain independent professional
advice to properly discharge his responsibilities.
BOARD COMPOSITION
The Board consists of one Executive and two Non-Executive Directors. Details of their skills,
experience and expertise and the year of office held by each director have been included in the
Directors’ Report. The number of Board meetings and the attendance of the directors are set out
in the Directors’ Report.
The Board will decide on the choice of any new director upon the creation of any new Board
position and if any casual vacancy arises. Decisions to appoint new directors will be minuted. The
Board considers that due to the size and complexity of the Group’s affairs it does not merit the
establishment of a separate nomination committee. Until the situation changes the Board of the
Group will carry out any necessary nomination committee functions.
SHARE TRADING POLICY
Directors, officers and employees are prohibited from dealing in the Group shares when they
possess inside information. The Board is to be notified promptly of any trading of shares in the Group
by any director or officer of the Group.
This Directors’ report is signed in accordance with a resolution of directors made pursuant to s.298(2)
of the Corporations Act 2001.
For, and on behalf of, the Board of the Company,
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Jonathon Wild
Chairman
Perth, Western Australia this 30th day of September 2020.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 17
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF FRUGL GROUP LIMITED
(FORMERLY FAMILY INSIGHTS GROUP LIMITED)
In relation to the independent audit for the year ended 30 June 2020, to the best of my knowledge and
belief there have been:
(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act 2001;
and
No contraventions of APES 110 Code of Ethics for Professional Accountants (including
Independence Standards).
This declaration is in respect of Frugl Group Limited and the entities it controlled during the year.
PITCHER PARTNERS BA&A PTY LTD
JOANNE PALMER
Executive Director
Perth, 30 September 2020
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18
DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
in the Directors’ opinion, there are reasonable grounds to believe that the Group will be
able to pay its debts as and when they become due and payable;
in the Directors’ opinion, the attached consolidated financial statements and notes
thereto are in accordance with the Corporations Act 2001, including compliance with
Australian Accounting Standards and International Financial Reporting Standards as
disclosed in Note 2 and giving a true and fair view of the financial position and
performance of the Group for the year ended on that date;
(c)
the audited remuneration disclosures set out in the Directors’ Report comply with
Accounting Standard AASB 124 Related Party Disclosures and the Corporations Act and
Regulations 2001; and
(d)
the Directors have been given the declarations required by s.295A of the Corporations
Act 2001 for the year ended 30 June 2020.
Signed in accordance with a resolution of the Board of Directors made pursuant to s.295(5) of the
Corporations Act 2001.
For, and on behalf of, the Board of the Company,
Jonathon Wild
Chairman
Perth, Western Australia this 30th day of September 2020.
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FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
ABN 80 096 870 978
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Frugl Group Limited (formerly Family Insights Group
Limited) (the “Company”) and its controlled entities (the “Group”), which comprises the
consolidated statement of financial position as at 30 June 2020, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(cid:894)(cid:258)(cid:895)
(cid:894)(cid:271)(cid:895)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of
its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Report section of our report. We are independent of the Group in
accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (including Independence Standards) (“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 2.1.3 Going Concern to the consolidated financial report which
indicates that the Group incurred a net loss of $1,365,594 during the year ended 30 June
2020 (2019: $3,182,653), a net operating cash outflow of $1,428,835 (2019: $1,958,806), and
as of that date, the Group had net current liabilities of $530,064 (2019: $379,037) and net
liabilities of $567,391 (2019: $929,370). Furthermore, the Group’s ability to continue as a
going concern and meet its debts and future commitments as and when they fall due is
dependent on the matters as set forth in Note 2.1.3 Going Concern to the consolidated
financial report. These conditions indicate that a material uncertainty exists that may cast
significant doubt about the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
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.
(cid:80)(cid:101)(cid:113)(cid:94)(cid:100)(cid:96)(cid:111)(cid:3)(cid:80)(cid:91)(cid:111)(cid:113)(cid:107)(cid:96)(cid:111)(cid:112)(cid:3)(cid:65)(cid:64)(cid:1186)(cid:64)(cid:3)(cid:80)(cid:113)(cid:118)(cid:3)(cid:76)(cid:113)(cid:95)
(cid:64)(cid:107)(cid:3)(cid:101)(cid:107)(cid:95)(cid:96)(cid:109)(cid:96)(cid:107)(cid:95)(cid:96)(cid:107)(cid:113)(cid:3)(cid:87)(cid:96)(cid:112)(cid:113)(cid:96)(cid:111)(cid:107)(cid:3)(cid:64)(cid:114)(cid:112)(cid:113)(cid:111)(cid:91)(cid:104)(cid:101)(cid:91)(cid:107)(cid:3)(cid:66)(cid:108)(cid:106)(cid:109)(cid:91)(cid:107)(cid:118)(cid:3)(cid:64)(cid:65)(cid:78)(cid:3)(cid:25)(cid:24)(cid:3)(cid:24)(cid:16)(cid:18)(cid:3)(cid:21)(cid:24)(cid:18)(cid:3)(cid:16)(cid:27)(cid:23)(cid:1212)
(cid:76)(cid:96)(cid:115)(cid:96)(cid:104)(cid:3)(cid:18)(cid:18)(cid:1215)(cid:3)(cid:18)(cid:20)(cid:1251)(cid:18)(cid:22)(cid:3)(cid:84)(cid:100)(cid:96)(cid:3)(cid:68)(cid:112)(cid:109)(cid:104)(cid:91)(cid:107)(cid:91)(cid:95)(cid:96)(cid:1215)(cid:3)(cid:80)(cid:96)(cid:111)(cid:113)(cid:100)(cid:3)(cid:87)(cid:64)(cid:3)(cid:24)(cid:16)(cid:16)(cid:16)
(cid:82)(cid:96)(cid:99)(cid:101)(cid:112)(cid:113)(cid:96)(cid:111)(cid:96)(cid:95)(cid:3)(cid:64)(cid:114)(cid:95)(cid:101)(cid:113)(cid:3)(cid:66)(cid:108)(cid:106)(cid:109)(cid:91)(cid:107)(cid:118)(cid:3)(cid:78)(cid:114)(cid:106)(cid:93)(cid:96)(cid:111)(cid:3)(cid:22)(cid:24)(cid:25)(cid:22)(cid:21)(cid:23)(cid:1212)
(cid:76)(cid:101)(cid:91)(cid:93)(cid:101)(cid:104)(cid:101)(cid:113)(cid:118)(cid:3)(cid:104)(cid:101)(cid:106)(cid:101)(cid:113)(cid:96)(cid:95)(cid:3)(cid:93)(cid:118)(cid:3)(cid:91)(cid:3)(cid:112)(cid:94)(cid:100)(cid:96)(cid:106)(cid:96)(cid:3)(cid:114)(cid:107)(cid:95)(cid:96)(cid:111)(cid:3)(cid:80)(cid:111)(cid:108)(cid:97)(cid:96)(cid:112)(cid:112)(cid:101)(cid:108)(cid:107)(cid:91)(cid:104)(cid:3)(cid:83)(cid:113)(cid:91)(cid:107)(cid:95)(cid:91)(cid:111)(cid:95)(cid:112)(cid:3)(cid:76)(cid:96)(cid:99)(cid:101)(cid:112)(cid:104)(cid:91)(cid:113)(cid:101)(cid:108)(cid:107)(cid:1212)
20
21
(cid:64)(cid:95)(cid:96)(cid:104)(cid:91)(cid:101)(cid:95)(cid:96)(cid:3)(cid:3)(cid:3)(cid:3)(cid:65)(cid:111)(cid:101)(cid:112)(cid:93)(cid:91)(cid:107)(cid:96)(cid:3)(cid:3)(cid:3)(cid:3)(cid:77)(cid:96)(cid:104)(cid:93)(cid:108)(cid:114)(cid:111)(cid:107)(cid:96)(cid:3)(cid:3)(cid:3)(cid:3)(cid:78)(cid:96)(cid:116)(cid:94)(cid:91)(cid:112)(cid:113)(cid:104)(cid:96)(cid:3)(cid:3)(cid:3)(cid:3)(cid:80)(cid:96)(cid:111)(cid:113)(cid:100)(cid:3)(cid:3)(cid:3)(cid:3)(cid:83)(cid:118)(cid:95)(cid:107)(cid:96)(cid:118)
(cid:80)(cid:101)(cid:113)(cid:94)(cid:100)(cid:96)(cid:111)(cid:3)(cid:80)(cid:91)(cid:111)(cid:113)(cid:107)(cid:96)(cid:111)(cid:112)(cid:3)(cid:101)(cid:112)(cid:3)(cid:91)(cid:107)(cid:3)(cid:91)(cid:112)(cid:112)(cid:108)(cid:94)(cid:101)(cid:91)(cid:113)(cid:101)(cid:108)(cid:107)(cid:3)(cid:108)(cid:97)(cid:3)(cid:101)(cid:107)(cid:95)(cid:96)(cid:109)(cid:96)(cid:107)(cid:95)(cid:96)(cid:107)(cid:113)(cid:3)(cid:97)(cid:101)(cid:111)(cid:106)(cid:112)(cid:1212)(cid:3)
(cid:80)(cid:101)(cid:113)(cid:94)(cid:100)(cid:96)(cid:111)(cid:3)(cid:80)(cid:91)(cid:111)(cid:113)(cid:107)(cid:96)(cid:111)(cid:112)(cid:3)(cid:101)(cid:112)(cid:3)(cid:91)(cid:3)(cid:106)(cid:96)(cid:106)(cid:93)(cid:96)(cid:111)(cid:3)(cid:108)(cid:97)(cid:3)(cid:113)(cid:100)(cid:96)(cid:3)(cid:99)(cid:104)(cid:108)(cid:93)(cid:91)(cid:104)(cid:3)(cid:107)(cid:96)(cid:113)(cid:116)(cid:108)(cid:111)(cid:103)(cid:3)(cid:108)(cid:97)(cid:3)(cid:65)(cid:91)(cid:103)(cid:96)(cid:111)(cid:3)(cid:84)(cid:101)(cid:104)(cid:104)(cid:118)(cid:3)(cid:73)(cid:107)(cid:113)(cid:96)(cid:111)(cid:107)(cid:91)(cid:113)(cid:101)(cid:108)(cid:107)(cid:91)(cid:104)(cid:3)
(cid:76)(cid:101)(cid:106)(cid:101)(cid:113)(cid:96)(cid:95)(cid:1215)(cid:3)(cid:113)(cid:100)(cid:96)(cid:3)(cid:106)(cid:96)(cid:106)(cid:93)(cid:96)(cid:111)(cid:112)(cid:3)(cid:108)(cid:97)(cid:3)(cid:116)(cid:100)(cid:101)(cid:94)(cid:100)(cid:3)(cid:91)(cid:111)(cid:96)(cid:3)(cid:112)(cid:96)(cid:109)(cid:91)(cid:111)(cid:91)(cid:113)(cid:96)(cid:3)(cid:91)(cid:107)(cid:95)(cid:3)(cid:101)(cid:107)(cid:95)(cid:96)(cid:109)(cid:96)(cid:107)(cid:95)(cid:96)(cid:107)(cid:113)(cid:3)(cid:104)(cid:96)(cid:99)(cid:91)(cid:104)(cid:3)(cid:96)(cid:107)(cid:113)(cid:101)(cid:113)(cid:101)(cid:96)(cid:112)(cid:1212)
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FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
ABN 80 096 870 978
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
Key Audit Matter
How our audit addressed the key audit matter
Recoverability of non-current assets
Refer to Note 8 and 9 to the financial report
The Group’s accounting policy is that subject
to certain criteria being met, as outlined in
AASB 136 Impairment of Assets (“AASB 136”),
expenditure relating to the development of the
Group’s product offerings is capitalised.
AASB 136 requires an entity to test non-
current assets where there are indicators of
impairment.
The evaluation of the recoverable amount of
the Group’s cash generating units (“CGUs”)
requires significant judgement in determining
the key assumptions and estimates, including
but not limited to:
forecast future cash flows
(cid:121) discount factors; and
(cid:121)
supporting the expected future cash flows of
the business and the utilisation of the relevant
assets.
Due to the significance to the Group’s financial
report and the level of judgment involved in
assessing the recoverable amount of the
Group’s CGUs, we consider this to be a key
audit matter.
Share based payments
Refer to Note 2.1.4, Note 2.10 and Note 14.5.1
to the financial report
During the year ended 30 June 2020, the
Group issued the following options:
(cid:121) 9,000,000 to Directors; and
(cid:121) 2,000,000 to employees.
Under Australian Accounting Standards, equity
settled awards are measured at fair value on
grant date taking into consideration the
probability of the vesting conditions (if any)
attached. This amount is recognised as an
expense either immediately if there are no
vesting conditions, or over the vesting period if
there are vesting conditions.
Due to the significance to the Group’s financial
report and the level of judgment involved in
determining the valuation of the share based
payments, we consider the Group’s calculation
Our procedures included, amongst others:
Obtaining an understanding of and
evaluating the processes and controls
associated with the assessment of the
Group’s CGUs.
Assessing management’s determination of
the Group’s CGUs based on our
understanding of the nature of the Group’s
business and the economic environment.
Critically reviewing and challenging
management’s assessment of impairment
indicators.
Critically assessing and challenging the
Group’s judgements in respect of the key
assumptions and estimates used to
determine the recoverable value of the
Group’s CGUs in accordance with AASB
136.
Testing the mathematical accuracy of the
model used in assessing the recoverable
amount of the Group’s CGUs.
Assessing the adequacy of the disclosures
included within the financial report.
Our procedures included, amongst others:
Obtaining an understanding of and
evaluating the processes and controls
associated with the preparation of the
valuation model used to assess the fair value
of share-based payments, including those
relating to volatility of the underlying security
and the appropriateness of the model used
for valuation.
Critically evaluating and challenging the
methodology and assumptions of
management in their preparation of valuation
models, agreeing inputs to internal and
external sources of information.
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FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
ABN 80 096 870 978
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
of the share based payment expense to be a
key audit matter.
Measurement of contingent consideration
Refer to Note 21 to the financial report
During the year ended 30 June 2019, the
Group acquired 95.71% of the issued share
capital of Frugl Group Limited.
Consideration for the acquisition included a
contingent element which becomes payable if
certain milestones are achieved.
AASB 3 Business Combinations requires
contingent consideration that is within the
scope of AASB 9 Financial Instruments to be
measured at fair value at each reporting date
and changes in fair value to be recognised in
profit or loss.
Determining the fair value of the contingent
consideration as at the reporting date requires
significant judgment in determining the key
assumptions and estimates, including but not
limited to:
(cid:121)
the assigned probability of the four
milestones in the sale agreement being
achieved.
Due to the significance to the Group’s financial
report and the level of judgment involved in
determining the fair value of the contingent
consideration as at the reporting date, we
consider this to be a key audit matter.
Other Information
Assessing the appropriateness of share-
based payments expensed during the year
pursuant to the requirements of Australian
Accounting Standards.
Assessing the adequacy of the disclosures in
the financial report including the Group’s
accounting policy for compliance with the
requirements of AASB 2 Share-based
Payments.
Our procedures included, amongst others:
Obtaining an understanding of and
evaluating the processes and controls
associated with the determination of the
likelihood of achieving the revenue for each
of the four milestones in the sale agreement
and hence the fair value of the contingent
consideration as at the reporting date.
Critically evaluating the Group’s judgments in
the determination of the likelihood of
achieving the revenue for each of the four
milestones in the sale agreement and hence
the calculation of fair value of the contingent
consideration as at the reporting date.
Checking the mathematical accuracy of
calculations associated with the calculation of
fair value of the contingent consideration as
at the reporting date.
Assessing the classification of the contingent
consideration as a current or non-current
liability.
Assessing the adequacy of the disclosures
included within the financial report.
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
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FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
ABN 80 096 870 978
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the Directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the Directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
(cid:121)
(cid:121)
(cid:121)
(cid:121)
(cid:121)
(cid:121)
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion. We communicate with the Directors regarding, among other
2423
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FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
ABN 80 096 870 978
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FRUGL GROUP LIMITED (FORMERLY FAMILY INSIGHTS GROUP LIMITED)
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 4 to 9 of the Directors’ report for the
year ended 30 June 2020. In our opinion, the Remuneration Report of Frugl Group Limited (formerly
Family Insights Group Limited), for the year ended 30 June 2020, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The Directors of the Group 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.
PITCHER PARTNERS BA&A PTY LTD
JOANNE PALMER
Executive Director
Perth, 30 September 2020
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CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2020
Notes
2020
$
2019
$
3.1
3.2
21
9.1
7.1
14.5.1
8.2
9.1
Revenue from contracts with customers
R+D Tax Rebate
Other income
Fair value gain on contingent consideration
Reversal of prior period impairment
Total income
Research and development costs, materials and consultants
Directors’ fees, salaries, superannuation and consulting expenses
Depreciation and amortisation expenses
Public company costs, fees, share registry, shareholder expenses
Occupancy expenses
Employee expenses
Legal fees
Audit fees
Insurances
Interest expenses
Foreign exchange gain
Other expenses from ordinary activities
Corporate fees
Share-based payments
Impairment expense – goodwill
Impairment expense – development costs
Impairment expense – trade receivable
Loss before income tax expense
Income tax (benefit)/expense
Loss after income tax expense from continuing operations
Loss after income tax expense for the year attributable to the owners of
the Company
Other comprehensive income, net of tax:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive loss for the year is attributable to:
Owners of the Company
Non-controlling interests
Loss per share
Basic and diluted loss per share (cents per share)
5,772
722,082
142,731
326,371
124,890
1,321,846
(118,059)
(680,231)
(57,749)
(64,200)
(32,516)
(832,245)
(223,462)
(87,584)
(36,978)
(45,060)
-
(60,860)
(169,942)
(159,441)
-
(119,113)
-
(1,365,594)
-
(1,365,594)
10,887
673,234
8,099
-
542,081
1,234,301
(525,108)
(562,183)
(78,563)
(91,098)
(66,360)
(1,277,425)
(104,750)
(52,540)
(36,712)
(19,035)
5,751
(251,136)
(120,000)
(323,811)
(622,699)
(287,100)
(4,185)
(3,182,653)
-
(3,182,653)
(1,365,594)
(3,182,653)
(17,800)
(1,383,394)
(4,772)
(3,187,425)
(1,350,676)
(14,918)
(1,365,594)
(3,157,934)
(24,719)
(3,182,653)
(1,368,476)
(14,918)
(1,383,394)
(3,162,706)
(24,719)
(3,187,425)
4.1
(0.02)
(0.08)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes, which form an integral part of the final annual report.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 25
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
as at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Plant and equipment
Development costs
Intangible Assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Contingent consideration
Employee entitlements
Total current liabilities
Non-current liabilities
Contingent consideration
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Issued capital
Reserves
Accumulated losses
Non-controlling interest
Total equity
Notes
19.2
6
7
9
8
10
11
21
21
12
13
2020
$
2019
$
330,675
35,822
366,497
-
-
-
-
366,497
447,564
195,600
186,635
66,762
896,561
192,653
82,582
275,235
-
-
-
-
275,235
576,751
-
-
77,521
654,272
37,327
37,327
933,888
(567,391)
550,333
550,333
1,204,605
(929,370)
32,244,951
1,230,000
(34,002,705)
(39,637)
(567,391)
30,659,019
1,522,844
(33,086,514)
(24,719)
(929,370)
The Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes, which form an integral part of the final annual report.
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FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the financial year ended 30 June 2020
Balance at 1 July 2018
Consolidated loss for the year
Foreign currency translation effect
Total comprehensive loss for the year
Shares/Options issued during the year
Share/Option issue costs
Reversal of lapsed options
Balance at 30 June 2019
Balance at 1 July 2019
Consolidated loss for the year
Foreign currency translation effect
Total comprehensive loss for the year
Shares/Options issued during the year
Share/Option issue costs
Reversal of lapsed performance shares
Balance at 30 June 2020
Share
Capital
$
Option Reserve
$
Performance
Share
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Non-Controlling
Interests
$
Total
$
28,375,771
75,508
434,485
22,572
(29,257,340)
-
(349,004)
-
-
-
-
-
-
2,599,065
(315,817)
-
30,659,019
323,811
-
671,240
1,070,559
-
-
-
-
-
-
434,485
-
(4,772)
(4,772)
-
-
-
17,800
(3,157,934)
-
(3,157,934)
-
-
(671,240)
(33,086,514)
(24,719)
-
-
-
-
-
(24,719)
(3,182,653)
(4,772)
(3,187,425)
2,922,876
(315,817)
-
(929,370)
30,659,019
1,070,559
434,485
17,800
(33,086,514)
(24,719)
(929,370)
-
-
-
-
-
-
-
-
-
1,660,000
(74,068)
-
32,244,951
159,441
-
-
1,230,000
-
-
(434,485)
-
-
(17,800)
(17,800)
-
-
-
-
(1,350,676)
-
(1,350,676)
-
-
434,485
(34,002,705)
(14,918)
-
-
-
-
-
(39,637)
(1,365,594)
(17,800)
(1,383,394)
1,819,441
(74,068)
-
(567,391)
The Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes, which form an integral part of the final annual report.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 27
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CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2020
Cash flows from operating activities
Payments to suppliers and employees
Receipts from customers
Government grants
Interest received
Interest paid
R&D Tax Rebate
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Acquisition of Frugl, net of cash acquired
Payments for intangible assets; R&D costs
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issues of shares
Payments of share issue costs
Proceeds from borrowings
Payment for principal portion of lease liabilities
Payments for early termination of lease
Net cash generated by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Foreign exchange effects
Cash and cash equivalents at the end of the year
Notes
2020
$
2019
$
(2,393,064)
5,825
113,770
2,047
(4,385)
846,972
(1,428,835)
(3,174,262)
11,871
-
7,305
(19,035)
1,215,315
(1,958,806)
-
-
(119,113)
(119,113)
(22,179)
(105,935)
(287,100)
(415,214)
1,660,000
(74,068)
195,600
(60,624)
(34,938)
1,685,970
138,022
192,653
-
330,675
2,599,065
-
-
-
(315,817)
2,283,248
(90,772)
288,197
(4,772)
192,653
19
7
21
9.1
12.1
12.1
11
26
26
19.2
The Consolidated Statement of Cash Flows should be read in conjunction with the
accompanying notes, which form an integral part of the final annual report.
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NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
for the financial year ended 30 June 2020
1. GENERAL INFORMATION
Frugl Group Limited (the Group and controlled entities) is a limited company incorporated in
Australia. The principal activity in the course of the financial year was the development, compliance
and commercialisation of the Frugl application.
2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements are general purpose financial statements which have
been prepared in accordance with the Corporations Act 2001, Accounting Standards and
Interpretations, and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group and its
controlled entities (collectively the Group).
The financial statements were authorised for issue by the directors on 30 September 2020.
2.1. BASIS OF PREPARATION
The financial statements comprise the consolidated financial statements of the Group. For the
purposes of preparing the consolidated financial statements, the Group is a for-profit entity. Material
accounting policies adopted in the preparation of these financial statements are presented below.
They have been consistently applied unless otherwise stated.
2.1.1. Statement of compliance
These financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) and International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB), and the Corporations Act 2001
(Cth).
2.1.2. Historical cost convention
The financial report has been prepared on the accruals basis and under the historical cost
convention.
2.1.3. Going concern
The financial report has been prepared on the going concern basis which contemplates continuity
of normal business activities and realisation of assets and settlement of liabilities in the ordinary
course of business. The Directors recognise that the going concern of the Group is dependent upon,
managing its costs and raising additional funds through future capital raisings and research &
development claims. For the year ended 30 June 2020 the Group incurred a net loss of $1,365,594
(2019: $3,182,653), a net operating cash outflow of $1,428,835 (2019: $1,958,806), and has net current
liabilities of $530,064 (2019: $379,037) and net liabilities of $567,391 (2019: $929,370).
The Directors have reviewed the business outlook, cash flow forecasts and immediate capital
requirements and are of the opinion that the use of the going concern basis of accounting is
appropriate as the Directors believe the Group will be able to pay its debts as and when they fall
due.
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In forming this view the Directors have taken into consideration the following:
• On 22 September 2020, the Group announced its intention to raise $1,485,000 through a two-
tranche placement to unrelated sophisticated and professional investors by issuing a total of
49,500,000 fully paid ordinary shares in the Company at $0.03 per share (Share)(Placement).
Tranche 1 of the Placement was completed on 25 September 2020 raising $742,500 before costs.
The Group has received confirmation from the appointed broker that commitments of $742,500
have been received from unrelated sophisticated and professional investors in respect of
tranche 2 of the Placement. Completion of tranche 2 of the Placement is subject to shareholder
approval which is expected to be received at the AGM in November 2020.
In addition to the Placement, Mr Mathew Walker, a Company director, intends to seek
Shareholder approval at the AGM in November 2020 for the issue to him of up to 10,000,000
Shares on the same terms as the Placement, to raise a further $300,000;
•
• Research and development expenditure projects are undertaken to which the Group will seek
to apply for the R&D tax incentive rebate (R&D Rebate)at 43.5%. On the basis that the Group’s
expenditure from 1 July 2019 to 30 June 2020 is fully eligible, the Group expects to receive an
R&D rebate of approximately $500,000 in October 2020; and
• The Group’s ability to reduce operational expenditure as and when required including, but not
limited to, reviewing all expenditure for deferral or elimination, until the Group has sufficient funds
to meet its liabilities as and when they fall due.
The Directors have carefully assessed the uncertainties relating to the likelihood of securing
additional funding, the Group’s ability to effectively manage their expenditures and cash flows from
operations. This assessment contemplates the successful launch of Frugl Version 2.0 which is
anticipated to drive growth in the Group’s shopper behaviour database whilst facilitating the
commercialisation of retail and customer analytics capabilities.
Should the Group not be successful in obtaining adequate funding, or adequately reducing
operational expenditure as required, there may be material uncertainty as to the ability of the
Group to continue as a going concern and it may be required to realise its assets and discharge its
liabilities other than in the ordinary course of business.
2.1.4. Share Based Payments
The Group measures the cost of equity-settled transactions with suppliers and employees by
reference to the fair value of the goods or services received provided this can be estimated reliably.
If a reliable estimate cannot be made the value of the goods or services is determined indirectly by
reference to the fair value of the equity instrument granted. The fair value of the equity instruments
granted is determined using the Black-Scholes model taking into account the terms and conditions
upon which the instruments were granted. The accounting estimates and assumptions relating to
equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity.
2.2. PRINCIPLES OF CONSOLIDATION
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into
the consolidated financial statements as well as their results for the year then ended. Where
controlled entities have entered (left) the Consolidated Group during the year, their operating
results have been included (excluded) from the date control was obtained (ceased).
2.2.1. Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date,
which is the date on which control is transferred to the Group. Control exists when the Group is
exposed, or has rights, to variable returns from its involvement with another entity and has the ability
to affect those returns through its power over the entity.
The Group measures goodwill at the acquisition date as:
the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interests in the acquisition; plus
•
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•
•
if the business combination is achieved in stages, the fair value of the existing equity interest in
the acquiree;
less
the net recognised amount of the identifiable assets acquired, and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity
securities, that the Group incurs in connection with a business combination are expensed as
incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the
contingent consideration is classified as equity, it is not remeasured, and settlement is accounted
for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration
are recognised in profit or loss.
2.2.2. Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the
date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the
policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are
allocated to the non-controlling interests even if doing so causes the non-controlling interests to
have a deficit balance.
2.2.3. Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-
controlling interests and the other components of equity related to the subsidiary. Any surplus or
deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in
the previous subsidiary, then such interest is measured at fair value at the date control is lost.
Subsequently it is accounted for as an equity-accounted investee or put through profit and loss or
through other comprehensive income depending on the election adopted.
2.2.4. Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
2.2.5. Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are
presented in Australian dollars which is the parent entity's functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measured at historical cost continue to be carried
at the exchange rate at the date of the transaction. Non-monetary items measured at fair value
are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss
except where deferred in equity as a qualifying cash flow or net investment hedge.
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Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the gain or loss is directly recognised in other
comprehensive income, otherwise the exchange difference is recognised in profit or loss.
Group companies and foreign operations
The financial results and position of foreign operations whose functional currency is different from
the Group's presentation currency are translated as follows:
• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
•
•
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the
Group's foreign currency translation reserve in the statement of financial position. These differences
are recognised in profit or loss in the period in which the operation is disposed, or the Board approves
the discontinuation of the foreign currency operations.
2.3.
TAXATION
2.3.1. Tax Consolidation
The Group is wholly-owned Australian resident entities have formed a tax-consolidated group with
effect from 1 July 2016 and are therefore taxed as a single entity from that date. The head entity
within the tax-consolidated group is Frugl Group Limited. As Frugl is not a wholly owned subsidiary it
cannot form part of the tax-consolidated group. The Group owns 95.71% of Frugl Group Limited.
Current tax liabilities and assets and deferred tax assets arising from the unused tax losses and
relevant tax credits of the members of the tax-consolidated group are recognised by the Group (as
head entity in the tax-consolidated group).
2.3.2. Income tax
The income tax expense/(income) for the year comprises current income tax expense/(income)
and deferred tax expense/(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at reporting
date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to
(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss
when the tax relates to items recognised outside profit or loss.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
tax assets also result where amounts have been fully expensed but future tax deductions are
available. No deferred income tax will be recognised from the initial recognition of an asset or
liability, excluding a business combination, where there is no effect on accounting or taxable profit
or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at reporting date. Their measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits
of the deferred tax asset can be utilised.
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Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of
set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur
in future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
2.3.3. 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 taxation authority. 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 consolidated statement of financial position are shown inclusive
of GST.
The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included
as a current asset or liability in the consolidated statement of financial position.
Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for
the GST component of investing and financing activities, which are disclosed as operating cash
flows.
2.3.4. Fair Value
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-
recurring basis, depending on the requirements of the applicable AASB.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a
liability in an orderly unforced transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing
information is used to determine fair value. Adjustments to market values may be made having
regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities
that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset
or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or,
in the absence of such a market, the most advantageous market available to the entity at the end
of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or
minimises the payments made to transfer the liability, after taking into account transaction costs
and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's
ability to use the asset in its highest and best use or to sell it to another market participant that would
use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-
based payment arrangements) may be valued, where there is no observable market price in
relation to the transfer of such financial instruments, by reference to observable market information
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where such instruments are held as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the respective note to the financial
statements.
Valuation techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which
sufficient data is available to measure fair value. The availability of sufficient and relevant data
primarily depends on the specific characteristics of the asset or liability being measured. The
valuation techniques selected by the Group are consistent with one or more of the following
valuation approaches:
• Market approach: valuation techniques that use prices and other relevant information
•
generated by market transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and
expenses into a single discounted present value.
• Cost approach: valuation techniques that reflect the current replacement cost of an asset at its
current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would
use when pricing the asset or liability, including assumptions about risks. When selecting a valuation
technique, the Group gives priority to those techniques that maximise the use of observable inputs
and minimise the use of unobservable inputs. Inputs that are developed using market data (such as
publicly available information on actual transactions) and reflect the assumptions that buyers and
sellers would generally use when pricing the asset or liability are considered observable, whereas
inputs for which market data is not available and therefore are developed using the best
information available about such assumptions are considered unobservable.
2.4. PLANT AND EQUIPMENT
2.4.1. Recognition and measurement
Items of plant and equipment are measured on the cost basis and carried at cost less accumulated
depreciation (see below) and impairment losses (see accounting Note 2.7 Impairment of non-
financial assets).
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly
attributable to bringing the asset to a working condition for its intended use, and the costs of
dismantling and removing the items and restoring the site on which they are located, and an
appropriate proportion of production overheads.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in
excess of the recoverable amount from these assets.
Where parts of an item of plant and equipment have different useful lives, they are accounted for
as separate items of plant and equipment.
2.4.2. Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits embodied within the part will flow to
the Group and its cost can be measured reliably. Any costs of the day-to-day servicing of plant and
equipment are recognised in the income statement as an expense as incurred.
2.4.3. Depreciation
Depreciation is charged to profit or loss on a diminishing value or straight-line basis over the asset's
useful life to the Group commencing from the time the asset is held ready for use.
Depreciation rates and methods are reviewed annually for appropriateness. The depreciation rates
using the straight-line method for the current and comparative period are:
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Class of fixed asset
Plant and Equipment
Motor Vehicles
Office Equipment
Furniture and Fittings
Computer Equipment
Depreciation rate (%)
20
20
20-40
20
40-100
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposal of an item of plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of plant and equipment and are recognised net
within “other income” in profit or loss.
2.5. RESEARCH & DEVELOPMENT EXPENDITURE
An intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if, all of the following has been demonstrated:
•
the technical feasibility of completing the intangible asset so that it will be available for use
or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
•
•
• how the intangible asset will generate probable future economic benefits;
•
the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
•
Subsequent to initial recognition, capitalised development costs are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis as intangible
assets that are acquired separately. Amortisation of the asset begins when development is
complete and the asset is available for use. It is amortised over the period of expected future
benefit, which will normally be the useful life of the asset. During the period of development, the
asset is tested for impairment annually.
2.6. BUSINESS COMBINATIONS AND GOODWILL
Business combinations are accounted for using the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration transferred, which is measured at acquisition
date fair value, and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree at
fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related
costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at
the acquisition date. Contingent consideration classified as equity is not remeasured and its
subsequent settlement is accounted for within equity. Contingent consideration classified as an
asset or liability that is a financial instrument and within the scope of AASB 9 Financial Instruments, is
measured at fair value with the changes in fair value recognised in the statement of profit or loss in
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accordance with AASB 9. Other contingent consideration that is not within the scope of AASB 9 is
measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests and any previous interest held
over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it
has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition date. If the
reassessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For
the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units that are expected to
benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are
assigned to those units.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation
within that unit is disposed of, the goodwill associated with the disposed operation is included in the
carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed
in these circumstances is measured based on the relative values of the disposed operation and the
portion of the cash-generating unit retained.
2.7.
IMPAIRMENT OF NON-FINANCIAL ASSETS
The carrying amounts of the Group's non-financial assets, other than deferred tax assets (see
accounting Note 2.3.2) are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset's recoverable amount is
estimated.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that
generates cash flows that largely are independent from other assets and groups. Impairment losses
are recognised in profit or loss, unless the asset has previously been revalued, in which case the
impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess
recognised through profit or loss. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the units and then
to reduce the carrying amount of the other assets in the unit on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs
to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to
which the asset belongs.
Impairment losses recognised in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation and amortisation, if no impairment loss had
been recognised.
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Where the Group receives a R&D tax rebate and the expenditure to which it relates has been
previously capitalised, the R&D tax rebate is offset against the capitalised expenditure resulting in
an equivalent impairment reversal for the period.
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2.8.
FINANCIAL INSTRUMENTS
2.8.1. Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument. For financial assets, this is equivalent to the date that the
Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is
adopted).
Financial instruments are initially measured at fair value adjusted for transaction costs, except where
the instrument is classified as fair value through profit or loss, in which case transaction costs are
immediately recognised as expenses in profit or loss.
The Group’s accounting policy for financial instruments is detailed as follows:
Financial Assets
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost,
fair value through other comprehensive income (OCI), and fair value through profit and loss.
The classification of financial instruments at initial recognition depends on the financial asset’s
contractual cashflow characteristics and the Group’s business model for managing them. With the
exception of the Group’s trade receivables that do not contain a significant financing component,
the Group initially measures the financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit and loss, transaction costs. Trade receivables that do not contain a
significant financing component are measured at the transaction price determined in accordance
with the Group’s accounting policy for revenue recognition.
For trade receivables, the Group applies a simplified approach in calculating expected credit
losses. Therefore, the Group does not track changes in credit risk, but instead recognises a loss
allowance based on lifetime expected credit losses at each reporting date. In determining the
provision required, the Group utilises its historical credit loss experience, adjusted only where
appropriate for forward-looking factors specific to the debtors and economic environment.
2.8.2. Classification of financial assets
Financial assets recognised by the Group are subsequently measured in their entirety at either
amortised cost or fair value, subject to their classification and whether the Group irrevocably
designates the financial asset on initial recognition at fair value through other comprehensive
income (FVtOCI) in accordance with the relevant criteria in AASB 9.
Financial assets not irrevocably designated on initial recognition at FVtOCI are classified as
subsequently measured at amortised cost, FVtOCI or fair value through profit or loss (FVtPL) on the
basis of both:
a) the Group’s business model for managing the financial assets; and
b) the contractual cash flow characteristics of the financial asset.
2.8.3. Classification of financial liabilities
Contingent consideration payable by the Group for the acquisition of a business, and financial
liabilities designated at FVtPL, are subsequently measured at fair value.
All other financial liabilities recognised by the Group are subsequently measured at amortised cost.
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2.8.4. Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement
of the loss allowance depends upon the Group’s assessment at the end of each reporting period
as to whether the financial instrument's credit risk has increased significantly since initial recognition,
based on reasonable and supportable information that is available, without undue cost or effort to
obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12
months. Where a financial asset has become credit impaired or where it is determined that credit
risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured based on the probability
weighted present value of anticipated cash shortfalls over the life of the instrument discounted at
the original effective interest rate.
2.8.5. Trade and other receivables
Trade and other receivables arise from the Group’s transactions with its customers and are normally
settled within 30 days.
Consistent with both the Group’s business model for managing the financial assets and the
contractual cash flow characteristics of the assets, trade and other receivables are subsequently
measured at amortised cost.
2.9. EMPLOYEE BENEFITS
2.9.1. Short-term benefits
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be
settled wholly within 12 months of the reporting date represent present obligations resulting from
employees' services provided to the reporting date and are calculated at undiscounted amounts
based on remuneration wage and salary rates that the Group expects to pay at the reporting date
including related on-costs, such as workers’ compensation insurance and payroll tax.
Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or
subsidised goods and services, are expensed based on the net marginal cost to the Group as the
benefits are taken by the employees.
2.9.2. Other long-term benefits
The Group's obligation in respect of long-term employee benefits other than defined benefit plans
is the amount of future benefit that employees have earned in return for their service in the current
and prior periods plus related on-costs; that benefit is discounted to determine its present value,
and the fair value of any related assets is deducted. The discount rate is the Reserve Bank of
Australia's cash rate at the report date that have maturity dates approximating the terms of the
Group’s obligations. Any actuarial gains or losses are recognised in profit or loss in the period in
which they arise.
2.9.3. Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier
of: (a) the date when the Group can no longer withdraw the offer for termination benefits; and (b)
when the Group recognises costs for restructuring pursuant to AASB 137 Provisions, Contingent
Liabilities and Contingent Assets and the costs include termination benefits. In either case, unless
the number of employees affected is known, the obligation for termination benefits is measured on
the basis of the number of employees expected to be affected. Termination benefits that are
expected to be settled wholly before 12 months after the annual reporting period in which the
benefits are recognised are measured at the (undiscounted) amounts expected to be paid. All
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other termination benefits are accounted for on the same basis as other long-term employee
benefits.
2.9.4. Equity-settled compensation
The Group operates an employee share option plan. The fair value of options granted is recognised
as an employee expense with a corresponding increase in equity. The fair value is measured at
grant date and spread over the period during which the employees become unconditionally
entitled to the options. The fair value of the options granted is measured using the Black-Scholes
pricing model, taking into account the terms and conditions upon which the options were granted.
The amount recognised is adjusted to reflect the actual number of share options that vest except
where forfeiture is only due to market conditions not being met.
2.10. SHARE-BASED PAYMENTS TRANSACTIONS
Under AASB 2 Share-Based Payments, the Group must recognise the fair value of options granted
to directors, employees and consultants as compensation as an expense on a pro-rata basis over
the vesting period in profit or loss with a corresponding adjustment to equity.
2.11. PROVISIONS
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will results, and that outflow
can be reliably measured.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, when appropriate, the risks
specific to the liability.
2.12. CONTINGENT LIABILITY
Contingent liabilities are not recognised but are disclosed in the consolidated financial statements,
unless the possibility of settlement is remote, in which case no disclosure is made. If settlement
becomes probable and the amount can be reliably estimated, a provision is recognised.
The amount disclosed as a contingent liability is the best estimate of the settlement.
2.13. EARNINGS PER SHARE
2.13.1. Basic earnings per share
Basic earnings per share is determined by dividing net profit or loss after income tax attributable to
members of the Group, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.
2.13.2. Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account the after income tax effect of interest and other financing costs associated
with dilutive potential ordinary shares and the weighted average number of shares assumed to
have been issued for no consideration in relation to dilutive potential ordinary shares. When the
Group makes a loss, the number of shares is not adjusted by the potential ordinary shares as the
impact would be to reduce the loss per share.
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2.14. REVENUE AND OTHER INCOME
The Group is in the business of sale and distribution and marketing of its suite of cyber safety and
grocery comparison products and services. Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the Customer at an amount that reflects
the consideration to which the Group expects to be entitled in exchange for those goods or
services.
The Group’s revenue accounting policy is detailed below:
Subscription revenues
Subscription/service revenue is recognised over time over the life of the service contract as the
Groups service obligations under the contract are satisfied.
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Sales of Books
Revenue from the sale of books is recognised at the point in time when control of the asset is
transferred to the customer, generally on delivery of the book. The Group considers whether there
are other promises in the contract that are separate performance obligations to which a portion of
the transaction price needs to be allocated (e.g. customer loyalty points). In determining the
transaction price for the sale of equipment, the Group considers the effects of variable
consideration, the existence of significant financing components, non-cash consideration, and
consideration payable to the customer (if any).
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2.14.1. Government grants
Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense
item, it is recognised as income on a systematic basis over the periods that the related costs, for
which it is intended to compensate, are expensed. When the grant relates to an asset, it is
recognised as income in equal amounts over the expected useful life of the related asset.
The Group’s income from the Australian Government’s Research & Development (R&D) Tax
Incentive and the Australian Government’s COCID-19 stimulus packages is accounted for as a
government grant.
2.14.2.
Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Interest income
2.15. SEGMENT REPORTING
An operating segment is a component of the Group that engages in business activities from which
it may earn revenues and incur expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. The operations of the business are regularly
reviewed by the Group's Managing Director to determine if segment reporting is required.
The Group operates in one industry and develops a single technology.
The Group solely operates within the geographical location of Australia on the basis NextGen
Networks Limited, incorporated in New Zealand, is 100% dormant.
2.16. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Management discusses with the Board the development, selection and disclosure of the Group's
critical accounting policies and estimates and the application of these policies and estimates. The
estimates and judgements that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
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2.16.1. Key Estimate - Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation, are based
on the best estimates of directors. These estimates take into account both the financial
performance and position of the Group as they pertain to current income taxation legislation, and
the directors understanding thereof. No adjustment has been made for pending or future taxation
legislation. The current income tax position represents that directors' best estimate, pending an
assessment by tax authorities in relevant jurisdictions. Refer Note 5 Income Tax.
2.16.2. Key Estimate - Intangible assets and amortisation
Intangible assets acquired as part of a business combination, other than goodwill, are initially
measured at their fair value at the date of the acquisition. Intangible assets acquired separately
are initially recognised at cost. Indefinite life intangible assets are not amortised and are
subsequently measured at cost less any impairment. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment. The gains or losses recognised in profit or
loss arising from the derecognition of intangible assets are measured as the difference between net
disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of
finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption
or useful life are accounted for prospectively by changing the amortisation method or period.
Research costs are expensed in the period in which they are incurred. Development costs are
capitalised when it is probable that the project will be a success considering its commercial and
technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources; and
intent to complete the development and its costs can be measured reliably. Capitalised
development costs are amortised on a straight-line basis over the period of their expected benefit,
being their finite life of four years.
Significant costs associated with software are deferred and amortised on a straight-line basis over
the period of their expected benefit, being their finite life of four years.
The purchase consideration of Frugl Group Limited was using the estimate of likelihood of achieve
revenue milestone set out in the acquisition announcement.
2.16.3. Key Estimate - Contingent Consideration
Contingent consideration, resulting from the acquisition of Frugl Group Limited, was valued at fair
value at the acquisition date as part of the transaction. The contingent consideration meets the
definition of a financial liability and is therefore subsequently remeasured to fair value at each
reporting date. The determination of the fair value of the deferred consideration at each reporting
date is based on a probability weighted payout approach factoring in the likelihood of achieving
the revenue targets as disclosed on Note 21.
2.16.4. Key Estimate – Provision for R&D
Where the Group receives the Australian Government’s R&D Tax Incentive, the Group accounts for
the amount refundable on accrual basis. In determining the amount of the R&D provision at year
end, there is an estimation process utilising a conservative approach. Any changes to the estimation
are recorded in the subsequent financial year.
2.16.5. Share-Based Payments
Goods or services received or acquired in a share-based payment transaction are recognised as
an increase in equity if the goods or services were received in an equity-settled share-based
payment transaction or as a liability if the goods and services were acquired in a cash settled share-
based payment transaction.
For equity-settled share-based transactions, goods or services received are measured directly at
the fair value of the goods or services received provided this can be estimated reliably. If a reliable
estimate cannot be made the value of the goods or services is determined indirectly by reference
to the fair value of the equity instrument granted using a Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price
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at grant date and expected price volatility of the underlying share, the expected dividend yield
and the risk-free interest rate for the term of the option.
Transactions with employees and others providing similar services are measured by reference to the
fair value at grant date of the equity instrument granted using a Black-Scholes option pricing model.
2.16.6. Impairment of Assets
In determining the recoverable amount of assets, in the absences of quoted market prices,
estimations are made regarding the present value of future cash flows using asset specific discount
rates and the recoverable amount of the asset is determined. Value-in-use calculations performed
in assessing recoverable amounts incorporate a number of key estimates.
Impairment of receivables from contracts with customers and other receivables
The Group applies the simplified approach under AASB 9 to measuring the allowance for credit
losses for both receivables from contracts with customers and contract assets. Under the AASB 9
simplified approach, the Group determines the allowance for credit losses for receivables from
contracts with customers and contract assets on the basis of the lifetime expected credit losses of
the instrument. Lifetime expected credit losses represent the expected credit losses that are
expected to result from default events over the expected life of the financial asset.
The Group determines expected credit losses based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the financial asset as well as current and future expected
economic conditions relevant to the financial asset. When material, the time value of money is
incorporated into the measurement of expected credit losses. There has been no change in the
estimation techniques or significant assumptions made during the reporting period.
2.16.7. Identifying performance obligations
The Group provides users access to its cyber security software application Frugl (App), which users
can download from the Apple App Store or Google Play Store (Application Stores). Users can
download the App via Application Stores and subscribe to the platform on a month-by-month basis.
The subscription is a promise from the Group to the user that they will be allowed access to the App
for the month. Granting and supporting the access to the App is the sole performance obligation
for the Group.
The timing of revenue recognition for the Group focuses on the successful subscription to the App
by the user. Once the user has accepted the terms and conditions of the App and successfully
subscribes, revenue is recognised.
2.17. NEW, REVISED OR AMENDING ACCOUNTING STANDARDS AND
INTERPRETATIONS ADOPTED
The Group has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for
the current reporting period. Any new, revised or amending AASBs that are not yet mandatory have
not been early adopted. The adoption of these AASBs did not have any significant impact on the
financial performance or position of the Group.
2.18. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED
2.18.1. New Accounting Standards adopted
The Group has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the AASB that are mandatory for the current reporting period. AASB 16
Leases became mandatorily effective on 1 January 2019. Accordingly, this standard applies to this
set of consolidated financial statements.
The accounting policies adopted by the Group are consistent with those of the previous financial
period, except as follows:
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AASB 16 Leases
AASB 16 replaced AASB 117 Leases (AASB 17) and introduces a single lessee accounting model that
will require a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value. Right-of-use assets are initially
measured at their cost and lease liabilities are initially measured on a present value basis.
Subsequent to initial recognition:
(a)
right-of-use assets are accounted for on a similar basis to non-financial assets, whereby the
right-of-use asset is accounted for in accordance with a cost model unless the underlying
asset is accounted for on a revaluation basis, in which case if the underlying asset is:
i.
investment property, the lessee applies the fair value model in AASB 140: Investment
Property to the right-of-use asset; or
ii. property, plant or equipment, the lessee can elect to apply the revaluation model in
AASB 116: Property, Plant and Equipment to all of the right-of-use assets that relate to that
class of property, plant and equipment; and
(b)
lease liabilities are accounted for on a similar basis as other financial liabilities, whereby interest
expense is recognised in respect of the liability and the carrying amount of the liability is
reduced to reflect lease payments made.
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly,
under AASB 16 a lessor would continue to classify its leases as operating leases or finance leases
subject to whether the lease transfers to the lessee substantially all of the risks and rewards incidental
to ownership of the underlying asset, and would account for each type of lease in a manner
consistent with the current approach under AASB 117.
In accordance with the transition requirements of AASB 16, the Group has elected to apply AASB
16 retrospectively to those contracts that were previously identified as leases under the predecessor
standard, with the cumulative effect of initially applying the new standard recognised at the
beginning of the current reporting period (i.e., at 1 July 2019). Accordingly, comparative information
has not been restated.
The application of AASB 16 resulted in the recognition of a right-of-use asset with an aggregate
carrying amount of $89,832 (referred to in these financial statements as “Right-of-use asset”) and a
corresponding lease liability as at 1 July 2019. The weighted average incremental borrowing rate
applied in the calculation of the initial carrying amount of lease liabilities is 8%.
Further details of the Group’s accounting policy for leases, for the year ended 30 June 2020 follows.
Lease assets
At the commencement date of a lease (other than leases of 12-months or less and leases of low
value assets), the Group recognises a lease asset representing its right to use the underlying asset
and a lease liability representing its obligation to make lease payments.
Lease assets are initially recognised at cost, comprising the amount of the initial measurement of
the lease liability, any lease payments made at or before the commencement date of the lease,
less any lease incentives received, any initial direct costs incurred by the Group, and an estimate
an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset,
restoring the site on which it is located or restoring the underlying asset to the condition required by
the terms and conditions of the lease, unless those costs are incurred to produce inventories.
Subsequent to initial recognition, lease assets are measured at cost (adjusted for any
remeasurement of the lease liability), less accumulated depreciation and any accumulated
impairment loss.
Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the
underlying asset, consistent with the estimated consumption of the economic benefits embodied
in the underlying asset.
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Lease liabilities
At the commencement date of a lease (other than leases of 12-months or less and leases of low
value assets), the Group recognises a lease asset representing its right to use the underlying asset
and a lease liability representing its obligation to make lease payments.
Lease liabilities are initially recognised at the present value of the future lease payments (i.e., the
lease payments that are unpaid at the commencement date of the lease). These lease payments
are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or
otherwise using the Group’s incremental borrowing rate.
Subsequent to initial recognition, lease liabilities are measured at the present value of remaining
lease payments (i.e., the lease payments that are unpaid at the reporting date). Interest expense
on lease liabilities is recognised in profit or loss (presented as a component of finance costs). Lease
liabilities are remeasured to reflect changes to lease terms, changes to lease payments and any
lease modifications not accounted for as separate leases.
Variable lease payments not included in the measurement of lease liabilities are recognised as an
expense when incurred.
Leases of 12-months or less and leases of low value assets
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for
which a lease asset and a lease liability has not been recognised) are recognised as an expense
on a straight-line basis over the lease term.
2.19. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET
MANDATORY OR EARLY ADOPTED
Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet effective and have not been adopted by the Group for the annual reporting period
ending 30 June 2020. It is not expected that these Australian Accounting Standards and
Interpretations will have a material impact on the Group when they are adopted in future reporting
periods.
3. REVENUE
3.1. REVENUE FROM CONTRACTS WITH CUSTOMERS: CONTINUING OPERATIONS
Revenue from sale, distribution and marketing of cyber safety
and grocery comparison products
Revenue from book sales
2020
$
2019
$
3,829
1,943
5,772
6,502
4,385
10,887
Revenue from contracts with customers is generated wholly within the geographical location of
Australia and is recognised at the point in time the product is delivered to the customer.
3.2. OTHER INCOME
Interest income
Grants and subsidies
Miscellaneous income
2020
$
2,047
113,770
26,914
142,731
2019
$
7,305
-
794
8,099
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4. LOSS PER SHARE
4.1. BASIC LOSS PER SHARE
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On 1 July 2019, the Group lodged its Notification of Consolidation/Split with the ASX. The Group
received shareholder approval at its general meeting held 5 August 2019 to perform a consolidation
on a 1:50 basis. As a result of the consolidation, the earnings per share for the year ended 30 June
2019 has been restated to (0.08) cents per share. The earnings per share for the year ended 30 June
2020 has been calculated as (0.02) cents per share.
(0.08)
From continuing operations
Total basic loss per share
(0.08)
The loss and weighted average number of ordinary shares used in the calculation of basic loss per
share are as follows:
(0.02)
(0.02)
2020
Cents Per
Share
2019
Cents Per
Share
Loss for the year
Loss for the year
Weighted average number of ordinary shares for the purposes of
basic loss per share
4.2. DILUTED LOSS PER SHARE
2020
$
2019
$
(1,365,594)
(1,365,594)
(3,182,653)
(3,182,653)
No.
63,827,398
No.
2,067,506,206
The following potential ordinary shares are anti-dilutive and are therefore excluded from the
weighted average number of ordinary shares for the purposes of diluted loss per share:
Unlisted options exercisable at $0.01 on or before 30 June 2021
Unlisted options exercisable at $0.15 on or before 30 June 2022
5.
INCOME TAX
5.1. INCOME TAX RECOGNISED IN PROFIT OR LOSS
Current tax
Deferred tax
2020
No.
23,048,883
11,000,000
2019
No.
1,152,444,168
-
2020
$
2019
$
-
-
-
-
-
-
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 45
The income tax expense for the year can be reconciled to the accounting (loss) as follows:
Loss before tax
Income tax (benefit) calculated at 27.5% (2019: 27.5%)
Tax effect of lower foreign tax rates
Effect of expenses not deductible and income in determining
taxable profit or loss
Current year deferred taxes not booked
Other deductible/other non-deductible and non-assessable items
Effect of current year tax losses not recognised as deferred tax
assets
Income tax expense in consolidated statement of comprehensive
income
2020
$
2019
$
(1,365,594)
(3,182,653)
(375,538)
190
(223,403)
-
7,399
(875,230)
(202)
-
122,114
379,356
591,352
373,962
-
-
The tax rate used for the 2020 year of 27.5% (2019: 27.5%) is the corporate tax rate of payable by
small business entities on taxable profits under Australian law.
5.2. TAX LOSSES
Deferred tax assets on the unused revenue tax losses of $12,416,186 (2019: $10,296,916) have not
been recognised as the future recovery of these losses is subject to the Group satisfying the
requirements imposed by the regulatory authorities, including the application of the available
fraction rules. The benefit of deferred tax assets not brought to account will only be brought to
account if:
(a)
(b)
Future assessable income is derived of a nature and of an amount sufficient to enable the
benefit to be realised.
The conditions for deductibility imposed by tax legislation continue to be complied with and
no changes in tax legislation adversely affect the Group in realising the benefit.
5.3. DEFERRED TAX ASSETS
Deferred tax assets recognised directly in equity
Revenue income tax losses not brought to account at 27.5%
(2019: 27.5%)
Other temporary differences
Unrecognised deferred tax assets relating to the above temporary
differences
125,240
139,286
3,414,451
29,511
2,831,652
37,268
3,569,202
3,008,206
5.4. TAX CONSOLIDATION
The Group and its wholly owned Australian controlled entities implemented the tax consolidation
legislation from 1 July 2016. The accounting policy in relation to this legislation is set out in Note 2.3.1.
6. CURRENT TRADE AND OTHER RECEIVABLES
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Trade debtors
Provision for expected credit loss
Sundry debtors
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
2020
$
2019
$
1,900
(1,900)
35,822
35,822
1,900
(1,900)
82,582
82,582
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Trade receivable are non-interest bearing and generally on terms of 14-60 days.
Other than those receivables fully provided for, all receivables are considered fully recoverable.
A provision for expected credit loss is recognised in accordance with Note 2.8.4.
6.1. FAIR VALUE AND CREDIT RISK
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate
their fair value.
7. PLANT AND EQUIPMENT
Plant and equipment at cost
Accumulated depreciation and impairment
Motor vehicles at cost
Accumulated depreciation
Office equipment at cost
Accumulated depreciation
Office furniture at cost
Accumulated depreciation
Computer equipment at cost
Accumulated depreciation
Carrying amount
2020
$
385,383
(385,383)
-
85,972
(85,972)
-
64,596
(64,596)
-
35,678
(35,678)
-
99,515
(99,515)
2019
$
385,383
(385,383)
-
85,972
(85,972)
-
64,596
(64,596)
-
35,678
(35,678)
-
99,515
(99,515)
-
-
7.1. MOVEMENT IN CARRYING AMOUNTS:
Carrying amount at 30 June 2018
Acquisitions
Depreciation expense
Carrying amount at 30 June 2019
Plant &
Equipment
$
2,654
5,545
(8,199)
-
Motor
Vehicles
$
7,585
-
(7,585)
-
Office
Furniture
$
3,516
13,455
(16,971)
-
Computer
Equipment
$
42,629
3,2179
(45,808)
-
Total
$
56,384
22,179
(78,563)
-
Acquisitions/(Disposals)
Depreciation expense
Carrying amount at 30 June 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
As at 30 June 2019, the Board reviewed the carrying value of its depreciative assets and determined
the recoverable value of all the depreciative assets was nil. The Board subsequently depreciated
all assets to a nil carrying value.
As at 30 June 2020, the Board reassessed the recoverable amount of its depreciative assets and
determined the recoverable value continued to be nil.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
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8.
INTANGIBLE ASSETS
8.1. INTANGIBLE ASSETS CARRYING BALANCE:
Technology rights at cost
Capitalised patent expenditure at cost
Accumulated amortisation – technology rights and patent
Impairment – technology rights and patent
Licence and know-how at cost
Accumulated amortisation – licence
Impairment – licence
Goodwill at cost
Impairment – goodwill
Assets acquired on acquisition of NexGen Networks Limited
Assets acquired as part of B Class shareholders interest
Impairment – asset acquisition
8.2. MOVEMENT IN GOODWILL NET BOOK VALUE:
Goodwill opening netbook value
Goodwill recognised on acquisition of Frugl Group Limited
Impairment - goodwill
Goodwill closing balance
2020
$
500,000
548,022
(425,759)
(622,263)
-
400,100
(140,000)
(260,100)
-
672,697
(672,697)
-
2019
$
500,000
548,022
(425,759)
(622,263)
-
400,100
(140,000)
(260,100)
-
672,697
(672,697)
-
6,086,956
3,116,929
(9,203,885)
-
6,086,956
3,116,929
(9,203,885)
-
2020
$
2019
$
-
622,669
(622,669)
-
-
-
-
-
On the date of the acquisition of Frugl Group Limited, 22 January 2019, the group recognised
$622,669 of goodwill.
At 30 June 2020 a $622,699 provision for impairment on goodwill. This was based on a conservative
review of the fair value of the goodwill using a value-in-use model. Based on a 5-year present value
net cash flow, the goodwill was deemed to have a carrying value of approximately nil as at 30 June
2020. Therefore, a full impairment has been recognised. The key assumptions for the value-in-use
models were; Forecasted revenue generated from developed forecasted development costs and
ongoing support costs of technologies, forecasted staff costs associated with developing and
marketing of technologies and providing technical support to users, forecasted marketing costs of
technologies and a discount rate of 13.8%.
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9. CAPITALISED DEVELOPMENT COSTS
9.1. MOVEMENT IN CAPITALISED DEVELOPMENT COSTS:
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Capitalised software development costs, opening net book
value
Capitalised software development costs during the year
Reversal of capitalised software development costs during the
year (i)
Reversal of capitalised software development costs impairment
during the year (i)
Impairment of capitalised software development costs during
the year
Capitalised software development costs, closing net book value
2020
$
2019
$
-
119,113
-
287,100
(124,890)
(542,081)
124,890
542,081
(119,113)
-
(287,100)
-
i) As per the Group account policy, cash inflows from the Research and Development Tax Incentive Scheme
are credited against where the original expenditure was allocated. As a result of the cash inflow of $846,972
(2019: $1.215 million) received in the year ended 30 June 2020, $124,890 (2019: $542,081) was credited
against the original capitalised expenditure. As the original capitalised expenditure had been fully impaired
in prior years, a reversal of impairment to the amount $124,890 (2019: $542,081) was recognised in the
current year.
9.2. CAPITALISED DEVELOPMENT COSTS CARRYING BALANCE:
Capitalised software development costs
Accumulated impairment of capitalised software development
costs
Other capitalised development costs
Accumulated impairment of other capitalised development
costs
2020
$
2019
$
3,111,359
2,992,245
(3,111,359)
51,456
(2,992,245)
51,456
(51,456)
-
(51,456)
-
During the year, $119,113 was recognised as a provision for impairment on capitalised
development costs. This was based on a review of the recoverable value of the relevant assets
factoring in a number of subjective assumptions using a value-in-use model. Based on a 5-year
present value net cash flow, the directors have taken a conservative view of the recoverable
value and deemed the capitalised software development costs to have a carrying value of
approximately $nil as at 30 June 2020. Therefore, a full impairment has been recognised. The key
assumptions for the value-in-use model were; Forecasted revenue generated from capitalised
software development costs and ongoing support costs of technologies, forecasted staff costs
associated with developing and marketing of technologies and providing technical support to
users, forecasted marketing costs of technologies and a discount rate of 13.8%.
10. TRADE AND OTHER PAYABLES
Current
Unsecured trade creditors
Sundry creditors and accruals
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
2020
$
2019
$
203,394
244,170
447,564
213,934
362,817
576,751
Page 49
Trade and other payables are non-interest bearing. Due to the short-term nature of these payables,
their carrying amount is assumed to approximate their fair value.
11. BORROWINGS
Current
Loan from Rocking Horse Nominees Pty Ltd
2020
$
2019
$
195,600
195,600
-
-
The loan bears an interest rate of 1.25% per month, with term of loan of 91 days. The Loan is secured
against the Company’s 2020 Financial Year Research and Development Offset Rebate. The Loan
was issued by Rocking Horse Nominees Pty Ltd.
12. ISSUED CAPITAL
All references to securities in the Group have been reported on a post-consolidation basis.
On 1 July 2019, the Group lodged its Notification of Consolidation/Split with the ASX. The Group
received shareholder approval at its general meeting held 5 August 2019 to perform a consolidation
on a 1:50 basis. As a result of the consolidation, the earnings per share for the year ended 30 June
2019 has been restated to (0.08) cents per share. The earnings per share for the year ended 30 June
2020 has been calculated as (0.02) cents per share.
99,000,000 fully paid ordinary shares
(2019: 50,000,000)
12.1. FULLY PAID ORDINARY SHARES
2020
$
2019
$
32,244,951
30,659,019
All references to securities in the Group have been reported on a post-consolidation basis.
Balance at beginning of year (i)
Shares issued (Ii)
Share issue costs
Balance at end of year
2020
2019
No.
50,000,000
49,000,000
-
99,000,000
$
30,659,019
1,660,000
(74,068)
32,244,951
No.
1,352,237,366
1,147,762,635
-
2,500,000,001
$
28,375,771
2,599,065
(315,817)
30,659,019
(i) On 1 July 2019, the Group lodged its Notification of Consolidation/Split with the ASX. The Group received shareholder
approval at its general meeting held 5 August 2019 to perform a consolidation on a 1:50 basis.
(ii) The Group issued 16,000,000 shares on the 11th of December 2019 at $0.0625 a share to raise $1,000,000 before costs. The
Group also issued 33,000,000 shares on 8 May 2020 at $0.02 a share to raise $660,000 before costs as part of a non-
renounceable entitlement issue on a 1 for 2 basis.
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Ordinary shares
participate in the proceeds on winding up of the Group in proportion to the number of shares held.
Ordinary shares have no par value.
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13. RESERVES
Option reserve balance at beginning of year
Options issued during the year (Note 14.5.2)
Reversal/(lapse) of options during previous periods
Option reserve balance at end of the financial year
2020
$
1,070,559
159,441
-
1,230,000
2019
$
75,508
323,811
671,240
1,070,559
The Option reserve arises on the grant of share options to executives, employees, consultants and
advisors and upon issue of options to shareholders or buyers. Amounts are transferred out of reserve
and into accumulated losses when options expire or lapse.
Performance share reserve balance at beginning of year
Lapse of performance shares
Performance share reserve balance at end of the financial year
434,485
(434,485)
-
434,485
-
434,485
The Performance share reserve arose on the grant of performance shares to A Class Share vendors,
consultants and advisors in previous years.
During the year ended 30 June 2019 the Group’s performance shares lapsed. The balance in the
reserve has therefore been transferred out of the performance share reserve and into accumulated
losses.
During the 2020 financial year, no performance shares were issued, lapsed or expired.
No performance shares were on issue as at 30 June 2020 or 30 June 2019.
Foreign currency translation reserve at beginning of year
Movement during year (i)
Foreign currency translation reserve at end of year
2020
$
17,800
(17,800)
-
2019
$
22,572
(4,772)
17,800
(i) During the year the Group ceased its operation of its foreign operations and therefore there is no translation reserve at
30 June 2020.
Option reserve
Performance share reserve
Foreign currency translation reserve
Total reserves balance at end of the financial year
1,230,000
-
-
1,230,000
1,070,559
434,485
17,800
1,522,844
Employee incentive option plan
On 30 November 2019, the Group received shareholder approval to adopt an employee incentive
scheme titled Incentive Option Plan (Option Plan) in accordance with ASX Listing Rule 7.2
(Exception 9(b)).
The Option Plan allows the Group to issue or agree to issue more equity securities during any 12
month period than that amount which represents 15% of the number of fully paid ordinary securities
on issue at the commencement of that 12 month period. This issue of options to employees under
the Option Plan is at the absolute discretion of the Board of Directors.
As at 30 June 2020, and subsequently, no options have been issued under the Option Plan.
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14. SHARE OPTIONS
All references to securities in the Group have been reported on a post-consolidation basis.
Each option issued converts into one ordinary share of Frugl Group Limited on exercise. Options
carry neither rights to dividends, nor voting rights. Options may be exercised at any time from the
date of vesting to the date of their expiry.
All share options issued during the year and on issue at 30 June 2020 are fully vested.
14.1. MOVEMENTS IN SHARE OPTIONS DURING THE YEAR
The following reconciles the share options outstanding at the beginning and end of the year:
2020
2019
Balance at beginning of the
year(i)
Granted during the year
Expired during the year
Balance at end of the year
Exercisable at end of the year
Number of
options
23,048,883
11,000,000
-
34,048,883
34,048,883
Weighted
average
exercise price
$
Number of
options
Weighted
average
exercise price
$
0.01
0.15
-
0.055
0.055
420,828,065
900,650,970
(169,034,867)
1,152,444,168
1,152,444,168
0.021
0.01
0.038
0.01
0.01
(i) On 1 July 2019, the Group lodged its Notification of Consolidation/Split with the ASX. The Group received shareholder
approval at its general meeting held 5 August 2019 to perform a consolidation on a 1:50 basis.
No options lapsed, cancelled or forfeited during the year.
14.2. SHARE OPTIONS EXERCISED DURING THE YEAR
During the year no options were converted into shares (2019: Nil).
14.3. SHARE OPTIONS OUTSTANDING AT THE END OF THE YEAR
The share options of 34,048,883 outstanding at the end of the year had a weighted average
exercise price of $0.055 (2019: $0.010) and a weighted average remaining contractual life of 548
days (2019: 730 days).
14.4. SHARE OPTIONS ON ISSUE
Share options issued by the Group carry no rights to dividends and no voting rights.
As at 30 June 2020, the Group had the following unlisted share options on issue on a post
consolidation basis:
Unlisted Options exercisable on or before 30 June 2021:
Balance at 1 July 2019(i)
Options issued during the year
Balance at 30 June 2020
Number
23,048,883
11,000,000
34,048,883
Exercise
price
$
0.010
0.15
-
(i) On 1 July 2019, the Group lodged its Notification of Consolidation/Split with the ASX. The Group received shareholder
approval at its general meeting held 5 August 2019 to perform a consolidation on a 1:50 basis.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 52
14.5. SHARE BASED PAYMENTS
Share-based payments made during the year ended 30 June 2020 are summarised below.
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14.5.1. Recognised Share-Based Payment Expense
Options issued to key management personnel and employees(i)
Options issued to key management personnel (ii)
2020
$
159,441
-
159,441
2019
$
-
328,811
328,811
(i) During the 2020 financial year, the Group issued 11,000,000 options to key management personnel (refer to remuneration
report for details) and the Group’s Chief Data Officer, Mr Alistair McCall, exercisable at $0.15 on or before 30 June 2022.
The options had no vesting conditions attached and vested immediately on issue.
(ii) In the prior year, the Group issued 175,000,000 Options to key management personnel (refer to remuneration report for
details), exercisable at $0.01 on or before 30 June 2021. The options had no vesting conditions attached and vested
immediately on issue.
14.5.2. Options Granted During the Year
The Group granted the following options during the year ended 30 June 2020:
Number of
Options Issued
9,000,000
2,000,000
Grant Date
Expiry Date
Exercise Price
Total Value(i)
Recipient
16 Mar 2020
16 Mar 2020
30 Jun 2022
30 Jun 2022
$0.15
$0.15
130,451
28,990
Directors
Employee
Number of
Options
9,000,000
2,000,000
Underlying
share price
(VWAP)
$0.040
$0.040
Exercise
price
Expected
volatility
Expiry date
(years)
Expected
dividends
Risk free
rate
Probability
of share
issue
Value per
option
$0.15
$0.15
117%
117%
2.29
2.29
Nil
Nil
0.53%
0.53%
Negligible Negligible
Negligible Negligible
(i) As the options issued are unlisted, the Company determined the most appropriate value using the Black Scholes Model
applying the following inputs: share price at grant date of $0.04 ; expected volatility of 117%, expected dividends of nil;
and a risk-free rate of 0.53%.
The Group granted the following options during the year ended 30 June 2019:
Number of
Options Issued
725,650,970
175,000,000
Grant Date
Expiry Date
Exercise Price
Total Value(i)
Recipient
25 July 2019
10 Dec 2018
30 June 2021
30 June 2021
$0.01
$0.01
Nil
323,811
Shareholders
Directors
Number of
Options
725,650,970
175,000,000
Underlying
share price
(VWAP)
$0.003
$0.002
Exercise
price
Expected
volatility
Expiry date
(years)
Expected
dividends
Risk free
rate
Probability
of share
issue
Value per
option
$0.01
$0.01
262%
262%
2.56
2.56
Nil
Nil
1.93%
1.93%
Negligible Negligible
Negligible Negligible
(i) As the options issued are unlisted, the Company determined the most appropriate value using the Black Scholes Model
applying the following inputs: share price at grant date of $0.002 for the 175,000,000 options and $0.003 for the 725,650,970
options; expected volatility of 262%, expected dividends of nil; and a risk-free rate of 1.93%.
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
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15. FINANCIAL INSTRUMENTS
15.1. CAPITAL MANAGEMENT
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The Group manages its capital to ensure that entities in the Group will be able to continue as a
going concern while maximising the return to stakeholders through the optimisation of the debt and
equity balance. The Group’s overall strategy remains unchanged from 2018.
The Group is not subject to any externally imposed capital requirements.
15.2. FINANCIAL RISK MANAGEMENT OBJECTIVES
The Board of directors provides services to business, co-ordinates access to domestic and
international financial markets, monitors and manages the financial risks relating to the operations
of the Group through internal risk reports which analyse exposures by degree and magnitude of
risks. These risks include interest rate risk, liquidity risk and credit risk.
The Group seeks to minimise the effects of these risks by making use of credit risk policies and future
cash requirements. These are approved by the Board of directors and are reviewed on a regular
basis.
The totals for each category of financial instruments, measured in accordance with AASB 9 Financial
Instruments, as detailed in the accounting policies to these financial statements below.
15.3. INTEREST RATE RISK
The Group is exposed to interest rate risk on its cash reserves held with the NAB or other acceptable
Australian Banking entities. The risk of interest rate movements is managed by the Group by
maintaining an appropriate mix between short term deposits and at call deposits.
The Group is not subject to any other interest rate risk as none of its other financial assets or liabilities
is subject to variable interest rates.
The Group’s exposure to interest rate on financial assets subject to variable interest rates is detailed
in the interest rate risk sensitivity analysis section of this note.
15.3.1. Interest rate sensitivity analysis
An increase of 50 basis points in interest rates (all other variables remaining constant) would have
decreased the Group’s loss by $1,653 (2019: $963). Where interest rates decreased, there would be
an equal and opposite impact on the loss.
15.3.2. Fair value of financial assets and liabilities
The carrying amount of financial assets and financial liabilities recorded in the consolidated
financial statements represents their respective fair values, determined in accordance with the
accounting policies disclosed in Note 2.
At risk amounts are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
2020
$
330,675
29,286
359,961
2019
$
192,653
82,582
275,235
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Financial liabilities
Trade and other payables
Contingent consideration
736,566
223,961
960,527
576,751
550,333
1,127,084
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15.4. LIQUIDITY RISK
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations with financial
liabilities. Ultimate responsibility for liquidity risk management rests with the Board of directors, which
has established an appropriate liquidity risk management framework for the management of the
Group’s short, medium, and long-term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate cash reserves by continuously monitoring forecast
and actual cash flows and identifying when further capital raising initiatives are required as
disclosed in Note 0. The Group presently has no significant source of operating income and it is
reliant on equity contributions and cooperation of creditors and lenders to continue as a going
concern.
The Group currently has a financing facility of $200,000 in place with Rocking Horse Nominees Pty
Ltd of which $195,600 is utilised as at the reporting date. Refer to Note 11 for terms and conditions.
In addition, during the year a director provided a binding letter of support for the following amounts,
by way of an unsecured interest free on-call loan facility with the following limits, and subsequent
amendments to the same facility:
16 October 2019: up to a maximum of $600,000 repayable at the earlier of 31 October 2020 or when
the Company completes a capital raising of no less than $1 million;
29 January 2020: facility limit revised up to a maximum of $600,000 repayable on 1 October 2020;
29 April 2020: facility limit revised up to a maximum of $700,000 repayable on 1 October 2020; and
Accordingly, as at 30 June 2020, the Group has a $700,000 loan facility with a director of the Group
(Director Loan). The Director Loan is available on call, is unsecured and interest free.
Subsequent to year end, on 28 July 2020, the Director Loan was increased to a maximum limit of
$750,000 and the repayment date extended to 31 December 2020.
As at 30 June 2020 and the date of this report, no amounts have been drawn down on the Director
Loan facility.
Contractual cash flows
Interest
Rate
%
Carrying
amount
$
<6
months
$
>6-12
months
$
>12
months
$
Nil
1.75
Nil
Nil
1.25
Nil
270,675
60,000
35,822
366,497
270,675
-
-
270,675
285,098
195,600
223,961
704,659
(338,162)
285,098
216,148
-
501,246
(230,571)
-
60,700
35,822
96,522
-
-
-
-
-
-
186,635
186,635
(90,113)
37,327
37,327
(37,327)
Total
contractual
cash flows
$
270,675
60,700
35,822
367,197
285,098
216,148
223,961
725,207
(358,010)
2020
Financial assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Contingent consideration
Net Exposure
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
Page 55
Contractual cash flows
Interest
Rate
%
Carrying
amount
$
<6
months
$
>6-12
months
$
>12
months
$
Total
contractual
cash flows
$
2019
Financial assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Financial liabilities
Trade and other payables
Contingent consideration
Nil%
2.35%
Nil%
Nil%
Nil%
Net Exposure
15.5. CREDIT RISK
132,653
60,000
75,829
268,482
132,653
-
-
132,653
-
60,940
75,829
136,769
-
-
-
-
132,653
60,940
75,829
208,482
388,802
550,333
939,135
(670,653)
388,802
-
388,802
(256,149)
-
-
-
136,769
-
550,333
550,333
(550,333)
388,802
550,333
939,135
(730,653)
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in
financial loss to the Group. In respect of financing activities, the Group is exposed to credit risk from
its operating activities (primarily trade and other receivables) and from its financing activities,
including deposits with banks and financial institutions. The Group has adopted a policy of only
dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as
a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities
that are rated the equivalent of investment grade and above. This information is supplied by
independent rating agencies where available and, if not available, the Group uses other publicly
available financial information and its own trading records to rate its major customers. The Group’s
exposure and the credit ratings of its counterparties are continuously monitored and the aggregate
value of transactions concluded is spread amongst approved counterparties. The credit risk on
liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies. The Group’s bank has an “AA-” long term issuer rating by
Standards & Poors (S&P).
The total Group exposure to credit risk is as follows:
Cash and cash equivalents
Trade and other receivables
2020
$
330,675
35,822
366,497
2019
$
192,653
82,582
275,235
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15.6. FOREIGN CURRENCY EXCHANGE RISK MANAGEMENT
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy
parameters utilising if necessary forward foreign exchange contracts.
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The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the balance date expressed in Australian dollars are as follows:
30 June 2020
NZ Dollars
•
•
Financial assets
Financial liabilities
30 June 2019
NZ Dollars
•
•
Financial assets
Financial liabilities
Consolidated
Short term
exposure
$’000
Long term
exposure
$’000
-
-
-
-
-
-
8,889
118
9,007
8,889
118
9,007
The Group does not consider its exposure to foreign currency exchange risk to be material.
16. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in Note 2.2.2. Details of subsidiary
companies are as follows:
Entity
Premium Pipe Services Pty Ltd
NexGen Networks Limited
Wangle Operations Pty Ltd
Frugl (Australia) Pty Ltd
Family Insights IP Pty Ltd
Incorporation
Australia
New Zealand
Australia
Australia
Australia
2019
Ownership
100%
100%
100%
95.71%
100%
2018
Ownership
100%
100%
95.71%
100%
100%
Family Insights IP Pty Ltd has been incorporated on 8 May 2019 as a pure corporate holding
Company.
Refer to Note 24 for events after the reporting date in relation to Frugl (Australia) Pty.
17. KEY MANAGEMENT PERSONNEL DISCLOSURES
17.1. KEY MANAGEMENT PERSONNEL COMPENSATION
The aggregate compensation made to key management personnel of the Group is set out below:
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Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payments
2020
$
460,700
-
-
130,451
591,151
2019
$
486,100
-
60,000
323,811
869,911
The compensation of each member of the key management personnel of the Group is set out in
the Directors’ Remuneration Report on pages 4 to 9.
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18. RELATED PARTY TRANSACTIONS
The immediate parent and ultimate controlling party of the Group is Frugl Group Limited. Balances
and transactions between the Group and its subsidiaries, which are related parties of the Group,
have been eliminated on consolidation and are not disclosed in this note.
18.1. LOANS TO KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
There have been no loans to key management personnel during the current or prior year and no
balances were outstanding as at the reporting date.
18.2. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
Key management personnel related parties
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated. Transactions with key
management personnel related parties are set out below.
The Group entered into a mandate with Cicero Corporate Services Pty Ltd (CCS), a company
related to Messrs Walker for corporate administration services including financial reporting,
company secretarial services, rent and administrative operations. CCS provided services to the
amount of $120,000 (2019: $120,000). As at 30 June 2020, $10,000 amount payable (2019: $Nil)
remains outstanding. The Group entered into a mandate with Cicero Advisory Services Pty Ltd
(CAS), a company related to Messrs Walker for corporate advisory services. CAS provided services
to the amount of $60,000 (2019: $162,654). As at 30 June 2020, $Nil amount (2019: $Nil amount
payable) remains outstanding.
19. RECONCILIATION OF LOSS FOR THE YEAR TO NET CASH FLOWS
FROM OPERATING ACTIVITIES
(Loss) for the year
Non-cash items
Depreciation and amortisation
Impairment of intangible assets and development costs
Share-based payments
Other non-operational expenditure
Fair Value movement on contingent consideration
Movements in working capital
Decrease in trade and other receivables
(Decrease) in trade and other payables in provisions
Net cash used in operating activities
Reconciliation to cash at the end of the year
Balance as per Note 19.2
Balance as per statement of cash flows
There are no available financing facilities.
2020
$
2019
$
(1,365,594)
(3,182,653)
57,749
119,113
159,441
(44,277)
(326,371)
(1,399,939)
46,760
(75,656)
(1,428,835)
78,563
913,984
323,811
-
115,704
(1,750,591)
64,447
(272,662)
(1,958,806)
330,675
330,675
192,653
192,653
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19.1. NON-CASH TRANSACTIONS
The only non-cash investing or financing activity relates to the contingent consideration payable of
$223,962 (2019: $550,333) by the entity as a result of the acquisition of Frugl Group Limited.
19.2. CASH AND CASH EQUIVALENTS
For the purposes of the consolidated statement of cash flows, cash and cash equivalents include
cash on hand and in banks, net of outstanding bank overdrafts. Cash and cash equivalents at the
end of the reporting period as shown in the consolidated statement of cash flows can be reconciled
to the related items in the consolidated statement of financial position as follows:
Cash and cash equivalents
20. COMMITMENTS & CONTINGENT LIABILITIES
20.1. COMMITMENTS
2020
$
330,675
2019
$
192,653
Commitments in respect of non-cancellable operating lease (30 June 2019)
The following information relates to non-cancellable operating lease arrangements of the prior
year reporting period only, and is presented in accordance with the predecessor accounting
standard AASB 117 Leases.
Agreement start date
Expiry date
Monthly amount
Terms of agreement
Within 12 months to June 2020
Total
Office
Lease
10/08/18
10/08/2020
6,650
152 days
93,100
93,100
Through its subsidiary Wangle Operations Pty Ltd (Wangle Operations), the Group was previously
party to an operating lease agreement for its office and software development facilities for a period
of 24 months from 1 September 2018, with no option to extend. Wangle Operations did not have an
option to purchase the leased asset at the expiry of the lease period.
The operating lease agreement was cancelled effective from 31 March 2020 by mutual consent
with the lessor.
Other commitments
Monthly amount
Terms of agreement
Within 12 months to June 2020
Total
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
2020
Corporate Fees
10,000
90 days
60,000
60,000
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Agreement start date
Expiry date
Monthly amount
Terms of agreement(i)
Within 12 months to June 2020
Total
20.2. CONTINGENT LIABILITIES
2019
Executive
Fees
25/01/2017
25/01/2020
20,000
2019
Corporate
Fees
1/01/2019
1/01/2020
10,000
90 days
90 days
140,000
140,000
60,000
60,000
As per the ASX announcement on 22 January 2019, the Group identified a legal dispute with a
previous employee of a redundant subsidiary, Frugl (Australia) Pty Ltd (Dispute). On 18 November
2019, the County Court of Victoria ruled in favour of the previous employee awarding a principal
amount and interest totalling $211,122. This amount has been provided for by the Group and is
included in trade and other payables in the statement of financial position. The County Court of
Victoria also ruled that the previous employees costs relating to the Dispute also be paid by the
Group. As at the date of this report, the quantum of the costs payable has not been determined.
In addition, refer to Note 25 for events after the reporting date in relation to subsequent action
regarding Frugl (Australia) Pty Ltd as a result of the Dispute.
21. BUSINESS COMBINATIONS AND ACQUISITION OF NON-
CONTROLLING INTEREST
On 22 January 2019, the Group acquired 95.71% of the voting shares of Frugl Group Limited (Frugl),
a non-listed company based in Perth, Australia. Frugl is a grocery price comparison platform with
advanced analytics capabilities, that collects and process numerous data streams including
behavioural shopper and browsing data, in real time, across any device. Frugl provides shoppers
with up-to-date products, promotions and pricing information to find the lowest price each week
across Australia’s leading supermarkets.
The Group has elected to measure the non-controlling interest at the proportionate share of the
value of net identifiable assets acquired. The amount recognised for goodwill is only the acquirer’s
shares. The choice of method used by the Group is decided on a transaction-by-transaction basis,
rather than being a policy choice.
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Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Frugl as at the date of Acquisition were:
Assets
Cash and cash equivalents
Trade and other receivables
Intellectual Property
Liabilities
Trade and other payables
Total identifiable net assets at fair value (100%)
Non-controlling interest
Goodwill on acquisition
Fair value of contingent consideration
FAIR VALUE AT
RECOGNISED ON
ACQUISITION
10,207
43,559
-
53,766
(129,375)
(129,375)
(75,609)
3,243
622,699
550,333
On the basis of their short-term nature, the fair value of the trade and other receivables amount of
$41,689, and trade and other payables amount of $123,825 was considered to be their carrying
value in the books of Frugl as at the acquisition date.
The intellectual property and underlying technologies were in state of care and maintenance when
Frugl was acquired by the Group. Based on the state of the technologies, management assessed
the fair value as $nil as at the acquisition date.
The goodwill of $622,699 comprises the value of expected synergies arising from the acquisition and
its intellectual property, which is not separately recognised. Goodwill is allocated entirely to the
grocery comparison engine.
From the date of acquisition, Frugl contributed ($653,481) of expenses and loss before tax from
continuing operations of the Group. If the combination had taken place at the beginning of the
year, expenses from continuing operations would have been ($1,245,885).
Purchase consideration
Shares issued, at fair value
Contingent consideration liability
Analysis of cashflows on acquisition:
Transaction costs of the acquisition
Net cash acquired with the subsidiary
-
550,333
550,333
$
$
(115,704)
9,769
(105,935)
Transaction costs of $115,704 were expensed and are included in other expenses from ordinary
activities.
Contingent consideration
As part of the purchase agreement with the previous shareholders of Frugl Group Limited, a
contingent consideration has been agreed. There will be the issue of fully paid ordinary shares in
Frugl Group Limited to the previous shareholders of Frugl Group Limited. The total contingent
FRUGL GROUP LIMITED | 2020 ANNUAL REPORT
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consideration is 1,914,200,000 fully paid ordinary shares which are to be issued to previous
shareholders of Frugl Group Limited in four equal tranches of 478,550,000 upon realisation of the
following milestones:
• $1,000,000 revenue before costs on or before 30 June 2021;
• $2,000,000 revenue before costs on or before 30 June 2021;
• $6,000,000 revenue before costs on or before 30 June 2022; and
• $10,000,000 revenue before costs on or before 30 June 2022.
As at the acquisition date, the fair value of the contingent consideration was estimated to be
$550,333 based on the assigned probability of the milestones being achieved.
On 22 January 2019 the parties to the purchase agreement agreed to the amend the terms of the
purchase agreement, specifically the first Revenue milestone for which deferred consideration is
payable.
•
•
•
If the settlement sum is equal to or less than $100,000, the revenue milestone shall be
$1,000,000;
If the settlement sum is greater than $100,000 and less than $250,000, the revenue milestone
shall be the settlement sum plus $1,000,000; and
If the settlement sum is greater than $250,000, the revenue milestone shall be $1,250,000.
All other revenue milestones remain the same.
21.1. MOVEMENT IN CONTINGENT CONSIDERATION:
Fair value as at beginning of year
Fair value as at acquisition date
Fair value movement recognised in profit or loss
Fair value as at end of year
2020
$
550,333
-
(326,371)
223,962
2019
$
-
550,333
-
550,333
As at 30 June 2020, the fair value of the contingent consideration was estimated to be $223,962 (30
June 2019: $550,333) in accordance with the accounting policies disclosed in the annual financial
report and based on the assigned probability of between 5% and 50% of achieving each milestone
and an underlying Group share price of $0.026 as at that date.
22. REMUNERATION OF AUDITORS
The auditor of Frugl Group Limited and its subsidiary is Pitcher Partners BA & A Pty Ltd.
Audit and review of the financial statements
2020
$
71,354
71,354
2019
$
52,540
52,540
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23. SEGMENT INFORMATION
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The Group identifies its operating segments based on the internal reports that are reviewed and used
by the Board of directors (chief operating decision maker) in assessing performance and determining
the allocation of resources.
The Group operates primarily in development of the Frugl mobile application. The financial
information presented
income and the
consolidated statement of financial position is the same as that presented to the chief operating
decision maker.
in the consolidated statement of comprehensive
Unless stated otherwise, all amounts reported to the Board of directors as the chief operating decision
maker is in accordance with accounting policies that are consistent to those adopted in the annual
financial statements of the Group.
24. EVENTS AFTER THE REPORTING PERIOD
On 1 July 2020, the Group announced the changed of Company name to Frugl Group Limited
(ASX:FGL) effective from 3 July 2020.
As disclosed in Note 20.2, the Group identified a legal dispute with a previous employee of a
redundant subsidiary, Frugl (Australia) Pty Ltd (Subsidiary) with the Court of Victoria ruling in favour
of the previous employee.
The Subsidiary recently received a cost estimate to pursue a counterclaim against the Former
Employee (Counter Claim) and take that Counter Claim to trial (Trial Cost). As a result of this Trial Cost,
the Group has resolved it is not in the best interest of shareholders to continue the Counter Claim and
to loan monies to the Subsidiary for the purpose of pursuing the Counter Claim and for any other
purpose.
Following a shareholder meeting of the Subsidiaries shareholders on 7 August 2020, it was resolved to
place the Subsidiary into liquidation.
Subsequently Greg Dudley and Jerome Mohen of RSM Australia Partners were appointed liquidators
of the Subsidiary.
The Group would like to advise that there are no assets of the Subsidiary currently deemed to be of
any value to the Group and that all the intellectual property developed by the Company that is being
used to support current operations remain unaffected and are held in a wholly owned Company
subsidiary Family Insights IP Pty Ltd (ACN 633 347 332).
The Group notes that the acquisition terms of the Subsidiary, as announced to the ASX on 30 October
2018 provided for contingent consideration (Contingent Consideration). As the Contingent
Consideration is based on revenue targets in the Subsidiary, it is the Company’s intention to seek
shareholder approval for the re-instatement of these Contingent Consideration securities at a
shareholder meeting to be convened in the near future.
On 22 September 2020, the Group announced that it has received firm commitments to raise
$1,485,000 through a two-tranche placement to unrelated sophisticated and professional investors.
Frugl will issue a total of 49,500,000 fully paid ordinary shares in the Company at $0.03 per share
(Share)(Placement). Tranche 1 of the Placement was completed on 25 September 2020 raising
$742,500 before cost.
On 28 July 2020, the Group received confirmation of a $750,000 loan facility with a director of the
Group. The facility is available on call, is unsecured and interest free. As at the date of this report,
the full amount of the facility is available for use as no amounts have been drawn. The facility expires
on 31 December 2020.
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25. PARENT ENTITY INFORMATION
The accounting policies of the parent entity, which have been applied in determining the financial
information shown below, are the same as those applied in the consolidated financial statements.
Refer to Note 2 for a summary of the significant accounting policies relating to the Group.
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Development costs
Intellectual property
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee entitlements
Total current liabilities
Non-current liabilities
Contingent consideration
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Statement of comprehensive income
Total loss and comprehensive expense
26. LEASES
2020
$
2019
$
21,320
16,820
-
38,140
-
-
-
-
38,140
92,566
15,896
-
108,462
-
-
-
-
108,462
294,308
53,526
347,834
128,277
41,157
169,434
223,962
223,962
571,796
(533,656)
550,333
550,333
719,767
(611,305)
32,244,951
1,664,485
(34,443,091)
(533,655)
30,659,019
1,618,647
(32,888,971)
(611,305)
(235,517)
(3,002,451)
At the commencement date of a lease (other than leases of 12-months or less and leases of low
value assets), the Group recognises a lease asset representing its right to use the underlying asset
and a lease liability representing its obligation to make lease payments.
Through its subsidiary Wangle Operations Pty Ltd (Wangle Operations), the Group was previously
party to a lease agreement for its office and software development facilities for a period of 24
months from 1 September 2018, with no option to extend. Wangle Operations did not have an
option to purchase the leased asset at the expiry of the lease period.
The operating lease agreement was cancelled effective from 31 March 2020 by mutual consent
with the lessor.
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Impact of initial adoption of AASB 16 – Right-of-use asset
Recognised on 1 July 2019
Amortisation from 1 July 2019 to 31 March 2020
De-recognition of right-of-use given lease was cancelled effective from 31 March
2020
Carrying amount as at 30 June 2020
Impact of initial adoption of AASB 16 – Lease liability
Recognised on 1 July 2019
Interest expense from 1 July 2019 to 31 March 2020
Payments for principal portion of lease liabilities for the year
De-recognition of lease liability given lease was cancelled effective from 31
March 2020
Carrying amount as at 30 June 2020
Amounts recognised in consolidated statement of cashflows
Interest expense on lease liability for the year
Payments for principal portion of lease liabilities for the year
Payments for early termination lease
Total cash outflow in relation to leases for the year
Reconciliation between AASB 16 right-of-use asset and lease commitments as at
30 June 2019
Lease commitments at 30 June 2019
Discounting of lease liabilities
Right-of-use asset and lease liability recognised at 1 July 2019
Office Lease
$
89,832
(57,749)
(32,083)
-
Office Lease
$
89,832
4,385
(60,624)
(33,593)
-
As at
30 June 2020
$
4,385
60,624
34,938
99,947
Office Lease
$
93,100
(3,268)
89,832
The weighted average incremental borrowing rate applied in the calculation of the initial carrying
amount of lease liabilities is 8%.
27. FAIR VALUE MEASUREMENT
27.1. FAIR VALUE HIERARCHY
Assets and liabilities measured and recognised at fair value have been determined by the following
fair value measurement hierarchy:
-
-
-
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities,
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly,
Level 3: Inputs for the asset or liability that are not based on observable market data.
The Group’s contingent consideration liability of $223,962 has been fair valued using significant
unobservable inputs (Level 3) for which market data is not available and developed using the best
information available about the realisation of the milestones and the underlying share price of the
Group as at 30 June 2020. Refer to Note 21 above for further details.
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The best information available relates to the directors determination of the current operational
status of the Group and the directors best estimate of the probability of achieving the milestones
based on the current operational status of the Group. The following table provides the fair value of
the financial asset held by the Group.
30 June 2020
Date of
valuation
Liabilities measured at fair value
Contingent
consideration
Total financial assets
30 June 2020
30 June 2019
Date of
valuation
Liabilities measured at fair value
Contingent
consideration
Total financial assets
30 June 2019
Quoted prices
in active
markets
(level 1)
$
Significant
observable
inputs
(level 2)
$
Significant
unobservable
inputs
(Level 3)
$
-
-
-
-
223,962
223,962
Quoted prices
in active
markets
(level 1)
$
Significant
observable
inputs
(level 2)
$
Significant
unobservable
inputs
(Level 3)
$
-
-
-
-
550,333
550,333
Total
$
223,962
223,962
Total
$
550,333
550,333
27.2. RECONCILIATION OF LEVEL 3 FAIR VALUE MOVEMENTS
Liabilities measured at fair value
Opening balance
Acquisition of Frugl
Fair value movement recognised in profit or loss
Closing balance
As at
30 June 2020
$
As at
30 Jun 2019
$
550,333
-
(326,371)
223,962
-
550,333
-
550,333
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ADDITIONAL SHAREHOLDERS’ INFORMATION
Frugl Group Limited’s issued capital on a post-consolidated basis is as follows:
ORDINARY FULLY PAID SHARES
At the date of this report there are 123,750,000 Ordinary fully paid shares in the Group.
Balance at the beginning of the year
Movements of share options during the year and to the date of this report
Total number of shares at the date of this report
Number of shares
50,000,000
73,750,000
123,750,000
SHARES UNDER OPTION
At the date of this report there are 34,048,883 unissued ordinary shares in respect of which options
are outstanding.
Balance at the beginning of the year
Movements of share options during the year and to the date of this report
Total number of options outstanding at the date of this report
The balance is comprised of the following:
Number of
options
23,048,883
11,000,000
34,048,883
Number of options
23,048,883
11,000,000
Expiry date
30 June 2021
30 June 2022
Exercise price (cents)
$0.50
$0.15
Listed/Unlisted
Listed
Unlisted
No person entitled to exercise any option referred to above has had, by virtue of the option, a right
to participate in any share issue of any other body corporate.
RANGE OF SHARES AS AT 27 SEPTEMBER 2020
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - > 100,001
Total
Total Holders
891
467
163
431
142
2,094
Units % Issued Capital
0.20%
0.99%
1.01%
11.71%
86.08%
100.00%
252,967
1,223,398
1,254,258
14,495,431
106,523,946
123,750,000
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UNMARKETABLE PARCELS AS AT 27 SEPTEMBER 2020
$500.00 parcel at $0.04 per unit
Minimum parcel
size
12,500
Holders
Units
1,734
3,641,956
TOP 20 HOLDERS OF ORDINARY SHARES AS AT 27 SEPTEMBER 2020
#
HOLDER NAME
1
2
3
4
5
THE TRUST COMPANY (AUSTRALIA) LIMITED
GREAT SOUTHERN FLOUR MILLS PTY LTD
SUNSET CAPITAL MANAGEMENT PTY LTD
GOLDEN STATE CAPITAL
TERRITORY TRADING GROUP PTY LTD
6 MR GREGORY PETER WILSON
7
8
9
STARTRADE PTY LTD
SCINTILLA STRATEGIC INVESTMENTS LIMITED
PETERLYN PTY LTD
10 MR ROBERT GREGORY LOOBY
11 CARDUP SYNDICATE HOLDINGS PTY LTD
12 MR JONATHAN MARK WILD
13 MR JASON PAUL GITMANS
14 MISS EVELYN KOJC
15 MR KEVIN COOPER
16
RIMOYNE PTY LTD
17 MR PETER KLIMIS
18 MR ZHENGZHONG TANG
19 CS FOURTH NOMINEES PTY LIMITED
20 ALI AYSHA PTY LTD
Units
11,685,295
9,000,000
7,505,426
5,650,000
5,251,941
5,014,980
3,481,472
2,750,000
2,625,000
2,335,000
2,024,500
2,000,000
1,692,000
1,323,215
1,250,000
1,218,901
1,149,081
1,124,888
1,046,680
1,022,988
%
9.44%
7.27%
6.07%
4.57%
4.24%
4.05%
2.81%
2.22%
2.12%
1.89%
1.64%
1.62%
1.37%
1.07%
1.01%
0.99%
0.93%
0.91%
0.85%
0.83%
Total of Top 20 Holders of ORDINARY SHARES
69,151,367
55.88%
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TOP 20 HOLDERS OF QUOTED OPTIONS AS AT 27 SEPTEMBER 2020
#
HOLDER NAME
1
2
3
4
5
KEIL INVESTMENTS PTY LTD
SEAN PAUL SMITH
THE TRUST COMPANY (AUSTRALIA) LIMITED
JONATHAN MARK WILD
FIRST GROWTH FUND LIMITED
6 MORELAND SKIP BINS PTY LTD
7
MR GRAHAM DENNIS CARTER & MRS YVONNE MARIA CARTER
8 MR GURBACHAN SINGH KHAIHRA
9 MR JENS ROESTEL
10
11
12
13
14
SCINTILLA STRATEGIC INVESTMENTS LIMITED
KHAZA NOMINEES PTY LTD
SACCO DEVELOPMENTS AUSTRALIA PTY LIMITED
TYCHE INVESTMENTS PTY LTD
STARTRADE PTY LTD
15 G & J SUPER FUND PTY LTD
16 MR SHANE ROBERT MARTIN
17
18
RUBYCHLO PTY LTD
1215 CAPITAL PTY LTD
19 MR BRETT ANDREW MAWSON
Units
2,000,000
2,000,000
1,666,666
1,500,000
1,333,333
1,160,664
1,000,000
1,000,000
1,000,000
500,000
400,000
400,000
400,000
372,590
333,333
300,000
266,666
265,000
250,000
%
8.68%
8.68%
7.23%
6.51%
5.78%
5.04%
4.34%
4.34%
4.34%
2.17%
1.74%
1.74%
1.74%
1.62%
1.45%
1.30%
1.16%
1.15%
1.08%
20 MR PAUL SIMON DONGRAY
Total of Top 20 Holders of quoted option holders
240,038
16,363,051
1.04%
70.99%
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