ICANDY INTERACTIVE LIMITED
AND CONTROLLED ENTITIES
ABN: 87 604 871 712
Financial Report For The Year Ended
31 December 2017
ICANDY INTERACTIVE LIMITED
AND CONTROLLED ENTITIES
ABN: 87 604 871 712
Financial Report For The Year Ended
31 December 2017
CONTENTS
Corporate Governance Statement
Directors' Report
Auditor's Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
Additional Information for Listed Public Companies
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ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
iCandy Interactive Limited is listed on the Australian Securities Exchange (ASX). Accordingly, unless stated otherwise in this
document, the Board's corporate governance arrangements comply with the recommendations of the ASX Corporate Governance
Council as well as current standards of best practice. The corporate governance statement is current as at the date of this report
and has been approved by the board.
Our approach to corporate governance
(a) Framework and approach to corporate governance and responsibility
The Board of iCandy Interactive Limited ("the Company") is committed to maintaining the highest standards of corporate
governance.
Corporate governance is about having a set of values that underpin the company's everyday activities - values that
ensure fair dealing, transparency of actions, and protect the interests of stakeholders. The Board considers corporate
governance forms part of a broader framework of corporate responsibility and regulatory oversight.
In pursuing its commitment to best practice governance standards, the Board will continue to:
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review and improve its governance practices; and
monitor global developments in best practice corporate governance.
The Board's approach has been guided by the principles and practices that are in our stakeholders' best interests while
ensuring full compliance with legal requirements.
(b) Compliance with the ASX Corporate Governance Principles and Recommendations
The ASX Listing Rules require listed companies to include in their Annual Report a statement disclosing the extent to
which they have followed the ASX Corporate Governance Principles and Recommendations in the reporting period.
Listed companies must identify the recommendations that have not been followed and provide reasons for the company's
decision and can be found on pages 7 - 14.
Date of this statement
This statement reflects our corporate governance policies and procedures as at 31 December 2017.
The Board of Directors
(a) Membership and expertise of the Board
The Board has a broad range of relevant financial and other skills, experience and expertise to meet its objectives. The
current Board composition, with details of individual Director's backgrounds, is set out in the Directors Report which is
included in this Annual Report.
(b) Board role and responsibility
The Board is accountable to shareholders for iCandy Interactive Limited's performance. In summary, the Board's
responsibilities include:
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providing strategic director and approving corporate strategic initiatives;
planning for Board and executive succession;
selecting and evaluating future Directors, the Chief Executive Office ("CEO");
setting CEO and Director remuneration within shareholder approved limits;
approving budget and monitoring management and financial performance;
considering and approving the Annual Financial Report (including the Directors' Declaration) and the
interim and final financial statements;
approving iCandy Interactive Limited's risk management strategy, monitoring its effectiveness and
maintaining a director and ongoing dialogue with iCandy Interactive Limited's auditors and regulators; and
considering and reviewing the social and ethical impact of iCandy Interactive Limited's activities, setting
standards for social and ethical practices and monitoring compliance with iCandy Interactive Limited's
social responsibility policies and practices.
1
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
The Board of Directors (continued)
The Board would normally delegate to management responsibility for:
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developing and implementing corporate strategies and making recommendations on significant corporate
strategic initiatives;
maintaining an effective risk management framework and keeping the Board and market fully informed
about material risks;
developing iCandy Interactive Limited's annual budget, recommending it to the Board for approval and
managing day-to-day operations within budget; and
managing day-to-day operations in accordance with standards for social and ethical practices which have
been set by the Board.
The current circumstances, however, require all these functions to be exercised by the Board members or the Company
Secretary. The company does not currently have a performance evaluation method due to the current size and limited
nature of operations.
The company has adopted a Board Charter which sets out the specific responsibilities of the Board, the requirements as
to the Board's composition, the roles and responsibilities of the Chairman, Company Secretary and management, the
establishment, operations and management of Board Committees, Directors' access to Company records and
information, details of the Board's relationship with management, details of the Board's performance review and details of
the Board's disclosure policy.
A copy of the Company's Board Charter is contained in the Company's Corporate Governance Plan which is available on
the Company's website.
(c) Board size and composition
The Board determines its size and composition, subject to the limits imposed by iCandy Interactive Limited's Constitution.
The Constitution requires a minimum of three and a maximum of twenty Directors. In addition, at least two of the Directors
shall ordinarily reside within Australia. Currently, the Board consists of four directors. The Board supports the principles of
diversity; however, due to the size and scale of the company's operations, its has no female representative on the board
at the present time.
Election of Board members is substantially the province of the Shareholders in general meeting.
(d) The selection and role of the Chairman
The Chairman is selected by the Board from the non-executive Directors. The Chairman's role includes:
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providing effective leadership on formulating the Board's strategy;
representing the views of the Board to the public;
ensuring that, when all Board members take office, they are fully briefed on the terms of their appointment,
their duties and responsibilities;
ensuring that the Board meets at regular intervals throughout the year, and that minutes of meetings
accurately record decisions taken and, where appropriate, the views of individual Directors;
guiding the agenda and conduct of all Board meetings; and
reviewing the performance of the Board of Directors.
The Board Charter provides that where practical the Chairman of the Board will be a non-executive director. The
Chairman, Kin Wai Lau is a non-executive director but is not considered by the Board to be independent.
The Company may seek to appoint additional independent Directors in the future to address the lack of independence of
its Directors.
(e) Directors' Independence
The Board assesses each of the Directors against specific criteria to decide whether they are in a position to exercise
independent judgement. Directors are considered to be independent if they are independent of management and free
from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially
interfere with, the exercise of their unfettered and independent judgement. Materiality is assessed on a case-by-case
basis by reference to each Directors' individual circumstances rather than general materiality thresholds. In assessing
independence, the Board considers whether the Director has a business or other relationship with iCandy Interactive
Limited, either directly, or as a partner, shareholder or officer of a company or other Company that has an interest, or a
business or other relationship, with iCandy Interactive Limited or another iCandy Interactive Limited group member.
Presently, the only independent Director is Robert Kolodziej. The Company may seek to appoint additional independent
Directors in the future to address the lack of independence of its Directors.
2
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
The Board of Directors (continued)
(f) Avoidance of conflicts of interest by a Director
In accordance with the Corporations Act 2001, any Director with a material personal interest in a matter being considered
by the Board must not be present when the matter is being considered and may not vote on the matter.
(g) Meetings of the Board and their conduct
Meetings of the Board happen when and as appropriate. Details of Board meetings held and attended are tabled in the
Directors' Report, which forms part of this Annual Report.
(h) Succession planning
The Board plans succession of its own members taking into account the skills, experience and expertise required and
currently represented, and iCandy Interactive Limited's future direction. The Board is also responsible for CEO
succession planning.
(i) Review of Board performance
The Board of iCandy Interactive Limited is responsible for evaluating the performance of the Board and individual
Directors will be evaluated on an annual basis, with the aid of an independent advisory, if deemed required. The process
for this can be found in Schedule 6 of the Company's Corporate Governance Plan.
The Company's Corporate Governance Plan requires the Board to disclose whether or not performance evaluations were
conducted during the relevant reporting period. Details of the performance evaluations conducted will be provided in the
Company's Annual Reports.
(j) Nomination and appointment of new Directors
iCandy Interactive Limited has detailed guidelines for the appointment and selection of the Board. The Company's
Corporate Governance Plan requires the Board to undertake appropriate checks before appointing a person, or putting
forward to security holders a candidate for election, as a Director.
All material information relevant to a decision on whether or not to elect or re-elect a Director will be provided to security
holders in a Notice of Meeting pursuant to which the resolution to elect or re-elect such Director will be voted on.
(k) Retirement and re-election of Directors
iCandy Interactive Limited's Constitution states that one-third of our Directors must retire each year. The maximum time
that each Director can serve in any single term is three years. Any Director who has been appointed during the year must
retire at the next annual general meeting. Eligible Directors who retire each year may offer themselves for re-election by
shareholders at the next annual general meeting.
(l) Compulsory retirement of Directors
The Board has no limit on the number of terms of office which any Director may serve.
(m) Board access to information and advice
All Directors have unrestricted access to company records and information and receive regular detailed financial and
operational report. The Company Secretary provides Directors with ongoing guidance on issues such as corporate
governance, iCandy Interactive Limited's Constitution and the law. The Board collectively, and each Director individually
has the right to seek independent professional advice at iCandy Interactive Limited's expense to help them carry out their
responsibilities. Which the Chairman's prior approval is needed, it may not be unreasonably withheld and, in its absence,
Board approval my be sought.
(n) Diversity Policy
The Board has adopted a diversity policy which provides a framework for the Company to achieve, amongst other things,
a diverse and skilled workforce, a workplace culture characterised by inclusive practices and behaviours for the benefit of
all staff, improved employment and career development opportunities for women and a work environment that values and
utilises the contributions of employees with diverse backgrounds, experiences and perspectives. The Diversity Policy of
iCandy Interactive Limited is available on the Company's website.
This diversity policy outlines requirements for the Board to develop measurable objectives for achieving diversity, and
annually assess both the objectives and the progress in achieving those objectives. Accordingly, the Board has developed
the following objectives regarding gender diversity and aims to achieve these objectives over the next five years as
director and senior executive positions become vacant and appropriately qualified candidates become available:
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ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
The Board of Directors (continued)
Women on the Board
Women in senior executive positions
Women employed by the company
(o) Securities trading policy
2017
2018 - 2023
No.
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%
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No.
1
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%
25%
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Directors and employees are subject to the Corporations Act restrictions on trading securities in the Company if they are
in possession of inside information. This is regarded as any information that is non-public and, if it were public that a
reasonable person would expect to have a material effect on the price of the Company's securities.
In addition, the Company has established a policy on the trading in iCandy Interactive Limited's securities, which applies
to all Directors and employees. Key aspects of this policy are as follows:
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Directors and employees are encouraged to be long term holders of the company's securities and are
discouraged from any short-term trading;
Directors and employees may trade shares for 4 weeks following announcements of the annual results,
half year results and the annual general meeting, provided the market has been fully informed. However, a
trading embargo of 2 days applies immediately after any significant announcement;
Directors and employees need to ensure that the market is fully informed before they can trade and to
protect themselves should discuss the intended share trading with the Chairman or Company Secretary;
and
Trading outside the four-week period is required to be approved by the Chairman, prior to any transaction
occurring. Generally, if the market is fully informed, the approval will be granted.
Directors are required to notify the Company Secretary within 2 days of a change in their beneficial interest in the
company shares.
Directors are also required to obtain a written acknowledgement of the Chairman (or the Board in the case of the
Chairman) prior to trading.
Directors' interest in the company's securities have not changed materially in the last 12 months.
Board committees
(a) Board committees and membership
(b) Audit committee
(c) Board Risk Oversight Committee
(d) Board Nominations Committee
(e) Board Remuneration Committee
Due to the size and nature of the existing Board and the magnitude of the Company's operations, the Company does not
currently have the committees listed above other than Audit and Board Risk Oversight committees. Pursuant to clause 5(h) of
the Company's Board Charter, the full Board carries out the duties that would ordinarily be assigned to the above Committees
under the written terms of reference for those committees.
Audit governance and independence
(a) Approach to audit governance
The Board is committed to these basic principles:
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iCandy Interactive Limited must produce trust and fair financial reports; and
Its accounting methods are comprehensive and relevant and comply with applicable accounting rules and
policies.
(b) Engagement and rotation of external auditor
iCandy Interactive Limited's independent external auditor is Bentleys Audit & Corporate (WA) Pty Ltd.
(c) Discussions with external auditor on independence
The Board requires the external auditor to confirm that they have maintained their independence.
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ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Audit governance and independence (continued)
(d) Relationship with auditor
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the audit partners and any audit firm employee on the iCandy Interactive Limited's audit are prohibited
from being an officer of iCandy Interactive Limited;
an immediate family member of an audit partner or any audit firm employee on the iCandy Interactive
Limited's audit is prohibited from being a Director or an office in a significant position at iCandy Interactive
Limited;
a former audit firm partner or employee on the iCandy Interactive Limited's audit is prohibited from
becoming a Director or officer in a significant position at iCandy Interactive Limited for at least five years
and after the five years, can have no continuing financial relationship with the audit firm;
members of the audit team and firm are prohibited from having a business relationship with iCandy
Interactive Limited or any officer of iCandy Interactive Limited unless the relationship is clearly insignificant
to both parties;
the audit firm, its partners, its employees on the iCandy Interactive Limited's audit and their immediate
family members are prohibited from having a direct or material indirect investment in iCandy Interactive
Limited;
officers of iCandy Interactive Limited are prohibited from receiving any remuneration from the audit firm;
the audit firm is prohibited from having a financial interest in any Company with a controlling interest in
iCandy Interactive Limited; and
the audit firm engagement team in any given year cannot include a person who had been an officer of
iCandy Interactive Limited during that year.
(e) Restrictions on non-audit services by the external auditor
The external auditor is not restricted in the provision of non-audit services to iCandy Interactive Limited except as required
by the Corporations Act or the ASX Listing Rules.
(f) Attendance at Annual General Meeting
iCandy Interactive Limited's external auditor attends the annual general meeting and is available to answer shareholders
questions.
Controlling and managing risk
(a) Approach to risk management
Taking and managing risk are central to business and to building shareholder value. iCandy Interactive Limited's
approach is to identify, assess and control the risks which affect is business. The intention is to enable risks to be
balanced against appropriate rewards. The risk management approach links iCandy Interactive Limited's vision and
values, objectives and strategies, and procedures and training.
(b) Risk management roles and responsibilities
The Board is responsible for approving and reviewing iCandy Interactive Limited's risk management strategy and policy.
The Risk Oversight Committee is responsible for implementing the Board-approved risk management strategy and
developing policies, controls, processes and procedures to identify and management risks in all of iCandy Interactive
Limited's activities.
iCandy Interactive Limited does not comply with ASX recommendations on these issues as it does not have a formal
verifiable system of risk management or any employees to implement such a system as it does not view this to be
appropriate at the current time. It relies on the oversight of the Directors and the various committees, together with the
periodic verification of the external auditor.
(c) Company secretarial assurance
The Board received periodic reports about the financial condition and operational results of iCandy Interactive Limited.
The CEO periodically provide formal statements to the Board that in all material respects:
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the company's periodic financial statements present a true and fair view of iCandy Interactive Limited's
financial condition and operational results for those reporting periods; and
that risk management and internal compliance and control systems are sound, appropriate and operating
efficiently and effectively.
5
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Remuneration framework
(a) Overview
The remuneration of an executive Director will be decided by the Board, without the affected executive Director
participating in that decision-making process.
The total maximum remuneration of Non-Executive Directors is initially set by the Directors and subsequent variation is by
ordinary resolution of Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the
ASX Listing Rules, as applicable. The determination of Directors' remuneration within that maximum will be made by the
Board having regard to the inputs and value to the Company of the respective contributions by each non-executive
Director. The current amount has been set at an amount not to exceed $150,000 per annum.
In addition, a Director may be paid fees or other amounts, (e.g. subject to any necessary Shareholder approval, non-cash
performance incentives such as Options) as the Directors determine whether a Director performs special duties or
otherwise performs services outside the scope of the ordinary duties of a Director.
Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or
about the performance of their duties as Directors.
The Board reviews and approves the remuneration policy to enable the Company to attract and retain executives and
Directors who will create value for Shareholders having consideration to the amount considered to be commensurate for a
company of its size and level of activity as well as the relevant Directors' time, commitment and responsibility. The Board
is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of
performance hurdles and total payments proposed.
(b) Employee Share Options Scheme
There are no Employee Share Options Schemes (ESOS) granted over un-issued shares to directors or executives as part
of their remuneration. The issue of any options would require approval by Shareholders.
Corporate responsibility and sustainability
(a) Approach to corporate responsibility and sustainability
iCandy Interactive Limited's approach to corporate responsibility and sustainability is to manage its business in a away
that produces positive outcomes for all stakeholders and maximises economic, social and environmental value
simultaneously. In doing so, iCandy Interactive Limited accepts that the responsibilities flowing from this go beyond both
strict legal obligations and financial bottom line. Transparency, the desire for fair dealing, and positive links into the
community underpin our everyday activities and corporate responsibility practices.
(b) Code of conduct
iCandy Interactive Limited's Board and management are committed to their Code of Conduct (Code) which is based on
their core values and on the expectations of their clients, of shareholders and of the broader community.
The Code aims to promote a high level of professionalism and provide a benchmark for ethical and professional
behaviour throughout the Company. It also promotes a healthy, respectful workplace and environment for all their
employees.
At the same time, the Code aims to support their business reputation and corporate image within the wider community
and make employees aware of the consequences they face if they breach the Code.
The ASX recommendations require that the Code of Conduct is reviewed periodically, specifically to reflect the ASX
Corporate Governance Principles and Recommendations.
(c)
Insider trading policy and trading in iCandy Interactive Limited shares
The Company Secretary has responsibility for ensuring compliance with the continuous disclosure requirements in the
ASX Listing Rules, and overseeing and coordinating information disclosure to the ASX, analysts, brokers, shareholders,
the media and the public.
iCandy Interactive Limited is committed to giving all shareholders comprehensive and equal access to information about
our activities, and to fulfil continuous disclosure obligations to the broader market. iCandy Interactive Limited's policy is
designed to ensure compliance with ASX Listing Rules continuous disclosure requirements. It ensures any information
that a reasonable person would expect to have a material effect on the price of iCandy Interactive Limited's securities is
disclosed.
At the same time, the Code aims to support their business reputation and corporate image within the wider community
and make employees aware of the consequences they face if they breach the Code.
iCandy Interactive Limited currently maintains its own website and relies on communication in this medium on the ASX Company
Announcements platform carrying all the relevant information.
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ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations
The table below outlines each of the ASX Best Practice Recommendations and the Company's compliance with those
recommendations. Where the Company has met the relevant recommendation during the reporting period, this is indicated by a
"YES" in the relevant column. Where the Company has not met or complied with a recommendation, this is indicated by a "NO" and
an accompanying note explaining the reasons why the Company has not met the recommendation.
Principles and Recommendations
Comply
(Yes/No)
Explanation
The Company has adopted a Board Charter.
The Board Charter sets out the specific responsibilities of
the Board, the requirements as to the Boards composition,
the roles and responsibilities of the Chairman, Company
Secretary and management of the Board Committees,
Directors' access to Company records and information,
details of the Board's relationship with management, details
of the Board's performance review and details of the Board's
disclosure policy.
A copy of the Company's Board Charter is contained in the
Company's Corporate Governance Plan which is available
on the Company's website.
(a) The Company has detailed guidelines for the
appointment and selection of the Board. The Company's
Corporate Governance Plan requires the Board to undertake
appropriate checks before appointing a person, or putting
forward to security holders a candidate for election, as a
Director.
(b) All material information relevant to a decision on whether
or not to elect or re-elect a Director will be provided to
security h9olders in a Notice of Meeting pursuant to which
the resolution to elect or re-elect such Director will be voted
on.
The Company's Corporate Governance Plan requires the
Board to ensure that each director and senior executive is a
party to a written agreement with the Company which sets
out the terms of that Director's or senior executive's
appointment.
The Board Charter outlines the role, responsibility and
accountability of the Company Secretary. The Company
Secretary is accountable directly to the Board, through the
Chair, on all matters relating to the proper functioning of the
Board.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should disclose:
(a)
the respective roles and responsibilities of its
board and management; and
those matters expressly reserved to the board and
those delegated to management.
(b)
Recommendation 1.2
A listed entity should disclose:
(a)
undertake appropriate checks before appointing a
person, or putting forward a person, or putting
forward to security holders a candidate for
election, as a director; and
(b)
provide security holders with all material
information relevant to a decision on whether or
not to elect or re-elect a director.
Recommendation 1.3
A listed entity should have a written agreement with
each director and senior executive setting out the terms
of their appointment
Recommendation 1.4
The Company Secretary of a listed entity should be
accountable, directly to the board, through the chair, on
all matters to do with the proper functioning of the
board
Yes
Yes
Yes
Yes
7
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Comply
(Yes/No)
Explanation
Recommendation 1.5
A listed entity should:
(a)
Have a diversity policy which includes
requirements for the board or a relevant
committee of the board;
(i)
to set measurable objectives for achieving
gender diversity; and
to assess annually both the objectives and
the entity's progress in achieving them;
(ii)
(b) disclose that policy of a summary of it; and
(c) disclose as at the end of each reporting period:
(i)
(ii)
(A)
(B)
the measurable objectives for achieving
gender diversity set by the board or a
relevant committee of the board in
accordance with the entity's diversity policy.
either:
the respective portions of men and women
on board, in senior executive positions and
across the whole organisation (including how
the entity has defined "senior executive" for
these purposes); or
if the entity is a "relevant employer" under
the Workplace Gender Equality Act, the
entity's most recent "Gender Equality
Indicators", as defined in the Workplace
Gender Equality Act 2012.
Recommendation 1.6
A listed entity should:
(a)
have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b)
disclose in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
Yes
Recommendation 1.7
A listed entity should:
(a)
(b)
have and disclose a process for periodically
evaluating the performance of its senior
executives; and
disclose in relation to each reporting period,
whether a performance evaluation was
undertaken in the reporting period in accordance
with that process.
Yes
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(a) The Company has adopted a diversity policy
(i) The diversity policy provides a framework for the
Company to set out and achieve measurable objectives that
encompass gender equality.
(ii) The diversity policy provides for the monitoring and
evaluation of the scope and currency of the diversity policy.
The Company is responsible for implementing, monitoring
and reporting on the measurable objectives.
(b) The Diversity Policy is available on the Company's
website.
(c) (i) The measurable objectives set by the Board will be
included in the annual key performance indicators for senior
executives. In addition, the Board will review progress
against the objectives in its annual performance. The Board
will include in its Annual Report each year, the measurable
objectives, progress against the objectives, and the
proportion of male and female employees in the whole
organisation, at senior management level and at Board
level.
Yes
(a) Currently, the roles of the Nomination Committee is
undertaken by the full Board. The Company intends to
establish a separate Nomination Committee once the
Company's operations are of a significant magnitude.
(b) The Board is responsible for evaluating the performance
of the Board and individual Directors will be evaluated on an
annual basis, with the aid of an independent advisor, if
deemed required. The process for this can be found in
Schedule 6 of the Company's Corporate Governance Plan.
(c) The Company's Corporate Governance Plan requires the
Board to disclose whether or not performance evaluations
were conducted during the relevant reporting period. No
performance evaluations were conducted during the
relevant reporting period.
(a) The Board, as a whole, is responsible for evaluating the
performance of senior executives and arranging
performance evaluations.
(b) The Company's Corporate Governance Plan requires the
Board to conduct annual performance of the senior
executives. Schedule 6 requires disclosure as to whether or
not performance evaluations were conducted during the
relevant reporting period and details of the performance
evaluations conducted to be contained in the Company's
annual reports.
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Comply
(Yes/No)
Explanation
Principle 2: Structure the Board to add value
Recommendation 2.1
The board of a listed entity should:
(a)
have a nomination committee which:
(i)
has at least three members, a majority of
whom are independent directors; and
(ii)
(iii)
(iv)
(v)
is chaired by an independent director and
disclose:
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
If it does not have a nomination committee,
disclose that fact and the processes it employs to
address board succession issues and to ensure
that the board has the appropriate balance of
skills, experience, independence and knowledge
of the entity to enable it to discharge its duties.
Recommendation 2.2
A listed entity should have and disclose a broad skill
matrix setting out the mix of skills and diversity that the
board currently has or is looking to achieve in its
membership.
Recommendation 2.3
A listed entity should disclose:
(a)
the names of the directors considered by the
board to be independent directors;
(b)
(c)
if a director has an interest, position, association
or relationship of the type described in Box 2.3 of
the ASX Corporate Governance Principles and
Recommendation (3rd Edition), but if the board is
of the opinion that it does not compromise the
independence of the director, the nature of the
interest, position, association or relationship in
question and an explanation of why the board is of
that opinion; and
the length of service of each director
Due to the size and nature of the existing Board and the
magnitude of the Company's operations, the Company does
not currently have a Nomination Committee. Pursuant to
clause 5(h) of the Company's Board Charter, the full Board
carries out the duties that would ordinarily be assigned to
the Nomination Committee under the written terms of
reference for that committee.
The duties of the Nomination Committee are outlined in the
Nomination Committee Charter contained in Schedule 5 of
the Company's Corporate Governance Plan.
The Board devotes time on an annual basis to discuss
Board succession issues. All members of the Board are
involved in the Company's nomination process, to the
maximum extent permitted under the Corporations Act and
ASX Listing Rules.
The Board regularly updates the Company's board skills
matrix (in accordance with Recommendation 2.2) to assess
the appropriate balance of skills, experience, independence
and knowledge of the entity.
The Board is required to prepare a Board skill matrix setting
out the mix of skills and diversity that the Board currently
has (or is looking to achieve). The composition of the Board
is to be reviewed regularly against the Company's Board
skill matrix to ensure the appropriate mix of skills and
expertise is present to facilitate successful strategic
direction. This role will be performed by the Nomination
Committee once established. The Company will disclose the
Board skill matrix in, or in conjunction with, its Annual
Reports.
(a) The Board Charter provides for the disclosure of the
names of Directors considered by the Board to be
independent. The only current independent Director is
Robert Kolodziej.
(b) The Board Charter requires Directors to disclose their
interest, positions, associations and relationships and
requires that the independence of Directors is regularly
assessed by the Board in light of the interest disclosed by
Directors. Details of the Directors interest, positions,
associations and relationship are provided in this report.
(c) The Board Charter provides for the determination of
Directors' terms and requires the length of service of each
Director to be disclosed. Date of appointments for each
director are disclosed in the Company's Annual Report.
No
Yes
Yes
9
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Recommendation 2.4
A majority of the board of a listed entity should be
independent directors.
Recommendation 2.5
The chair of the board of a listed entity should be an
independent director and, in particular, should not be
the same person as the CEO of the entity.
Recommendation 2.6
A listed entity should have a program for inducting new
directors and providing appropriate professional
development opportunities for continuing directors to
develop and maintain the skills and knowledge needed
to perform their role as a director effectively.
Principle 3: Act Ethically and Responsibly
Recommendation 3.1
A listed entity should:
(a)
have a code of conduct for its directors, senior
executives and employees; and
(b) disclose that code or a summary of it
Comply
(Yes/No)
Explanation
The Board Charter requires that where practical the majority
of the Board will be independent.
Details of each Director's independence are provided in this
report. The only current independent Director is Robert
Kolodziej.
The Company may seek to appoint additional independent
Directors in the future to address the lack of independence
of its Directors.
The Board Charter provides that where practical, the
Chairman of the Board will be a non-executive director. The
Chairman, Kin Wai Lau is a non-executive director but is not
considered by the Board to be independent.
The Company may seek to appoint additional independent
Directors in the future to address the lack of independence
of its Directors.
The Board Charter states that a specific responsibility of the
Board is to procure appropriate professional development
opportunities for Directors. The Nomination Committee is
responsible for the approval and review of induction and
continuing professional development programs and
procedures for Directors to ensure that they can effectively
discharge their responsibilities.
Due to the size and nature of the existing Board and the
magnitude of the Company's operations, the Company does
not currently have a Nomination Committee. Pursuant to
clause 5(h) of the Company's Board Charter, the full Board
carries out the duties that would ordinarily be assigned to
the Remuneration Committee under the written terms of
reference for that committee.
(a) The Corporate Code of Conduct applies to the
Company's Directors, senior executive and employees.
(b) The Company's Corporate Code of Conduct is contained
in the Corporate Governance Plan available on the
Company's website.
No
No
Yes
Yes
10
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Comply
(Yes/No)
Explanation
Principle 4: Safeguard Integrity in Corporate Reporting
Recommendation 4.1
The board of a listed entity should:
(a) have an audit committee which:
(i)
(ii)
(iii)
(iv)
(v)
has at least three members, a majority of
whom are independent directors; and
is chaired by an independent director who is
not the chair of the board, and disclose:
the charter of the committee;
the relevant qualifications and experience of
the members of the committee; and
in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
if it does not have an audit committee, disclose
that fact and the processes it employs that
independently verifies and safeguards the integrity
of its financial reporting, including the processes
for the appointing and removal of the external
auditor and the rotation of the external auditor.
Recommendation 4.2
The Board of a listed entity should, before it approves
the entity's financial statements for a financial period,
receive from its CEO and CFO a declaration that the
financial records of the entity have been properly
maintained and that the financial statements comply
with the appropriate accounting standards and give a
true and fair view of the financial position and
performance of the entity and that the opinion has been
formed on the basis of a sound system of risk
management and internal control which is operating
effectively.
Recommendation 4.3
A listed entity that has an AGM should ensure that its
external auditor attends its AGM and is available to
answer questions from security holders relevant to the
Annual Report.
Principle 5: Make timely and balances disclosure
Recommendation 5.1
A listed entity:
(a)
have a written policy for complying with its
continuous disclosure obligations under the
Listing Rules; and
(b)
disclose that policy of a summary of it; and
Principle 6: Respect the rights of Security Holders
Recommendation 6.1
A listed entity should provide information about itself
and its governance to investors via its website.
Yes
Yes
Yes
Yes
Yes
11
The Board has established a formal audit committee and
such a committee will operate under an audit committee
charter which has already been approved by the Board. In
the meantime, the Board as a whole carries out the
functions of an audit committee in accordance with the audit
committee charter.
The Company's Corporate Governance Plan states that a
duty and responsibility of the Board is to ensure that before
the Board approves the entity's financial statements for a
financial period, the CEO/MD and CFO have declared that
in their opinion, the financial records of the entity have been
properly maintained and that the financial statements
comply with the appropriate accounting standards and give
a true and fair view of the financial position and performance
of the entity and that the opinion has been formed on the
basis of a sound system of risk management and internal
control which is operating effectively. Where there is no
CEO/MD or CFO (at present), the full Board will carry out
the duties that would ordinarily be assigned to the CEO/MD
and CFO under the Audit and Risk Committee Charter.
The Company's Corporate Governance Plan provides that
the Board must ensure the Company's external auditor
attends its AGM and is available to answer questions from
security holders relevant to the audit.
(a) Schedule 7 of the Company's Corporate Governance
Plan is entitled "Disclosure Continuous Disclosure" and
details the Company's disclosure requirements as required
by the ASX Listing Rules and other relevant legislation.
(b) The Corporate Governance Plan is available on the
Company's website
Information about the Company and its governance is
available in the Corporate Governance Plan which is
available on the Company's website.
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Comply
(Yes/No)
Explanation
The Company has adopted a shareholder Communications
Strategy which aims to promote and facilitate effective two-
way communication with investors. The Strategy outlines a
range of ways in which information is communicated to
Shareholders. The Strategy is contained in Schedule 11 of
the Company's Corporate Governance Plan.
The Shareholder Communications Strategy states that as a
part of the Company's developing investor relations
program, Shareholders can register with the Company
Secretary to receive email notifications of when an
announcement is made by the Company to the ASX,
including the release of the Annual Report, half yearly
reports and quarterly reports. Links will be made available to
the Company's website on which all information provided to
the ASX is immediately posted.
Shareholders are encouraged to participate at all EGMs and
AGMs of the Company. Upon the despatch of any notice of
meeting to Shareholders, the Company Secretary shall send
out material with that notice of meeting stating that all
Shareholders are encouraged to participate at the meeting.
Security holders can register with the Company to receive
email notifications where an announcement is made by the
Company to the ASX. Shareholders queries should be
referred to the Company Secretary in the first instance.
The Board has established a formal risk oversight
committee and such a committee will operate under a risk
committee charter which will be approved by the Board.
Recommendation 6.2
A listed entity should design and implement an investor
relations program to facilitate effective two-way
communication with investors.
Recommendation 6.3
A listed entity should disclose the policies and
processes it has in place to facilitate and encourage
participation at meetings of security holders.
Yes
Yes
Recommendation 6.4
A listed entity should give security holders the option to
receive communications from, and send
communications to, the entity and its board.
Yes
Principle 7: Recognise and manage risk
Recommendation 7.1
The board of a listed entity should:
(a)
have a committee or committees to oversee risk,
each of which:
(i)
(ii)
(iii)
(iv)
(v)
has at least three members, a majority of
whom are independent directors; and
is chaired by an independent director, and
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
process it employs for overseeing the entity's risk
management framework.
Yes
12
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Comply
(Yes/No)
Explanation
Recommendation 7.2
The board or a committee of the board should:
(a)
review the entity's risk management framework
with management at least annually to satisfy itself
that it continues to be sound, to determine
whether there have been any changes in the
material business risks the entity faces and to
ensure that they remain within the risk appetite
set by the board; and
(b)
disclose in relation to each reporting period,
whether such a review has taken place.
Recommendation 7.3
A listed entity should disclose:
(a)
if it has an internal audit function, how the function
is structed and what role it performs; or
(b)
if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of its
risk management and internal control process.
Recommendation 7.4
A listed entity should disclose whether, and if so how, it
has regard to economic, environmental and social
sustainability risks and, if it does, how it manages or
intends to manage those risks
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The board of a listed entity should:
(a) have a remuneration committee which:
(i)
(ii)
(iii)
(iv)
(v)
has at least three members, a majority of
whom are independent directors; and
is chaired by an independent director; and
disclose:
the charter of the committee;
the members of the committee; and
as at the end of each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b)
if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for directors and senior executives and ensuring
that such remuneration is appropriate.
Yes
No
Yes
No
13
(a) The Company's process for risk management and
internal compliance includes a requirement on the Board to
identify and measure risk, monitor the environment for
emerging factors and trends that affect theses risks,
formulate risk management strategies and monitor the
performance of risk management systems. Schedule 8 of
the Corporate Governance Plan is entitled "Disclosure - Risk
Management" and details the Company's disclosure
requirements with respect tot eh risk management review
procedure and internal compliance controls.
(b) Schedule 8 requires the Board to disclose the number of
times the Board (or the Audit and Risk Committee once
established) met throughout the relevant reporting period,
and the individual attendances of the members at those
meetings. Details of the meetings will be provided in the
Company's Annual Reports.
Due to the size and nature of the existing Board and the
magnitude of the Company's operations, the Company does
not currently have an internal audit function.
Schedule 3 (Audit and Risk Committee Charter) of the
Company's Corporate Governance Plan provides for a
future internal audit function of the Company. The Charter
outlines the monitoring, review and assessment of a range
of internal audit functions and procedures.
Schedule 8 of the Company's Corporate Governance Plan
details the Company's risk management systems which
assist in identifying and managing potential or apparent
business, economic, environmental and social sustainability
risks (if appropriate). Review of the Company's risk
management framework is conducted at least annually and
reports are continually created by management on the
efficiency and effectiveness of the Company's risk
management framework and associated internal compliance
and control procedures.
Due to the size and nature of the existing Board and the
magnitude of the Company's operations, the Company does
not currently have a Remuneration Committee. Pursuant to
clause 5(h) of the Company's Board Charter, the full Board
carries out the duties that would ordinarily be assigned to
the Remuneration Committee under the written terms of
reference for that committee.
The role and responsibilities of the Remuneration
Committee are outlined in Schedule 4 of the Company's
Corporate Governance Plan which is available online on the
Company's website.
The Board devotes time annually to fulfilling the roles and
responsibilities associated with setting the level and
composition of remuneration for Directors and senior
executives and ensuring that such remuneration is
appropriate and not excessive.
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CORPORATE GOVERNANCE STATEMENT
Compliance with ASX Corporate Governance Council Good Practice Recommendations (continued)
Principles and Recommendations
Comply
(Yes/No)
Explanation
Recommendation 8.2
A listed entity should separately disclose its policies
and practices regarding the remuneration of non-
executive directors and the remuneration of executive
directors and other senior executives and ensure that
the difference roles and responsibilities of non-
executive directors compared to executive directors
and other senior executives are reflected in the level
and composition of their remuneration.
Recommendation 8.3
A listed entity which has an equity-based remuneration
scheme should:
(a)
have a policy on whether participants are
permitted to enter into transactions (whether
through the use of derivatives or otherwise) which
limited the economic risk of participating in the
scheme; and
(b)
disclose that policy or a summary of it
Yes
Yes
The Company discloses its policies and practices regarding
the remuneration of non-executive and executive directors
and other senior employees within the Annual Financial
Report.
Equity based executive remuneration is made in accordance
with thresholders set in plans approved by shareholders. In
addition, the Company has issued equity based
remuneration to both Executive and Senior Management
which has been approved by shareholders at a general
meeting, at which a summary of the incentive plan was
provided to shareholders.
14
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' REPORT
Your directors present their report on the consolidated entity (referred to herein as the Group) consisting of iCandy Interactive Limited and its
controlled entities for the financial period ended 31 December 2017.
General Information
Directors
The following persons were directors of iCandy Interactive Limited during the whole of the financial period and up to the date of this report, unless
otherwise stated.
Kin Wai Lau
Non-Executive Director and Chairman
Appointed on 20 March 2015
Phillip Lord
Executive Director
Appointed 11 October 2017
Kin-Wai is a serial tech entrepreneur with extensive international start-up,
senior management and investment experience
Since founding his first company at the age of 23, Kin-Wai has built companies
across telecom software, internet media and biotech. He is one of the handful
of entrepreneurs in Southeast Asia that have real track-record of multiple
exists. Kin-Wai was named by the media as one of the youngest ever MDs of
a publicly traded firm in Southeast Asia when he IPO'd his first company at the
age of 28. He has since been involved in building other tech companies, with
three of them being listed on major stock exchanges in the region.
Kin-Wai began his career as research staff and a PhD candidate at the
Imperial College, London before starting up his own company.
Kin-Wai frequently supports entrepreneurial campaigns in colleges and
universities and is a regular judge at innovation and start-up competitions in
Singapore.
Kin-Wai graduated with first class honours in Electronic & Electrical
Engineering from the University of Manchester, United Kingdom. He also has
a Master in Business, Administration from the University of Oxford.
Other current directorships of listed companies
Fatfish Internet Group Limited - appointed July 2014
Former directorships of listed companies in last three years
N/A
Phillip has been a serial investor in tech and early stage companies with 20
years of experience in global equity, debt, and M&A markets. He was fomerly
MD for Jefferies & Nomura, working in Tokyo, Hong Kong, Singapore &
London.
He expressed that he is super excited about joining iCandy and to have the
opportunity to drive growth for them within the gaming industry, and its
surrounding verticals like in-game advertising and micropayment. He has also
stated that there is a revolution happening in blockchain technology and is
positive that the blockchain technology could facilitate in-game micro-payment
purchase in the gaming industry for the free-to-play business model of mobile
games.
Other current directorships of listed companies
N/A
Former directorships of listed companies in last three years
N/A
15
Robert Kolodziej
Non-Executive Director
Appointed 27 May 2015
Donald Low
Non-Executive Director
Appointed on 20 March 2015
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' REPORT
Robert is a senior advisor at Bell Porter Securities and has over 20 years'
experience in investment management. He has wide macroeconomic
understanding across many areas of financial markets and specialises in
strategic investment advice for high net worth clients, small cap fund
managers and family officers.
Robert has expertise with small capitalisation companies especially in the
technology and renewable sector and has been arranging transactions in
equity capital markets for these companies. Prior to working in stockbroking,
Robert worked for Ernst & Young in the property trust area while at the same
time running a business specialising in eco-tourism. Since then, he has
worked in the property development sector specialising in due diligence and
strategy. Separately from his role at Bell Potter Securities, he is also an
Executive Director at Kollins Capital, a financial services and corporate
advisory firm.
Other current directorships of listed companies
N/A
Former directorships of listed companies in last three years
N/A
Donald has worked in the corporate advisory and corporate finance section
with experience covering the whole business cycle, ranging from start-ups,
business creating and exits via Initial Public Offerings (IPOs), Reverse Take
Overs (RTO), Trade Sales and Mergers and Acquisitions (M&A). As part of all
corporate restructurings, especially in distressed assets and business models,
Donald takes a hands-on approach in the senior management of the
companies post transactions.
He has served as Chief Executive Officer (CEO) and as director on boards of
private and publicly listed companies in Asia, Australian and Europe with
interests ranging from traditional businesses such as agriculture (oil palm
plantations, etc.), logistics, finance, mining, manufacturing, goods and service
(A&W) to new economy businesses in TMT (Telecommunication, Media &
Technology) space and the fast growing internet environment.
Other current directorships of listed companies
Fatfish Internet Group Limited - appointed April 2008
Former directorships of listed companies in last three years
Gladiator Resources Limited - resigned February 2017
Company Secretary
Mr Donald H Low is the Company Secretary of the entity. He was appointed on 29 February 2016.
Shareholdings of directors and other key management personnel
The interest of each Director and other key management personnel, directly and indirectly, in the shares and options of the Company at the date of
this report are as follows:
Kin Wai Lau*
Phillip Lord
Donald Han Low*
Robert Kolodziej
31 December 2017
31 December 2016
Ordinary Shares
Share Options
Ordinary Shares
Share Options
192,500,000
-
192,500,000
250,000
-
-
-
-
192,500,000
-
192,500,000
250,000
-
-
-
-
* Shares are held in Fatfish Internet Pte Ltd, a fully owned subsidiary of Fatfish Internet Group Limited, of which Mr Kin Wai Lau and Mr Donald
Han Low are directors of.
16
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' REPORT
Meetings of Directors
During the financial year, 15 meetings of directors were held.
Attendances by each director during the year were as follows:
Kin Wai Lau
Phillip Lord
Donald Han Low
Robert Kolodziej
Directors' Meetings
Number eligible to
attend
Number attended
15
5
15
15
15
5
15
15
Principle Activities and Significant Changes in Nature of Activities
The Company's business plan is to develop and publish 'freenium' games for smartphones, which are free-to-download and free-to-play for platers.
The 'freenium' game model is proven to be a successful business model employed by many global mobile game companies. The Company plans
to generate revenue through the following approaches:
-
-
-
In-game purchases - players can purchase virtual items or currencies which are used within the Company's games to improve character
levels, speed up the game progress and/or enhance playing experience;
Mobile advertising - which allows iCandy to advertise third-party products and service in the Company's games; and
Game merchandise sales - players can purchase game related merchandise branded with logos and artwork of the Company's various
games.
REVIEW OF OPERATIONS
For this second year the Group entered into the Early Access program of Google Play app-store, a global program that sees selected game
developers working closely with the Google Play team to test and experiment soon-to-be-launched game titles and apps to a global app-store
community. The Group’s latest game title, Light A Way, was selected to be in the Early Access program. Light A Way is the first fantasy-themed
game that the Group develops and publishes. It has received good response the Early Access program and all indications point to an eventual
successful full-fledged launch expected to be carried out through-out the first quarter period of 2018.
Appxplore, a game studio of the Group, a Excellence in Gameplay Award of the coveted International Mobile Gaming Awards (IMGA) Southeast
Asia. The prestigious IMGA award recognises the Group’s creativity and capability in the art of making high-quality entertainment products. The
Group has also expanded its operation in Malaysia by setting up a dedicated Marketing and Analytics department to better analyse behaviours of
its gaming community and take a proactive stance in designing better game titles and game mechanics that gamers will be inclined to like. The
Group has continue to build up its creativity resources and pipeline during the period and through that the process the Group has invested into a
talent pool that is now able to provide for a larger creativity and productivity throughput for the coming year of 2018.
Operating Results
The consolidated loss of the consolidated entity after providing for income tax amounted to $3,113,914 (2016: loss of $422,090)
Dividend Paid or Recommended
It is not recommended that a dividend be declared and no dividends were paid or declared during and since the end of the financial year.
Financial Position
The net assets of the Group have increased by $732,070 from $3,061,090 as at 31 December 2016 to $3,793,160 as at 31 December 2017.
17
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' REPORT
Matters subsequent to the End of the Financial Year
At 31 December 2017, the Group had prepaid for 1,449,696 NOX tokens, and value at 31 December 2017 was $610,780. At the date of this report,
NOX is being traded with a value of AUD $0.0945 per token (USD $0.0726). The fair value of the tokens held as at the date of this report is AUD
$137,017 (USD $105,248)
At the date of this report, the matter regarding the Company's application to the Federal Court of Australia for orders providing for the retrospective
curing of the offers for sale, or sale, by the subscribers of shares issued on 9 October 2017 was heard before the Honorable Justice Banks-Smith
in the Federal Court on the 26 March 2018. Justice Banks-Smith had reserved judgement and ordered that ASIC file and service further
submissions by 9 April 2018 and the Company file and serve any submissions (if necessary) in reply within 7 days of ASIC submissions.
ASX has advised that the Company's shares will remain in voluntary suspension until such time as orders are made by the Federal Court. The
Company will make a further announcement once a judgement is received.
At the date of this report, the transaction to purchase the Casual Games Portfolio from Animoca Brands Corporation Limited ("AB1") has yet to be
completed. The transaction is expected to complete within the second quarter of the 2018 year subject to the Company getting shareholder
approval and fulfillment of customary closing conditions, after which the Company will pay AB1 an upfront consideration of AUD 1 million in cash
and AUD 4 million in the Company's shares at a fixed valuation of AUD 0.16 per share (25,000,000 shares). To the date of this report, a total
deposit of AUD 250,000 has been paid to AB1. The total remaining cash consideration left to be paid is AUD 750,000.
In addition to the upfront consideration described above, AB1 will also receive deferred payments of up to AUD 3 million in 2018 and 2019, subject
to revenue hurdles and payable in the Company's shares, as well as earn-out payments on profit generated by the games sold for a period of five
years after the closing of the Transaction.
The Company had entered into a binding term sheet with Animoca Brands Corporation Limited ("AB1") and Nitro Interactive Limited ("Nitro") to co-
develop and co-invest in a global iOS and Android mobile game application based on the Masterchef franchise, one of the world's top-rate
competitive cooking reality television programs.
The Company, AB1 and Nitor have committed to co-develop the Masterchef mobile app, with AB1 contributing 50% of the total development,
publishing, and market costs while the Company and Nitro will contribute 25% each of the same. AB1 will own all intellectual property rights relating
to the mobile app and grants to Nitro an irrevocable, fully paid-up, royalty-free worldwide license to those rights.
Mr Donald Low has resigned as the Company's director and Company Secretary, effective 1 April 2018. Mr Marcus Ungar would be appointed as
an Non-Executive Director. Mr Andrew Draffin and Ms Jiahui Lan would be appointed joint Company Secretary on that date.
Future Developments
The Company plans to implement its business strategy as outlined above.
The Company will continue to keep stakeholders informed of any future developments via its compliance with the continuous disclosure
requirements.
Environmental Issues
The Company's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or
Territory.
Audit/ Non-Audit Services
Auditors' remuneration is disclosed in Note 6. No non-audit services have been provided by the auditor or their related practices.
Indemnifying Officers or Auditor
An indemnity has been given by the Company in favour of the directors to the extent that the Corporations Act 2001 allows. No payment or
agreement has been given in relation to a premium in respect of a contract insuring against a liability incurred as an officer for the costs or
expenses to defend legal proceedings.
No other insurance premium or indemnity has been paid or provided in respect of any directors or auditors.
Capital Raising and Capital Structure
As at 31 December 2017, the Company has 277,192,746 fully paid ordinary shares. During the year, a total of 47,909,412 fully paid ordinary shares
were issued. Please refer to Note 18 - Issued capital for further details.
Summary of Options on issue
Issuing entity
Issue Date
Number of shares
under option
Class of shares
Exercise Price
Expiry Date
iCandy Interactive Limited
10 June 2015
8,033,333
Listed options
iCandy Interactive Limited
1 February 2016
22,500,000
Listed options
iCandy Interactive Limited
9 October 2017
20,500,000
Unlisted options
iCandy Interactive Limited
9 October 2017
10,000,000
Unlisted options
$0.210
$0.210
$0.100
$0.065
4 February 2020
4 February 2020
9 October 2019
9 October 2018
Option holders do not have any rights to participate in any issues or other interest in the company or any other entity.
For details of options issued to directors and executives as remuneration, refer to Remuneration Report.
There have been no shares issued since the end of the financial year resulting from exercise of options.
18
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' REPORT
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the company is a
party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required by section 307c of the Corporations Act 2001 is attached on page 21.
REMUNERATION REPORT - AUDITED
This remuneration report sets out remuneration information for non-executive directors, executive directors and other key management personnel.
Remuneration Policies
Remuneration levels are competively set to attract the most qualified and experienced Directors and Senior Executives. The Board may obtain
independent advice on the appropriateness of remuneration packages. No independent advice was sought during or since the end of the period
under review with regards to remuneration.
There are no schemes for retirement benefits.
The directors are reimbursed for expenses incurred by them in the course of their duties as directors of the company.
There is no link between the provision of any monetary benefits and performance of the company.
The Group's earnings and movement in shareholder's wealth for financial year ended 31 December 2017 are detailed in the following table:
31 December 2017
31 December 2016
Nine months ending 31
December 2015
Revenue
Net (loss) before tax
Net (loss) after tax
Share price at start of the year
Share price at end of the year
Dividends paid
Basic (loss) per share
Key management remuneration policy
$
1,656,454
(3,362,941)
(3,113,914)
0.14
0.16
-
(1.23)
$
1,573,817
(408,768)
(422,090)
-
0.14
-
(0.19)
$
154,246
(250,254)
(250,254)
-
-
-
(0.14)
The key management personnel of the company are represented by the directors and company secretary.
The key management personnel remuneration policy is therefore the same as the directors' remuneration policy.
Directors and executives disclosed in this report
Name (current directors)
Kin Wai Lau
Position Held
Non-Executive Director and Chairman
Phillip Lord (appointed 11 October 2017)
Executive Director
Donald Han Low
Robert Kolodziej
Non-Executive Director and Company Secretary
Non-Executive Director
Remuneration of Directors and Other Key Management Personnel (KMP) for the Year Ended 31 December 2017
2017
Group KMP
Kin Wai Lau
Phillip Lord (appointed 11 October 2017)
Donald Han Low
Robert Kolodziej
Salaries, fees and
leave
Shares, Options/
Incentive Rights
Superannuation
Total
$
$
$
$
23,024
108,738
24,000
12,000
167,762
-
-
-
-
-
-
-
-
-
-
23,024
108,738
24,000
12,000
167,762
Remuneration of Directors and Other Key Management Personnel (KMP) for the Year Ended 31 December 2016
2016
Group KMP
Kin Wai Lau
Donald Han Low
Robert Kolodziej
Ivan Perry Wu - Resigned 29.02.2016
Salaries, fees and
leave
Shares, Options/
Incentive Rights
Superannuation
Total
$
$
$
$
19,111
22,000
11,000
4,500
56,611
19
-
-
-
-
-
-
-
-
-
-
19,111
22,000
11,000
4,500
56,611
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' REPORT
No post-employment benefits were paid to the directors. The directors do not participate in any incentive programs.
KMP Shareholdings
The number of ordinary shares in iCandy Interactive Limited held by each KMP of the Group during the financial year are as follows:
Balance at beginning
of year
Granted as
Remuneration during
the year
Issued on Exercise
of Options during the
year
Other changes
during the year
Balance at End of
Year
Group KMP
Kin Wai Lau*
Phillip Lord
Donald Han Low*
Robert Kolodziej
192,500,000
-
192,500,000
250,000
-
-
-
-
-
-
-
-
-
-
-
-
192,500,000
-
192,500,000
250,000
*Shares are held in Fatfish Internet Pte Ltd, a fully owned subsidiary of Fatfish Internet Group Limited, of which Mr Kin Wai Lau and Mr Donald Han
Low are directors of.
The number of listed and unlisted options in iCandy Interactive Limited held by each KMP of the Group during the financial year are as follows:
Balance at beginning
of year
Granted as
Remuneration during
the year
Issued on Exercise
of Options during the
year
Other changes
during the year
Balance at End of
Year
Group KMP
Kin Wai Lau
Phillip Lord
Donald Han Low
Robert Kolodziej
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share options granted to directors and executives
No shares or options were granted to Directors or Executives during the year.
At the end of the financial year, no unlisted options were held by any Director and other key management personnel, directly and indirectly.
Other transactions and balances with Key Management Personnel:
Mr Kin Wai Lau had loaned iCandy Ventures Limited, a wholly owned subsidiary of iCandy Interactive Limited AUD $191,865 (SGD $200,000)
during the reporting year.
This concludes the remuneration report, which has been audited.
The Directors' Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors made pursuant to
s.298(2) of the Corporations Act 2001.
Mr Kin Wai Lau
Director
Dated this 29 March 2018
20
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit director for the audit of the financial statements of iCandy Interactive
Limited for the financial year ended 31 December 2017, I declare that to the best of my
knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 29th day of March 2018
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
Continuing operations
Revenue
Other income
Cost of sales
Gross Profit
Marketing expenses
Audit fees
Legal and Professional fees
Share based payments
Occupancy expenses
Employee benefits expense
Depreciation and amortisation expense
Impairment expense
Computer expenses
Other expenses
Travel expenses
Finance expenses
Profit before income tax
Tax (benefit)/expense
Loss for the year attributable to members of the company
Items that may be reclassified subsequently to profit or loss when
specific conditions are met:
Exchange differences on translating foreign operations, net of tax
Total other comprehensive income/(loss) for the year
Total comprehensive income for the year
Earnings per share
Basic loss per share (cents)
Diluted loss per share (cents)
Note
3
3
4
7
7
Group
2017
$
2016
$
1,656,454
(11,137)
(939,533)
705,784
(65,269)
(50,196)
(129,108)
(885,980)
(37,834)
(514,729)
(651,745)
(1,488,570)
(11,274)
(113,322)
(120,698)
-
(3,362,941)
249,027
(3,113,914)
62,889
62,889
62,889
(3,051,025)
(1.23)
(1.23)
1,573,817
41,277
(896,632)
718,462
(261,091)
(38,552)
(364,048)
-
(17,075)
(114,026)
(162,951)
-
(6,169)
(150,927)
(8,542)
(3,849)
(408,768)
(13,322)
(422,090)
(132,697)
(132,697)
(132,697)
(554,787)
(0.19)
(0.19)
The accompanying notes form part of these financial statements.
22
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017
2017
$
Note
Group
2016
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other financial assets
Property, plant and equipment
Intangible assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Other financial liabilities
Current tax liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Other financial liabilities
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
8
9
10
14
10
12
13
14
15
16
17
16
17
18
26
142,241
287,256
1,379,023
18,501
1,827,021
-
97,910
1,713,129
1,184,334
2,995,373
4,822,394
134,139
832,696
2,006
968,841
-
60,393
60,393
1,029,234
3,793,160
645,505
204,570
1,268,550
-
2,118,625
37,509
20,827
1,283,606
303,693
1,645,635
3,764,260
161,279
520,191
10,962
692,432
9,049
1,689
10,738
703,170
3,061,090
27,056,445
(19,477,027)
(3,786,258)
3,793,160
24,159,330
(20,425,896)
(672,344)
3,061,090
The accompanying notes form part of these financial statements.
23
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2017
Consolidated Group
Balance at 1 January 2016
Comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners, in their capacity as
owners, and other transfers
Shares issued during the year
Transaction costs
Total transactions with owners and other transfers
Issued Capital
Accumulated
Losses
$
$
Foreign Currency
Translation
Reserve
$
20,061,697
(250,254)
(3,200)
-
-
-
(422,090)
-
(422,090)
-
(132,697)
(132,697)
4,500,000
(402,367)
4,097,633
-
-
-
-
-
-
Balance at 31 December 2016
24,159,330
(672,344)
(135,897)
Balance at 1 January 2017
24,159,330
(672,344)
(135,897)
Comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners, in their capacity as
owners, and other transfers
Shares issued during the year
Transaction costs
Options issued during the year
Total transactions with owners and other transfers
-
-
-
(3,113,914)
-
(3,113,914)
-
62,889
62,889
2,977,065
(79,950)
-
2,897,115
-
-
-
-
-
-
-
-
Reserves
Option Reserve Other components
Total
of Equity
$
$
(20,289,999)
(481,756)
-
-
-
-
-
-
(422,090)
(132,697)
(554,787)
4,500,000
(402,367)
4,097,633
(20,289,999)
3,061,090
(20,289,999)
3,061,090
-
-
-
-
-
-
-
(3,113,914)
62,889
(3,051,025)
2,977,065
(79,950)
885,980
3,783,095
-
-
-
-
-
-
-
-
-
-
-
-
-
-
885,980
885,980
Balance at 31 December 2017
27,056,445
(3,786,258)
(73,008)
885,980
(20,289,999)
3,793,160
The accompanying notes form part of these financial statements.
24
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash acquired with acquisition of Inzen Studio Pte Ltd
Interest received
Purchase of property, plant and equipment
Purchase of intangible assets
Deposit paid for acquisition of investment
Payments for investments
Loans to related parties:
- payments made
- proceeds from repayments
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments for capital raising costs
Loans from related parties
- payments made
- proceeds from borrowings
Net cash provided by (used in) financing activities
Net increase in cash held
Cash and cash equivalents at beginning of financial year
Effect of exchange rates on cash holdings in foreign currencies
Cash and cash equivalents at end of financial year
Group
Note
2017
$
2016
$
1,553,137
(2,166,699)
(613,562)
631
60,323
(89,802)
(464,585)
(250,000)
(601,390)
-
(104,351)
(1,449,174)
1,332,500
(87,945)
-
314,490
1,559,045
(503,691)
645,505
427
142,241
818,284
(1,777,134)
(958,850)
-
53,200
(14,281)
(1,235,524)
(302,533)
-
(1,223,729)
196,328
(2,526,539)
4,121,584
(406,367)
(20,797)
10,986
3,705,406
220,017
427,197
(1,709)
645,505
20a
8
The accompanying notes form part of these financial statements.
25
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
These consolidated financial statements and notes represent those of iCandy Interactive Limited and Controlled Entities ("group").
The financial statements were authorised for issue on 29 March 2018 by the directors of the company.
Note 1
Summary of Significant Accounting Policies
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards
and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International
Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material
accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless
stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accrual basis and are based on historical costs, modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
(a)
Principles of Consolidation
iCandy Interactive Limited's financial statements consolidated those of the Parent Company and all of its subsidiaries as of 31 December
2017. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the
ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 31 December.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which
control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Inter-company
transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation.
Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting
policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date
of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary's profit or loss and net assets that is not held by
the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-
controlling interests based on their respective ownership interests.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under
common control. The business combination will be accounted for from the date that control is obtained, whereby the fair value of the
identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration
arrangement is also included. Subsequent to initial recognition, 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 is remeasured each reporting
period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at
acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are
recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
(i) the consideration transferred;
(ii) any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
(iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any
previously held equity interest shall form the cost of the investment in the separate financial statements.
Fair value remeasurements in any pre-existing equity holdings are recognised in profit or loss in the period in which they arise. Where
changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to
profit or loss.
The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than 100% interest will depend on the
method adopted in measuring the non-controlling interest. The Group can elect in most circumstances to measure the non-controlling
interest in the acquiree either at fair value (full goodwill method) or at the non-controlling interest's proportionate share of the subsidiary's
identifiable net assets (proportionate interest method). In such circumstances, the Group determines which method to adopt for each
acquisition and this is stated in the respective note to the financial statements disclosing the business combination.
26
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
Under the full goodwill method, the fair value of the non-controlling interest is determined using valuation techniques which make the
maximum use of market information where available. Under this method, goodwill attributable to the non-controlling interest is recognised in
the consolidated financial statements.
Refer to Note 11 for information on the goodwill policy adopted by the Group for acquisitions.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in
associates.
Goodwill is tested for impairment annually and is allocated to the Group's cash-generating units or groups of cash-generating units,
representing the lowest level at which goodwill is monitored and not larger than an operating segment. Gains and losses on the disposal of
an entity include the carrying amount of goodwill related to the entity disposed of.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not
affect the carrying amounts of goodwill.
(b)
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 for the current period. Current tax liabilities
(assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority using tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period.
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 that are
recognised outside profit or loss or arising from a business combination.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, 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 and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of
the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of
investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying
amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the entity in a
business model whose objective is to consume substantially all of the economic benefits embodied in the property through use over time
(rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such
property will be recovered entirely through use.
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.
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: (i)
a legally enforceable right of set-off exists; and (ii) 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.
(c)
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 accounting standard.
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 (i.e. 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 (ie 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 (ie 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.
27
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
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 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.
(d)
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation
and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount
is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a
revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when
impairment indicators are present (refer to Note 1(m) for details of impairment).
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. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's
employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable
amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an
appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other
repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a
straight-line basis over the asset's useful life to the Group commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Depreciation Rate
10 - 25%
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 disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in
profit or loss in the period in which they arise. When revalued assets are sold, amounts included in the revaluation surplus relating to that
asset are transferred to retained earnings.
(e)
Accounting for Common Control
Where the acquisition of entities that are deemed to be under common control occurs, then consideration is required to determine the
accounting acquirer. A new entity formed to effect a business combination through the issue of equity interests will not be regarded as the
accounting acquirer, rather one of the combining entities that existed prior to the business combination shall be identified as the accounting
acquirer.
The pooling of interests method is adopted for business combinations under common control. Existing book values for assets and liabilities
at the date of acquisition will be recognised and fair value adjustments including new intangibles or goodwill will not be recognised. Any
premium between the fair value of consideration paid and the book value of net assets is debited to a separate category of equity (premium
on assets acquired - Note 21)
(f)
Financial Instruments
Recognition and Initial Measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For
financial assets, this is equivalent to the date that the entity commits itself to either the purchase or sale of the asset (ie trade date
accounting is adopted).
Financial instruments are initially measured at fair value plus transactions costs except where the instrument is classified ‘at fair value
through profit or loss’ in which case transaction costs are expensed to profit or loss immediately.
28
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal
repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and
the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate
that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) over the
expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the
financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a
consequential recognition of an income or expense item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint ventures as being subject to the requirements of Accounting
Standards specifically applicable to financial instruments.
(i)
Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit
taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable
performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in
accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with
changes in carrying amount included in profit or loss.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
and are subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.
(iii)
Financial Liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are
recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result
of one or more events (a “loss event”) having occurred, which has an impact on the estimated future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to
constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously
recognised in other comprehensive income is reclassified into profit or loss at this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are
experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy
or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying
amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that
the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the
carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance
account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Group recognises the
impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss
events that have occurred are duly considered.
(g)
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will
include the consideration of external and internal sources of information, including dividends received from subsidiaries, associates or joint
ventures deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing
the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use, to the asset’s carrying
amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset
is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116: Property,
Plant and Equipment ). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available for use.
29
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
(h)
Investments in Associates
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and
operating policy decisions of the entity but is not control or joint control of those policies. Investments in associates are accounted for in the
consolidated financial statements by applying the equity method of accounting, whereby the investment is initially recognised at cost
(including transaction costs) and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate. In
addition, the Group’s share of the profit or loss of the associate is included in the Group’s profit or loss.
The carrying amount of the investment includes, when applicable, goodwill relating to the associate. Any discount on acquisition, whereby
the Group’s share of the net fair value of the associate exceeds the cost of investment, is recognised in profit or loss in the period in which
the investment is acquired.
Profits and losses resulting from transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the
associate.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group discontinues recognising its
share of further losses unless it has incurred legal or constructive obligations or made payments on behalf of the associate. When the
associate subsequently makes profits, the Group will resume recognising its share of those profits once its share of the profits equals the
share of the losses not recognised.
(i)
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 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.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent
that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or
loss.
Group companies
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 exchange rates prevailing at the end of the reporting period;
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 with functional currencies other than Australian dollars are recognised in
other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. The cumulative
amount of these differences is reclassified into profit or loss in the period in which the operation is disposed of.
(j)
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than
termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the
employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as part of current trade and
other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave
entitlements are recognised as provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after
the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured
at the present value of the expected future payments to be made to employees.
Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are
discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity
dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term
employee benefits are recognised in profit or loss in the periods in which the changes occur.
30
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except
where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in
which case the obligations are presented as current provisions.
(k)
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 result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
(l)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and deposits available on demand with banks. Bank overdrafts are reporting within short-
term borrowings in current liabilities in the statement of financial position.
(m)
Revenue and Other Income
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume
rebates allowed. When the inflow of consideration is deferred it is treated as the provision of financing and is discounted at a rate of interest
that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount
ultimately received is interest revenue.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of
ownership of the goods and the cessation of all involvement in those goods.
Interest revenue is recognised using the effective interest method.
Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the end
of the reporting period where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the
services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated reliably,
revenue is recognised only to the extent that related expenditure is recoverable.
Investment property revenue is recognised on a straight-line basis over the period of the lease term so as to reflect a constant periodic rate
of return on the net investment.
All revenue is stated net of the amount of goods and services tax.
(n)
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business.
Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other
receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment. Refer to Note 1(l) for further discussion on the determination of impairment losses.
(o)
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting
period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.
(p)
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 Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to
suppliers.
(q)
Government Grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions
will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs it is
compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life
of the asset on a straight-line basis.
(r)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its financial
statements, an additional (third) statement of financial position as at the beginning of the preceding period in addition to the minimum
comparative financial statement is presented.
31
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
(s)
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best
available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic
data, obtained both externally and within the Group.
(i)
Key judgements and estimates - Intellectual Property - Software
In determining the development expenditures to be capitalised, the Group makes estimates and assumptions based on expected future
economic benefits generated by products that are the result of these development expenditures. Other important estimates and
assumptions in this assessment process are the distinction between R&D and the estimated useful life.
Development costs associated with intangible assets are only capitalised by the Group when it can demonstrate the technical feasibility
of completing the asset so that the asset will be available for use or sale, how the asset will generate future economic benefits and the
ability to measure reliably the expenditure attributable to the intangible asset during its development.
Development costs in respect to software are internally generated, and have a finite useful life. The amortisation method is line over the
period of the expected benefit, being 5 years. Impairment testing is undertaken when impairment indicators exist.
(ii)
Key Estimate - Taxation
Refer to Note 4 - Income Tax
(iii)
Key judgements and estimates - Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of
assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in
assessing recoverable amounts incorporate a number of key estimates.
(iv)
Key Estimate - Impairment of Goodwill
Refer to Note 13 - Intangible Assets
(v)
Key judgements and estimates - Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model,
using the assumptions detailed in Note 21 - Share-based payments.
(t) New Accounting Standards for Application in Future Periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential
impact of such pronouncements on the Group when adopted in future periods, are discussed below:
—
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1
January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for
financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets,
simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to
recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9
also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to
hedges of non-financial items. Hedge accounting requirements are required to be prospectively applied.
—
—
—
Further reduction in the carrying amount of trade receivables and investments in related parties as at 31 December 2017 due to
additional loss allowances (measured as 12-month and life-time expected credit losses) provided for such instruments that are not
yet past due and past due but not yet impaired. The assessment of financial impact on account of the above is still in progress;
Listed and Unlisted investments that are classified as available-for-sale financial assets (not held for trading) will be continued to be
measured at fair value through other comprehensive income through an irrevocable option as permitted by AASB 9. As such no
financial impact is expected to arise from this reclassification.
Unlisted investments at cost are not held for trading and as such will be measured at fair value through other comprehensive
income through an irrevocable option as permitted by AASB 9. However Management believes that there is a wide range of
possible fair value measurements for these instruments and their cost represents the best estimate of fair value within that range.
Hence, as per the relevant principle in AASB 9, cost of these investments is regarded to be an appropriate estimate of their fair
value. As such no financial impact is expected to arise due to the above mentioned reclassification.
—
Government and fixed interest securities are held in a business model of collecting all contractual cash flows (principal and interest)
and therefore will continue to be measured at amortised cost. Therefore there will be no financial impact.
32
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 1: Summary of Significant Accounting Policies (Cont'd)
—
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018)
When effective, this Standard will replace the current accounting requirements in AASB 118 and the related interpretations. The core
principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. Revenue is
recognised through a five-step process that notably involves identifying a contract with customer and the related performance
obligations and recognising revenue (as a portion of transaction price allocated to such performance obligations) as and when the
performance obligation is satisfied.
The key areas of change that may impact the Group's financial statements have been identified below:
●
●
●
●
●
identification and categorisation of performance obligations on each contract, which would influence the timing of revenue
recognition on each contract deliverable;
capitalisation of costs incurred in procuring a contract that is expensed under the existing accounting policies;
upfront estimation of credit risk applicable to each customer and factoring the same in the revenue recognition of each contract;
estimation of the variable consideration in the transaction price and including that portion in the revenue recognition on the contract
for the current year; and
additional qualitative and quantitative disclosures regarding contracts and the related amounts.
The assessment of the financial impact on account of the above changes in accounting policies is still in progress and as such not
known at this stage.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period presented per
AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or
recognise the cumulative effect of retrospective application to incomplete contracts on the date of initial application.
—
AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-10:
Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 ).
This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing control over a subsidiary that is not
a "business" as defined in AASB 3: Business Combinations to an associate or joint venture, and requires that:
●
●
●
a gain or loss (including any amounts in other comprehensive income (OCI)) be recognised only to the extent of the unrelated
investor’s interest in that associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint venture; and
any gain or loss from remeasuring the remaining investment in the former subsidiary at fair value also be recognised only to the
extent of the unrelated investor’s interest in the associate or joint venture. The remaining gain or loss should be eliminated against
the carrying amount of the remaining investment.
The application of AASB 2014-10 will result in a change in accounting policies for transactions of loss of control over subsidiaries
(involving an associate or joint venture) that are businesses per AASB 3 for which gains or losses were previously recognised only to
the extent of the unrelated investor’s interest.
The transitional provisions require that the Standard should be applied prospectively to sales or contributions of subsidiaries to
associates or joint ventures occurring on or after 1 January 2018.
(u) Going Concern Note
The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the
realisation of assets and the settlement of liabilities in the ordinary course of business.
The Company incurred a loss for the year after tax of $3,113,914 net cash outflows from operating activities of $613,562.
During the year, the entity entered a term sheet with Animoca Brands Limited ("AB1") for the acquisition of its mobile games business. On
settlement which is expected in the first half of 2018, a cash payment of AUD 750,000 will be required to be made to AB1 representing the
remainder of the cash consideration.
The ability of the Company to continue as a going concern is principally dependent upon the ability of the Company to secure funds by
raising capital from equity markets and managing cashflow in line with available funds. These conditions indicate a material uncertainty that
may cast significant doubt about the ability of the Company to continue as a going concern. In the event the above matters are not achieved,
the Company will be required to raise funds for working capital from debt or equity sources.
The directors have prepared a cash flow forecast, which indicates that the Company will have sufficient cash flows to meet all commitments
and working capital requirements for the 12 month period from the date of signing this financial report.
Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation
is appropriate. In particular, given the Company’s history of raising capital to date, the directors are confident of the Company’s ability to raise
additional funds as and when they are required.
Should the Company be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities other than
in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include
any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern and meet its debts as and when they fall due.
33
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 2
Parent Information
The following information has been extracted from the books and records of the parent and has
been prepared in accordance with Australian Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Retained earnings
TOTAL EQUITY
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Profit/(Loss) for the year
Other comprehensive income for the year
Total comprehensive income
2017
$
2016
$
368,117
3,471,914
3,840,031
474,135
23,503,452
23,977,587
93,491
(46,620)
46,871
34,668
106,418
141,086
3,793,160
23,836,501
27,056,444
885,980
(24,149,264)
3,793,160
24,159,330
-
(322,829)
23,836,501
(23,826,435)
-
(23,826,435)
(275,614)
-
(275,614)
On consolidation of the Group, iCandy Interactive Limited's investment cost in iCandy Ventures Limited ($15,000,000) and iCandy Digital Pte Ltd -
formerly known as Kensington Ventures Pte Ltd ($5,000,000) has been allocated to equity. Refer to Note 21(b) for a detailed explanation on the
adoption of this accounting policy.
Contingent liabilities
In relation to the acquisition of Inzen Studio Pte Ltd, iCandy will issue SGD 1 million (AUD $959,325) worth of shares to the previous shareholders
of Inzen Studio Pte Ltd upon the new game title "Dark Dot" or other game-titles published by the Company achieving revenue of SGD 500,000
(AUD $479,662) within 24 months from the closing date (12 April 2017). In addition, iCandy will issue an addition SGD 1 million (AUD $959,325)
worth of shares to the previous shareholders of Inzen Studio Pte Ltd upon the new game title "Dark Dot" or other game-titles published by the
Company achieving revenue of SGD 1,000,000 (AUD $959,325) within 24 months from the closing date (12 April 2017)
Note 3
Revenue and Other Income
(a) Revenue from continuing operations
Sales revenue
Sale of mobile game applications
Game developing income
—
—
—
Other revenue
—
—
—
—
interest received
Unrealised foreign exchange gain/(loss)
Realised foreign exchange gain/(loss)
Other income
Total revenue
Group
2017
$
2016
$
1,656,454
1,486,201
-
87,616
-
1,656,454
-
1,573,817
60,323
(50,370)
(29,330)
8,240
(11,137)
52,886
3,476
(15,085)
-
41,277
1,645,317
1,615,094
34
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 4
Tax Expense
(a)
The components of tax (expense) income
comprise:
Current tax
Deferred tax
Foreign currency translation difference
Note
17
Group
2017
$
2016
$
250,988
(1,961)
-
(10,962)
(1,689)
(671)
249,027
(13,322)
(b)
The prima facie tax on profit from ordinary activities before income tax is reconciled to
income tax as follows:
Prima facie tax payable on profit from ordinary activities before income tax at 27.5% (2016:
28.5%)
—
consolidated group
Add:
Tax effect of:
— current year tax loss not brought into account
— income tax payable by foreign subsidiary
— write back of deferred tax liabilities brought into account
(c) Deferred tax assets not brought into account
Deferred tax assets not brought to account, the benefits of which will only be realised if it is
probable that taxable profit will be available against which the unutilised tax losses can be
utilised.
Temporary differences
Tax Losses:
- Operating Losses
(d) Deferred tax liabilities
Deferred tax liabilities brought into account on purchase of Inzen Studio Pte Ltd
Deferred tax liabilities brought into account by foreign subsidiary
(924,809)
(116,499)
924,809
(3,969)
(245,058)
(249,027)
116,499
13,322
-
13,322
678,564
659,022
58,432
1,961
60,393
-
1,689
1,689
Note 5
Key Management Personnel Compensation
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the
Group’s key management personnel (KMP) for the year ended 31 December 2017.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Share-based payments
Total KMP compensation
Short-term employee benefits
2017
$
59,024
-
59,024
2016
$
56,611
-
56,611
–
these amounts include fees and benefits paid to the non-executive chair and non-executive directors as well as all salary, paid leave
benefits, fringe benefits and cash bonuses awarded to executive directors and other key management personnel.
Share-based payments
–
these amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair
value of the options, rights and shares granted on grant date.
Further information in relation to KMP remuneration can be found in the Remuneration Report.
Note 6
Auditor’s Remuneration
Remuneration of the auditor for:
— auditing or reviewing the financial report of iCandy Interactive Limited
— auditing or reviewing the financial report of subsidiaries
35
Group
2017
$
2016
$
30,701
19,495
50,196
31,115
7,437
38,552
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 7
Earnings per Share
(a)
Reconciliation of earnings to profit or loss
Loss
Loss used to calculate basic and dilutive EPS
(b)
Weighted average number of ordinary shares outstanding during the year
used in calculating basic EPS
Weighted average number of ordinary shares outstanding during the year
used in calculating dilutive EPS
Note 8
Cash and Cash Equivalents
Cash at bank and on hand
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash flows is
reconciled to items in the statement of financial position as follows:
Cash and cash equivalents
Note 9
Trade and Other Receivables
CURRENT
Trade receivables
Provision for impairment
Other receivables
GST receivables
Total current trade and other receivables
Credit risk
Group
2017
$
2016
$
(3,113,914)
(3,113,914)
(422,090)
(422,090)
No.
No.
253,761,838
227,377,596
253,761,838
256,005,192
Note
Group
2017
$
142,241
142,241
2016
$
645,505
645,505
25
142,241
142,241
645,505
645,505
Group
2017
$
2016
$
165,854
153,537
-
-
165,854
153,537
96,834
24,567
49,702
1,331
287,256
204,570
The Group has no significant concentration of credit risk with respect to any single counter party or group of counter parties other than those
receivables specifically provided for and mentioned within Note 9. The class of assets described as Trade and Other Receivables is considered to
be the main source of credit risk related to the Group.
On a geographic basis, the Group has significant credit risk exposures in Australia and the Malaysia given the substantial operations in those
regions. The Group’s exposure to credit risk for receivables at the end of the reporting period in those regions is as follows:
AUD
Australia
Singapore
Malaysia
Group
2017
$
21,792
2016
$
2,567
88,131
1,374,355
177,333
176,874
287,256
1,553,796
The following table details the Group’s trade and other receivables exposed to credit risk (prior to collateral and other credit enhancements) with
ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled with the terms
and conditions agreed between the Group and the customer or counter party to the transaction. Receivables that are past due are assessed for
impairment by ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not
be fully repaid to the Group.
36
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 9: Trade and Other Receivables (Cont'd)
The balances of receivables that remain within initial trade terms (as detailed in the table) are considered to be of high credit quality.
Consolidated Group
2017
Trade and term receivables
Other receivables
Total
Consolidated Group
2016
Trade and term receivables
Other receivables
Total
Gross
Amount
Past due and
impaired
$
165,854
121,401
287,256
$
<30
$
-
-
-
Gross
Amount
Past due and
impaired
$
153,537
51,033
204,570
$
<30
$
-
-
-
-
-
-
-
-
-
Past due but not impaired
(days overdue)
31-60
$
61-90
$
-
-
-
-
-
-
Past due but not impaired
(days overdue)
31-60
$
61-90
$
43,523
5,152
-
-
43,523
5,152
>90
$
>90
$
Within initial
trade terms
$
165,854
121,401
287,256
Within initial
trade terms
-
-
-
857
-
857
$
104,005
51,033
155,038
(b) Collateral Held as Security
No collateral was held as security at balance date or at the date of this report.
(c) Financial Assets Classified as Loans and Receivables
Trade and other Receivables
— Total current
— Total non-current
Total financial assets classified as loans and receivables
Note 10
Other Financial Assets
Note
25
CURRENT
Amounts receivable from :
—
—
other related parties
others
Total current assets
NON-CURRENT
Amounts receivable from:
—
other related parties
Total non-current assets
Total Other Financial Assets
Current
Non-Current
Terms of Receivables:
All receivables are at call.
There are no securities attached
No interest are charged on receivables.
Group
2017
$
2016
$
287,256
-
287,256
204,570
-
204,570
Group
2017
$
2016
$
1,328,595
1,268,550
50,428
-
1,379,023
1,268,550
-
-
37,509
37,509
1,379,023
-
1,379,023
1,268,550
37,509
1,306,059
37
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 11
Interests in Subsidiaries
(a)
Information about Principal Subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary shares or ordinary units which are held directly by the Group.
The proportion of ownership interests held equals the voting rights held by Group. Each subsidiary’s principal place of business is also its
country of incorporation.
Name of subsidiary
Principal place of business
iCandy Digital Pte Ltd (formerly known as Kensington
Ventures Pte Ltd)
Singapore
iCandy Ventures Limited
Appxplore Sdn Bhd (100% owned by iCandy Ventures
Limited)
British Virgin Island
Malaysia
Inzen Studio Pte Ltd
Singapore
Ownership interest held by the
Group
2017
(%)
100
100
100
100
2016
(%)
100
100
100
-
Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same
reporting date as the Group’s financial statements.
(b) Significant Restrictions
There are no significant restrictions over the Group's ability to access or use assets and settle liabilities, of the Group.
Note 12
Property, Plant and Equipment
PLANT AND EQUIPMENT
Plant and equipment:
At cost
Accumulated depreciation
Leasehold improvements
At cost
Accumulated depreciation
Signage
At cost
Accumulated depreciation
Total property, plant and equipment
(a)
Movements in Carrying Amounts
Group
2017
$
2016
$
87,836
(34,196)
53,640
51,928
(8,256)
43,672
849
(251)
598
39,634
(25,595)
14,039
10,327
(4,220)
6,107
849
(168)
681
97,910
20,827
Movements in carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial
year.
Consolidated Group:
Balance at 1 January 2016
Additions
Depreciation expense
Balance at 31 December 2016
Additions
Depreciation expense
Balance at 31 December 2017
Leasehold
Improvements
$
Plant and
Equipment
$
Signage
Total
$
$
3,680
4,364
(1,937)
6,107
41,601
(4,036)
43,672
11,066
9,482
(6,509)
14,039
48,202
(8,601)
53,640
373
435
(127)
681
-
(83)
598
15,119
14,281
(8,573)
20,827
89,803
(12,720)
97,910
38
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 13
Intangible Assets
Goodwill
Cost
Accumulated impairment losses
Net carrying amount
Computer software:
Cost
Accumulated amortisation and impairment losses
Net carrying amount
Research and development
Cost
Accumulated amortisation and impairment losses
Net carrying amount
Total intangible assets
Consolidated Group:
Year ended 31 December 2016
Balance at the beginning of the year
Additions
Disposals
Amortisation charge
Year ended 31 December 2017
Balance at the beginning of the year
Additions
Acquisitions through business combinations
Amortisation charge
Impairment losses
Closing value at 31 December 2017
Group
2017
$
2016
$
305,300
(305,300)
-
-
-
-
1,759,275
1,346,355
(554,499)
(203,000)
1,204,776
1,143,355
2,014,213
(1,505,860)
508,353
175,314
(35,063)
140,251
1,713,129
1,283,606
Goodwill
$
Computer
Software
$
Research and
Development
$
Total
$
-
-
-
-
-
-
-
202,461
1,060,210
-
202,461
175,314
1,235,524
-
-
-
(119,316)
(35,063)
(154,379)
1,143,355
140,251
1,283,606
1,143,355
412,920
140,251
1,283,606
53,663
466,583
305,300
-
1,785,236
2,090,536
-
(351,499)
(287,526)
(639,025)
(305,300)
-
(1,183,271)
(1,488,571)
-
1,204,776
508,353
1,713,129
Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for intangible assets are included under
depreciation and amortisation expense per the statement of profit or loss. Goodwill has an indefinite useful life.
Goodwill has been impaired as the cash generating unit was in a loss making situation.
A discount cashflow forecast for the intangibles brought in through business acquisition was prepared based on the expected life of games. The
calculations were done based on sales received to date and an estimate of future revenue. The present value of the intangibles does not support
the value that was brought in. An impairment was provided for the intangibles to the present value as calculated using the method described
before.
39
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Group
2017
$
2016
$
18,501
18,501
-
-
573,553
610,781
303,693
-
1,184,334
303,693
18,501
1,184,334
1,202,835
-
303,693
303,693
Group
2017
$
2016
$
58,854
75,285
134,139
4,863
156,416
161,279
Note
Group
2017
$
2016
$
134,139
-
134,139
161,279
-
161,279
25
Group
2017
$
2016
$
832,696
832,696
520,191
520,191
-
-
9,049
9,049
832,696
-
832,696
520,191
9,049
529,240
Note 14
Other Assets
CURRENT
Prepayments
NON-CURRENT
Prepayment on acquisition of business
Prepayment on cryptocurrency
Total Other Assets
Current
Non-Current
Note 15
Trade and Other Payables
CURRENT
Unsecured liabilities
Trade payables
Sundry payables and accrued expenses
(a) Financial liabilities at amortised cost classified as trade and other payables
Trade and other payables
— Total current
— Total non-current
Financial liabilities as trade and other payables
Note 16
Other Financial Liabilities
CURRENT
Amounts payable to:
—
other related parties
NON-CURRENT
Amounts payable to:
—
other related parties
Total Other Financial Assets
Current
Non-Current
Terms of payables
All payables are at call
There are no securities attached
No interest payable on amounts owing.
40
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 17
Tax
CURRENT
Income tax payable
NON-CURRENT
Consolidated Group
Deferred tax liabilities
Other
Balance at 31 December 2016
Intangible assets
Other
Balance at 31 December 2017
Note 18
Issued Capital
Group
2017
$
2016
$
2,006
2,006
Opening
Balance
Charged to
Income
Charged
directly to
Equity
Changes in
Tax Rates
Exchange
Differences
$
$
$
$
$
-
-
-
1,689
1,689
-
-
-
-
-
1,689
1,689
58,432
229
58,661
-
-
-
-
-
-
-
-
-
-
43
43
Closing
Balance
$
1,689
1,689
58,432
1,961
60,393
277,192,746 fully paid ordinary shares (2016: 229,283,334 fully paid ordinary shares)
The company has authorised share capital amounting to 277,192,746 fully paid ordinary shares.
Group
2017
$
2016
$
27,056,445
24,159,330
27,056,445
24,159,330
(a)
Ordinary Shares
At the beginning of the reporting period
Shares issued during the year
Transaction costs
At the end of the reporting period
2017
No.
Group
2017
$
2016
No.
2016
$
229,283,334
24,159,330
206,783,334
20,061,697
47,909,412
2,977,065
22,500,000
4,500,000
-
(79,950)
-
(402,367)
277,192,746
27,056,445
229,283,334
24,159,330
On 12 April 2017, 27,409,412 fully paid ordinary shares were issued as part consideration for the Company's acquisition of Inzen Studio Pte
Ltd. Value of the shares at issue date was $1,644,565. Refer to Note 21 for further details.
On 9 October 2017, 20,500,000 fully paid ordinary shares were issued in a private placement raising a total of $1,332,500 before costs.
(b) Options
There were 27,716,666 listed options on issue for the financial year ended 31 December 2017. The following reconciles with the outstanding
listed options to subscribe for fully paid ordinary shares in the Company at the beginning and end of the financial year.
The following reconciles with the outstanding listed options to subscribe for fully paid ordinary shares in the Company at the beginning and
end of the financial year.
Balance at beginning of the year
Granted during the financial year
Expired during the financial year
Balance at end of the financial year
Exercisable at the end of the financial year
Group
2017
No.
2016
No.
27,716,666
-
-
27,716,666
27,716,666
5,216,666
22,500,000
-
27,716,666
27,716,666
41
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 18: Issued capital (Cont'd)
The following reconciles with the outstanding unlisted options to subscribe for fully paid ordinary shares in the Company at the beginning and
end of the financial year.
Balance at beginning of the year
Granted during the financial year
Expired during the financial year
Balance at end of the financial year
Exercisable at the end of the financial year
Group
2017
No.
2,816,667
30,500,000
33,316,667
33,316,667
2016
No.
2,816,667
-
-
2,816,667
2,816,667
A total of 20,500,000 unlisted options were issued in conjunction with the private placement on 9 October 2017. The options have an
exercise price of $0.10 and an expiry date of 9 October 2019.
An additional 10,000,000 unlisted options were issued to the brokers involved in the private placement as mentioned above. The options
were issued in consideration of broking services provided to the Company. Options have an exercise price of $0.065 and an expiry date of 9
October 2018.
(c) Capital Management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term shareholder value
and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group's financial risks and adjusting its capital structure in response
to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and
share issues.
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Note 19
Operating Segments
General Information
Identification of reportable segments
Note
8
Group
2017
$
832,696
(142,241)
690,455
2016
$
529,240
(645,505)
(116,265)
3,793,160
3,061,090
4,483,615
2,944,825
15%
N/A
The Group has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief
operating decision makers) in assessing performance and in determining the allocation of resources.
The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group's operations inherently
have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic
characteristics and are also similar with respect to the following:
—
the products sold and/or services provided by the segment;
Types of products and services by segment
(i)
Development and sale of digital media (except games)
The Group is engaged in the development of software for interactive digital media (except games).
(ii)
Design and development of intellectual properties for software applications and games
The Group is also engaged in the design and development of intellectual properties for software applications and games.
42
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 19: Operating Segments (Cont'd)
Basis of accounting for purposes of reporting by operating segments
(a)
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision makers with respect to operating
segments, are determined in accordance with accounting policies that are consistent with those adopted in the annual financial statements of
the Group.
(b)
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of the economic value
from the asset. In most instances, segment assets are clearly identifiable on the basis of their nature and physical location.
(c)
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment.
Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include
trade and other payables and certain direct borrowings.
(d)
Unallocated items
The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part of the
core operations of any segment:
• Impairment of assets and other non-recurring items of revenue or expense
• Income tax expense
• Current tax liabilities
• Other financial liabilities
• Intangible assets
(f)
Segment information
(i) Segment performance
31 December 2017
REVENUE
External sales
Total segment revenue
Reconciliation of segment revenue to group revenue
Total group revenue
Segment net loss from continuing operations before tax
Reconciliation of segment result to group net profit/loss before tax
Intersegment elimination
Net loss before tax from continuing operations
31 December 2016
REVENUE
External sales
Other income
Interest revenue
Total segment revenue
Reconciliation of segment revenue to group revenue
Total group revenue
Segment net loss from continuing operations before tax
Reconciliation of segment result to group net profit/loss before tax
Intersegment elimination
Net loss before tax from continuing operations
Development
of digital
media
Development
of Intellectual
properties
All Other
Segments
Total
$
$
$
$
-
-
1,656,454
1,656,454
-
-
1,656,454
1,656,454
(739,054)
355,353
(1,172,519)
Development
of digital
media
Development
of Intellectual
properties
All Other
Segments
1,656,454
(1,556,220)
(1,557,694)
(3,113,914)
Total
$
$
$
$
87,616
(6,356)
-
81,260
1,001,673
(5,244)
33,185
1,029,614
-
(9)
19,701
19,692
(803,816)
657,340
(275,614)
1,089,289
(11,609)
52,886
1,130,566
1,130,566
(422,090)
(422,090)
43
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 19: Operating Segments (Cont'd)
(ii) Segment assets
31 December 2017
Segment assets
Segment assets include:
—
Non-current assets (other than financial assets and
deferred tax)
Reconciliation of segment assets to group assets
Intersegment eliminations
Total group assets
31 December 2016
Segment assets
Segment assets include:
—
Non-current assets (other than financial assets and
deferred tax)
Reconciliation of segment assets to group assets
Intersegment eliminations
Total group assets
(iii) Segment liabilities
31 December 2017
Segment liabilities
Reconciliation of segment liabilities to group liabilities
Intersegment eliminations
Total group liabilities
31 December 2017
Segment liabilities
Reconciliation of segment liabilities to group liabilities
Intersegment eliminations
Total group liabilities
(iv) Revenue by geographical region
Development
of digital
media
Development
of Intellectual
properties
All Other
Segments
Total
$
$
$
$
1,627,611
3,241,995
26,646,985
31,516,591
1,623,921
2,915,803
21,896,758
26,436,482
Development
of digital
media
Development
of Intellectual
properties
All Other
Segments
(26,694,197)
4,822,394
Total
$
$
$
$
1,176,318
2,112,473
475,469
3,764,260
1,144,673
159,761
-
1,304,434
Development
of digital
media
Development
of Intellectual
properties
All Other
Segments
-
3,764,260
Total
$
$
$
$
3,667,538
2,139,952
199,909
6,007,399
Development
of digital
media
Development
of Intellectual
properties
All Other
Segments
(4,978,165)
1,029,234
Total
$
482,907
$
77,845
$
$
142,418
703,170
-
703,170
Revenue, including revenue from discontinued operations, attributable to external customers is disclosed below, based on the location of the
external customer:
Australia
Singapore
Malaysia
Total revenue
(v) Assets by geographical region
The location of segment assets by geographical location of the assets is disclosed below:
Australia
Singapore
Malaysia
Total assets
44
31 December
2017
$
-
-
1,656,454
1,656,454
31 December
2016
$
19,692
81,260
1,514,142
1,615,094
31 December
2017
$
31 December
2016
$
370,310
1,627,611
2,824,473
4,822,394
475,469
1,176,318
2,112,473
3,764,260
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 20
Cash Flow Information
(a)
Reconciliation of Cash Flows from Operating Activities
with Profit after Income Tax
Profit after income tax
Non-cash flows in profit
Depreciation, amortisation and impairment
Options issued for services
Unrealised foreign currency gain
Interest revenue
Changes in assets and liabilities, net of the effects of purchase and disposal
of subsidiaries:
(Increase)/decrease in trade and term receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in income taxes payable
Increase/(decrease) in deferred taxes payable
Cash flows from operating activities
Note 21
Share based payments
The aggregate share-based payments for the financial year are set out below:
Fair value of options granted to brokers involved in private placement (i)
Expense arising from share-based payments
Group
2017
$
2016
$
(3,113,914)
(422,090)
2,140,315
162,951
885,980
59,606
(60,324)
-
(56,676)
-
(82,686)
(18,501)
(170,296)
(8,956)
(244,786)
(613,562)
(122,934)
(205,152)
(327,600)
10,962
1,689
(958,850)
Group
2017
$
885,980
885,980
2016
$
-
-
(i)
The Company issued 10,000,000 unlisted options to the brokers involved in a private placement during the year.
Table below details the total number of unlisted options on issue as at 31 December 2017
Outstanding during the year
Granted
Exercised
Outstanding at year-end
Exercisable at year-end
2017
2016
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
2,816,667
20,500,000
10,000,000
-
33,316,667
33,316,667
$
0.100
0.065
-
2,816,667
-
-
-
2,816,667
2,816,667
$
-
-
The following share-based payment arrangements were in existence during the current reportiong period:
Number
Grant Date
Expiry Date Exercise Price Fair value at
(i) Options granted
10,000,000
9 Oct 2017
9 Oct 2018
$
7 cents
grant date
$
0.0886
Options were priced using the Black-Scholes model. Where relevant, the expected life used in the model has been adjusted based on
management's best estimate of the effects of non-transferability an exercise restrictions. Expected volatility is based on the historical share price
volatility of the Company over the reporting period.
(i) Options granted
Number
10,000,000
Share price
at grant date
0.14
Exercise Price
0.07
Expected
volatility
106%
Option life
1 year
Risk-free
interest rate
1.89%
45
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 22
Business Combinations
On 12 April 2017, the Company acquired 100% of the issued capital of Inzen Studio Pte Ltd, a company incorporated in Singapore, in accordance
with a Share Sale Agreement executed on 16 December 2017. The total cost of the acquisition is $5.6 million (SGD $6million), subject to
performance milestones.
On 12 April 2017, 27,409,412 fully paid ordinary shares were issued as part consideration for the acquisition of Inzen Studio Pte Ltd. This was the
first payment of SGD 4.5 million. The value of shares at issue date was $1,644,565.
The Company will further issue SGD 1 million (AUD $959,325) worth of shares to the previous shareholders of Inzen Studio Pte Ltd upon the new
game title "Dark Dot" or other game-titles published by the Company achieving revenue of SGD 500,000 (AUD $479,662) within 24 months from
the closing date (12 April 2017). In addition, iCandy will issue an addition SGD 1 million (AUD $959,325) worth of shares to the previous
shareholders of Inzen Studio Pte Ltd upon the new game title "Dark Dot" or other game-titles published by the Company achieving revenue of
SGD 1,000,000 (AUD $959,325) within 24 months from the closing date (12 April 2017)
The fair value of identifiable assets and liabilities of Inzen Studio Pte Ltd as at the date of acquisition were:
Consideration (including shares and deferred consideration subject to
performance milestones that have been adjusted based on probability
assessments at transaction date)
Value of assets acquired
Cash
Intangible assets
Trade creditors
Other creditors
Deferred tax liability
Fair value of net assets acquired
Goodwill
12 April 2017
1,644,565
631
1,785,236
(24,256)
(118,900)
(303,490)
1,339,221
305,344
The contribution of Inzen Studio Pte Ltd to the consolidated entity's loss was a profit of $25,924.
Note 23
Events After the Reporting Period
Other than the following, the directors are not aware of any significant events since the end of the reporting period.
At 31 December 2017, the Group had prepaid for 1,449,696 NOX tokens, and value at 31 December 2017 was $610,780. At the date of this
report, NOX is being traded with a value of AUD $0.0945 per token (USD $0.0726). The fair value of the tokens held as at the date of this report
is AUD $137,017 (USD $105,248)
At the date of this report, the matter regarding the Company's application to the Federal Court of Australia for orders providing for the
retrospective curing of the offers for sale, or sale, by the subscribers of shares issued on 9 October 2017 was heard before the Honourable
Justice Banks-Smith in the Federal Court on the 26 March 2018. Justice Banks-Smith had reserved judgement and ordered that ASIC file and
service further submissions by 9 April 2018 and the Company file and serve any submissions (if necessary) in reply within 7 days of ASIC
submissions.
ASX has advised that the Company's shares will remain in voluntary suspension until such time as orders are made by the Federal Court. The
Company will make a further announcement once a judgement is received.
At the date of this report, the transaction to purchase the Casual Games Portfolio from Animoca Brands Corporation Limited ("AB1") has yet to be
completed. The transaction is expected to complete within the second quarter of the 2018 year subject to the Company getting shareholder
approval and fulfillment of customary closing conditions, after which the Company will pay AB1 an upfront consideration of AUD 1 million in cash
and AUD 4 million in the Company's shares at a fixed valuation of AUD 0.16 per share (25,000,000 shares). To the date of this report, a total
deposit of AUD 250,000 has been paid to AB1. The total remaining cash consideration left to be paid is AUD 750,000.
In addition to the upfront consideration described above, AB1 will also receive deferred payments of up to AUD 3 million in 2018 and 2019,
subject to revenue hurdles and payable in the Company's shares, as well as earn-out payments on profit generated by the games sold for a
period of five years after the closing of the Transaction.
The Company had entered into a binding term sheet with Animoca Brands Corporation Limited ("AB1") and Nitro Interactive Limited ("Nitro") to co-
develop and co-invest in a global iOS and Android mobile game application based on the Masterchef franchise, one of the world's top-rate
competitive cooking reality television programs.
The Company, AB1 and Nitor have committed to co-develop the Masterchef mobile app, with AB1 contributing 50% of the total development,
publishing, and market costs while the Company and Nitro will contribute 25% each of the same. AB1 will own all intellectual property rights
relating to the mobile app and grants to Nitro an irrevocable, fully paid-up, royalty-free worldwide license to those rights.
Mr Donald Low has resigned as the Company's director and Company Secretary, effective 1 April 2018. Mr Marcus Ungar would be appointed as
an Non-Executive Director. Mr Andrew Draffin and Ms Jiahui Lan would be appointed joint Company Secretary on that date.
46
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 24
Related Party Transactions
Related Parties
(a)
The Group's main related parties are as follows:
i.
Entities exercising control over the Group:
The ultimate parent entity that exercises control over the Group is Fatfish Internet Group Limited, which is incorporated in Australia.
ii.
Key Management Personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly,
including any director (whether executive or otherwise) of that entity are considered key management personnel.
For details of disclosures relating to key management personnel, refer to Note 5.
(b)
Transactions with 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.
The following transactions occurred with related parties:
i.
Director related entities
-
-
-
-
-
Directors' fees/wages paid to Kin Wai Lau
Directors' fees paid to Phillip Lord
Directors' fees and company secretarial fees paid to DHL Corporate Advisory, of which
Mr Donald Low is a director and shareholder
Directors' fees paid to Robert Kolodziej
Directors' fees paid to ICW Capital, of which Mr Ivan Perry Wu is a director and
shareholder
(c)
Amounts payable to and receivable from related parties
i.
Loan from Ultimate Parent Entity - Fatfish Internet Group Limited
Beginning of the year
Loans advanced
End of the year
ii.
Loan payable to Immediate Parent Entity - Fatfish Internet Pte Ltd
Beginning of the year
Loans advanced
Loan repayment made
Foreign currency movement
End of the year
iii.
Loans payable to Other Related Parties
Beginning of the year
Loans advanced
Loan repayment received
Foreign currency movement
End of the year
iv.
Loans receivable from Other Related Parties
Beginning of the year
Loans advanced
Loan repayment received
Foreign currency movement
End of the year
v.
Loan receivable from Immediate Parent Entity - Fatfish Internet Pte Ltd
Beginning of the year
Loans advanced
End of the year
47
Group
2017
$
2016
$
23,024
108,738
24,000
12,000
-
19,111
-
22,000
11,000
4,500
167,762
56,611
Group
2017
$
2016
$
106,418
-
86,418
20,000
106,418
106,418
425,548
12,769
(893)
2,567
537,056
-
(111,508)
-
439,991
425,548
83,608
168,081
-
1,217
252,906
77,373
32,582
(26,347)
-
83,608
1,262,892
61,074
14,243
1,219,390
-
(17,572)
(25,637)
-
1,251,498
1,262,892
43,167
50,385
93,552
-
43,167
43,167
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 24: Related Party Transactions (Cont'd)
(d)
Other transactions and balances with Key Management Personnel:
Mr Kin Wai Lau had loaned iCandy Ventures Limited, a wholly owned subsidiary of iCandy Interactive Limited AUD $191,865 (SGD
$200,000) during the reporting year.
Note 25
Financial Risk Management
The Group's financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts
receivable and payable and loans to and from subsidiaries.
The totals for each category of financial instruments, measured in accordance with AASB 139: Financial Instruments: Recognition and
Measurement as detailed in the accounting policies to these financial statements, are as follows:
Financial Assets
Cash and cash equivalents
Loans and receivables
Other financial assets
Total Financial Assets
Financial Liabilities
Financial liabilities at amortised cost
—
Trade and other payables
Other financial liabilities
Total Financial Liabilities
Financial Risk Management Policies
Note
8
9
10
15
16
Group
2017
$
2016
$
142,241
645,505
287,256
204,570
1,379,023
1,306,059
1,808,520
2,156,134
134,139
161,279
832,696
966,835
529,240
690,519
The directors are responsible for iCandy Interactive Limited's risk management strategy and management is responsible for implementing the
directors' strategy. A risk management program focuses on the unpredictability of finance markets and seeks to minimise potential adverse
effects on financial performance. iCandy Interactive Limited uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case on interest rate and market risk. iCandy Interactive Limited does not use derivatives.
The consolidated entity's financial instruments consist of deposits with banks and accounts receivables and payables. The main purpose of non-
derivative financial instruments is to raise finance for group operations.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk
and foreign currency risk.
a. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that
could lead to a financial loss to the Group.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics. The credit risk on liquid funds and derivative financial instruments is limited as the counterparties are banks with high credit
ratings assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represent the Group's
maximum exposure to credit risk.
b.
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations
related to financial liabilities. The Group manages this risk through the following mechanisms:
• preparing forward-looking cash flow analyses in relation to its operating, investing and financing activities;
• obtaining funding from a variety of sources;
• maintaining a reputable credit profile;
• only investing surplus cash with major financial institutions; and
The table below reflects an undiscounted contractual maturity analysis for financial liabilities. Bank overdrafts have been deducted in the
analysis as management does not consider that there is any material risk that the bank will terminate such facilities. The bank does however
maintain the right to terminate the facilities without notice and therefore the balances of overdrafts outstanding at year-end could become
repayable within 12 months. Financial guarantee liabilities are treated as payable on demand since the Group has no control over the timing
of any potential settlement of the liabilities.
Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ
from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflect the earliest contractual settlement dates
and do not reflect management’s expectations that banking facilities will be rolled forward.
48
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 25: Financial Risk Management (Cont'd)
Financial liability and financial asset maturity analysis
Consolidated Group
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
Within 1 Year
1 to 5 years
Over 5 years
Total
Financial liabilities due for payment
134,139
Trade and other
payables
161,279
Amounts payable to
related parties
Total contractual
outflows
Total expected
outflows
832,696
529,240
966,835
690,519
966,835
690,519
-
-
-
-
-
9,049
9,049
9,049
-
-
-
-
Consolidated Group
2017
$
2016
$
2017
$
2016
$
2017
$
2016
$
Within 1 Year
1 to 5 years
Over 5 years
Financial Assets - cash flows realisable
Cash and cash
equivalents
142,241
645,505
Trade, term and loans
receivables
Amounts receivable
from related parties
Total anticipated
inflows
Net (outflow) / inflow
on financial
i
c. Market Risk
t
t
287,256
204,570
1,379,023
1,268,550
1,808,520
2,118,625
841,685
1,428,106
-
-
-
-
-
-
-
37,509
37,509
28,460
-
-
-
-
-
-
-
-
-
-
-
-
-
-
134,139
161,279
832,696
538,289
966,835
699,568
966,835
699,568
Total
2017
$
2016
$
142,241
645,505
287,256
204,570
1,379,023
1,306,059
1,808,520
2,156,134
841,685
1,456,566
i.
Interest rate risk
The Group's exposure to market risk primarily consists of financial risks associated with changes in interest rates as detailed below. As the
level of risk is low, the Group does not use any derivatives to hedge its exposure.
The Group is not exposed to interest rate risk on its non-current borrowings as the terms of the loan agreement stipulates that no interest is
payable.
ii.
Foreign currency risk
Exposure to foreign currency risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in
foreign exchange rates of currencies in which the Group holds financial instruments which are other than the AUD functional currency of the
Group.
With instruments being held by overseas operations, fluctuations in SGD Dollar and Malaysia Ringgit may impact on the Group's financial
results unless those exposures are appropriately hedged.
The following significant exchange rates were applied during the year.
$1 AUD
Singapore
Malaysia
iii. Sensitivity Analysis
31 December 2017
31 December 2016
Average
Rate
0.9446
0.3033
Spot Rate
Average Rate
Spot Rate
0.9593
0.3159
0.9735
0.3332
0.9556
0.3224
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates, exchange rates and commodity and equity
prices. The table indicates the impact of how profit and equity values reported at the end of the reporting period would have been affected by
changes in the relevant risk variable that management considers to be reasonably possible.
These sensitivities assume that the movement in a particular variable is independent of other variables.
Year ended 31 December 2017
+/- 0.75% in interest rates
+/- 10% in $A/$SGD
+/- 10% in $A/$MYR
Group
Profit
$
Equity
$
1,067
997
3,595
1,067
997
3,595
49
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 25: Financial Risk Management (Cont'd)
Year ended 31 December 2016
+/- 0.75% in interest rates
+/- 10% in $A/$SGD
+/- 10% in $A/$MYR
Group
Profit
$
Equity
$
4,841
56,600
27,500
4,841
56,600
27,500
There have been no changes in any of the methods or assumptions used to prepare the above sensitivity analysis from the prior year.
Fair Values
Fair value estimation
The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying amounts as
presented in the statement of financial position. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Differences between fair values and carrying amounts of financial instruments with fixed interest rates are due to the change in discount rates
being applied by the market since their initial recognition by the Group.
Consolidated Group
Financial assets
Cash and cash equivalents
Trade and other receivables:
Other financial assets
Total financial assets
Financial liabilities
Trade and other payables
Other financial liabilities
Total financial liabilities
Note
2017
Carrying
Amount
$
Fair Value
$
Carrying
Amount
$
2016
Fair Value
$
8
9
10
15
16
142,241
287,256
1,379,023
1,808,520
142,241
287,256
1,379,023
1,808,520
645,505
204,570
1,306,059
2,156,134
645,505
204,570
1,306,059
2,156,134
134,139
832,696
966,835
134,139
832,696
966,835
161,279
529,240
690,519
161,279
529,240
690,519
(i)
Cash and cash equivalents, trade and other receivables, and trade and other payables are short-term instruments in nature whose carrying
amounts are equivalent to their fair values.
(ii)
Term receivables reprice to market interest rates every three months, ensuring carrying amounts approximate fair value.
Note 26
Reserves
a.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.
Balance at the beginning of the period
Foreign currency movements during the year
b. Premium on Assets Acquired
Group
2017
$
135,897
(62,889)
73,008
2016
$
3,200
132,697
135,897
When the Company acquired iCandy Ventures Limited, a company incorporatead in British Virgin Island and iCandy Digital Pte Ltd (formerly
known as Kensington Ventures Pte Ltd), a company incorporated in Singapore, this transaction was assessed as a transaction involving
entities under common control. The Company was formeded to effect the business combination and consideration was settled via the issue
of equity interests. As the Company was incorporated to effect the transactions, it was determined that iCandy Interactive Limited would be
the legal acquirer and iCandy Ventures Limited would be the accounting acquirer as it was an entity that was carrying on a business prior to
the business combination.
In accordance with the accounting policy adopted, all assets and liabilities will be recorded at their book value at the date of acquisition. The
remaining difference between the fair value of the consideration paid and the book value of the net assets acquired is allocated to equity.
Balance at the beginning of the period
Foreign currency movements during the year
Group
2017
$
2016
$
20,289,999
-
20,289,999
20,289,999
-
20,289,999
50
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 26: Reserves (Cont'd)
c. Option Reserve
The option reserve records the fair value movement on options.
2016
$
Group
2017
$
-
(885,980)
(885,980)
Group
2017
$
2016
$
-
-
-
73,008
20,289,999
(885,980)
19,477,027
135,897
20,289,999
-
20,425,896
Balance at the beginning of the period
Issue of options during the year
Total Reserves
Foreign currency translation reserve
Other components of equity
Option reserve
Note 27
Company Details
The registered office of the company is:
iCandy Interactive Limited
Level 4, 91 William Street
Melbourne Vic 3000
The principal places of business are:
iCandy Interactive Limited
Level 4, 91 William Street
Melbourne Vic 3000
51
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
DIRECTORS' DECLARATION
In accordance with a resolution of the directors of iCandy Interactive Limited, the directors of the company declare
that:
1.
the financial statements and notes, as set out on pages 22 to 51, are in accordance with the Corporations Act
2001 and:
(a)
(b)
comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the
financial statements, constitutes compliance with International Financial Reporting Standards; and
give a true and fair view of the financial position as at 31 December 2017 and of the performance for the
year ended on that date of the consolidated group;
2.
3.
in the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts
as and when they become due and payable; and
the directors have been given the declarations required by section 295A of the Corporations Act 2001 from
the Chief Executive Officer and Chief Financial Officer.
Director
Dated this
Mr Kin Wai Lau
29 March 2018
52
Independent Auditor's Report
To the Members of iCandy Interactive Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of iCandy Interactive Limited (“the Company”) and
its subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement
of financial position as at 31 December 2017 , 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:
a.
the accompanying financial report of the Consolidated Entity is in accordance with
the Corporations Act 2001, including:
(i)
giving a true and fair view of the Consolidated Entity’s financial position as
at 31 December 2017 and of its financial performance for the year then
ended; and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement. 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 Consolidated Entity in
accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independent Auditor’s Report
To the Members of iCandy Interactive Limited (Continued)
Material Uncertainty Related to Going Concern
We draw attention to Note 1(u) in the financial report, which indicates that the Consolidated Entity incurred a
net loss after tax of $3,113,914 during the year ended 31 December 2017. As stated in Note 1(u), these events
or conditions, along with other matters as set forth in Note 1(u), indicate that a material uncertainty exists that
may cast significant doubt on the Consolidated Entity’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.
Key audit matter
How our audit addressed the key audit matter
Impairment assessment of Cash Generating
Units inclusive of goodwill and other intangible
assets
Our procedures amongst others included:
Obtaining an understanding of the value in use
model and assumptions used;
As disclosed in note 13, the Consolidated Entity
Critically
evaluating
management’s
methodologies and their documented basis for
key assumptions utilised in the valuation models
which are described in Note 13;
We checked the mathematical accuracy of the
cash flow models;
We assessed the reasonableness of forecasts
provided by management to historical cashflows;
and
We assessed
the appropriateness of
the
disclosures included in Notes 1 and 13 to the
financial report.
has goodwill and other intangible assets of
$1,713,129 after impairment charges of
$1,488,571 which related to the Inzen Cash
Generating Unit (CGU);
Impairment of intangible assets is considered to
be a key audit matter due to the significance of
the assets to the Consolidated Entity’s financial
position, current year’s performance and due to
the judgement involved in determining the key
assumptions used in the recoverable amount.
An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount of
the CGU is based on certain key assumptions,
such as cash flow projections covering a five
year period.
Independent Auditor’s Report
To the Members of iCandy Interactive Limited (Continued)
Accounting for Business Combination
Our procedures amongst others included:
The acquisition of Inzen Studio Pte Ltd as
disclosed in note 22 of the consolidated financial
statements is a key audit matter due to the size of
Reviewing the acquisition agreement to
understand the key terms and conditions, and
confirming our understanding of the
the acquisition
(purchase consideration of
transaction with management;
$1,644,565) and complexities
inherent
in a
business acquisition.
Assessing the deemed consideration with the
terms of the acquisition agreement;
Management has completed a process to
Reviewing the acquisition date balance sheet
allocate the purchase consideration to tangible
assets, goodwill and separately identifiable
intangible assets including development costs.
This process involved estimation and judgement
by management.
to acquisition agreement and underlying
supporting documentation;
Assessing the fair value of assets and
liabilities acquired to the fair value assessment
conducted by management.
We assessed the appropriateness of the
disclosures included in Notes 1(a) and 22 to
the financial report.
Recoverability of Other Financial Assets
Our procedures amongst others included:
The Consolidated entity has provided loans to
multiple entities including related parties and external
parties, totalling $1,379,023, as disclosed in note 10.
Due to the quantum of the loans, the recoverability of
the loans were considered a key audit matter.
Obtaining loan confirmations and / or agreeing to
contractual arrangements in place;
Discussions held with management over the
recoverability of the loans;
Assessment of the counterparty’s capacity to
repay the loan; and
We assessed the appropriateness of the
disclosures included in Notes 10 and 24 to the
financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Consolidated Entity’s annual report for the year ended 31 December 2017, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Independent Auditor’s Report
To the Members of iCandy Interactive Limited (Continued)
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 Note 1, the
directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. 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:
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 Consolidated Entity’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 Consolidated Entity’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 Consolidated Entity to cease to
continue as a going concern.
Independent Auditor’s Report
To the Members of iCandy Interactive Limited (Continued)
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 Consolidated Entity to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other 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, related safeguards.
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
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December
2017. The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with s 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 31 December 2017, complies
with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 29th day of March 2018
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The following information is current as at 29 March 2018:
1.
Shareholding
a.
Distribution of Shareholders
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
No. of Holders
No. of Ordinary
Shares
64
76
148
143
92
523
3,084
278,400
1,374,606
5,910,259
269,626,397
277,192,746
b.
c.
The number of shareholdings held in less than marketable parcels is 94. (2016: 76)
The names of the substantial shareholders listed in the holding company’s register are:
Shareholder
Fatfish Internet Pte Ltd
Number
No. of Fully Paid
Ordinary Shares
% Held of Issued
Ordinary Capital
187,500,001
67.64%
d.
The names of the substantial option holders listed in the holding company's register are:
Shareholder
HSBC Custody Nominees (Australia) Limited
Poh Khuan Low
Blue Boat Group Limited
Number
No. of Options
% Held of Listed
Options
10,006,714
2,108,333
1,790,000
32.77%
6.91%
5.86%
d.
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
–
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
Listed options
–
These options have no voting rights
e.
20 Largest Shareholders — Ordinary Shares
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Fatfish Internet Pte Ltd
HSBC Custody Nominees (Australia) Limited
Fatfish Medialab Pte Ltd
Dutchman Capital Pte Ltd
Incubate Fund 1-G Limited Partnership
Mr Choy Tze Lee
Mr Jenn Yu Lim
Tock Yung Myn Gerald
Lead Nation Holdings Limited
Tan Choon Huat
Hoo Jia Ling
Kie Seik Phai Roland
Liang Zhenlong
Quek Seow Kee
TA Securities Holdings Berhad
Ms Poh Khuan Low
Lead Nation Holdings Limited
Low Chin Hong
58
Number of Ordinary
Fully Paid Shares
Held
187,500,001
12,237,652
5,000,000
4,673,870
4,140,056
3,750,000
3,750,000
2,744,180
2,580,000
2,535,371
1,622,171
1,594,059
1,594,059
1,463,642
1,450,522
1,376,095
1,301,500
1,270,409
% Held
of Issued
Ordinary Capital
67.64%
4.41%
1.80%
1.69%
1.49%
1.35%
1.35%
0.99%
0.93%
0.91%
0.59%
0.58%
0.58%
0.53%
0.52%
0.50%
0.47%
0.46%
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
e.
20 Largest Shareholders — Ordinary Shares
Name
17.
18.
19.
20.
Ms Lay Chin Moey
Citicorp Nominees Pty Limited
Jasmeet Kaur
Mr Jimmy Fausto Caffieri & Mrs Lucia Caffieri
Chifley Portfolios Pty Limited
Mr Lee Yoke Khai
f.
20 Largest Option Holders - Listed Options
Name
Number of Ordinary
Fully Paid Shares
Held
% Held
of Issued
Ordinary Capital
1,206,126
1,014,236
1,009,338
1,000,000
1,000,000
1,000,000
246,813,287
0.44%
0.37%
0.36%
0.36%
0.36%
0.36%
89.04%
Number of Listed
Options
% Held of Listed
Options
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC Custody Nominees (Australia) Limited
Ms Poh Khuan Low
Blue Boat Group Limited
TA Securities Holdings Berhad
Ms Lay Chin Moey
CGAM Pty Ltd
Planetbiz Investments Limited
RHB Securities Singapore Pte Ltd
Mr Lee Yoke Khai
Lawley Investments Pty Ltd
BNP Paribas Nominees Pty Ltd
Accent Accounting (WA) Pty Ltd
Elohim Nominees Pty Ltd
Mrs Lao Soi Fong
Mr Teh Chong Jin
Mr Seng Tan
Jersia Pty Ltd
Walbrook Institute Pty Ltd
Mr Brian Thomas Ryan
Mr Choon Huat Tan
AMW Investments Pty Ltd
Leigh Webster Holdings Pty Ltd
Mr Graeme Dougald Hutson Miller
Rock The Polo Pty Ltd
Mr Matthew Ian Banks & Mrs Sandra Elizabeth
Banks
Yii Wen Choong
Mrs Risa Gunawan-ha
Sayers Investments (ACT) Pty Ltd
Constance Chai Ai Tan
The name of the company secretary is Mr Donald Low.
10,006,714
2,108,333
1,790,000
1,525,000
1,480,000
1,333,333
1,166,667
1,014,000
1,000,000
1,000,000
510,000
500,000
500,000
500,000
500,000
400,000
351,220
319,000
300,000
250,000
225,000
200,000
200,000
200,000
140,000
100,000
100,000
100,000
32.77%
6.91%
5.86%
4.99%
4.85%
4.37%
3.82%
3.32%
3.28%
3.28%
1.67%
1.64%
1.64%
1.64%
1.64%
1.31%
1.15%
1.04%
0.98%
0.82%
0.74%
0.66%
0.66%
0.66%
0.46%
0.33%
0.33%
0.33%
100,000
27,919,267
0.33%
91.48%
The address of the principal registered office in Australia is Level 4, 91 William Street, Melbourne Victoria
3000.
59
2.
3.
ICANDY INTERACTIVE LIMITED AND CONTROLLED ENTITIES
ABN: 87 604 871 712
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
4.
Registers of securities are held at the following addresses
Link Market Services Limited
Level 4, 152 St Georges Terrace
Perth WA 6000
5.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the
Australian Securities Exchange Limited.
60