2021 ANNUAL REPORT
For the year ended 30 June 2021
MEMBERS
FUNDRAISER GROUPS
MERCHANT PARTNERS
ENTERPRISE CLIENTS
ASX-listed IncentiaPay is the owner of The
Entertainment Group – and the producer of Australia
and New Zealand’s Entertainment Membership
App and corporate Frequent Values product.
Entertainment builds communities where everyone
wins, through experiences, savings, philanthropy
and the building of businesses. Helping others is at
the heart of what we do.
Entertainment is an iconic brand with a 27-year
history providing one of the largest portfolios of
lifestyle offers and content in the market.
A choice of Memberships provide access to
thousands of 2-for-1 and up to 50% off offers from
over 7,000 business partners in dining, travel,
activities, and retail across over 15,000 partner
locations in Australia, New Zealand and Bali. Our
offers are available across 21 major cities, regional
areas, and country towns. Entertainment is about
discovering new experiences and creating memories
with family and friends all while helping a good cause.
An Entertainment Membership allows savvy
consumers to do more of what they value and love
every day, while at the same time saving money
and helping a good cause. With up to 20 per cent
of Membership sales going directly to fundraisers,
Entertainment have helped more than 13,000
charities, large and small, local primary and high
schools, sports clubs and community groups reach
their fundraising goals.
Entertainment drives new business and revenue
growth through word of mouth and exclusive
marketing programs for contemporary and casual
dining Merchants, retail outlets, and travel and leisure
partners.
Entertainment’s bespoke dining and leisure benefits
product provides organisations and major brands
with trusted and well-known loyalty programs,
featuring always-on special offers across dining,
takeaway, travel, and wellbeing to help retain existing
customers, reduce lapsed customers, and acquire new
ones. Over 30 corporate clients including household
names such as Zurich, Red Energy, HSBC and Budget
Direct provide this offering to their clients.
There are over 65 Entertainment employees working
across Australia and New Zealand with headquarters
in Sydney.
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CONTENTS
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Chairman’s Introduction
CEO’s Review
Financial Review
The Leadership Team
Business Risks
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
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46
110
112
122
125
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INTRODUCTION
501CHAIRMAN’S
4
4 CHAIRMAN’S
INTRODUCTION
Dear Shareholders,
On behalf of the Board of
Directors of IncentiaPay, I am
pleased to present the 2021
Annual Report.
The past financial year has
seen IncentiaPay continue
to progress its business
transformation plans whilst
addressing the immediate
challenges on our business
from COVID-19 as it impacted
the entertainment, hospitality,
travel and leisure sector. We are
operating under the assumption
that our trading environment
will remain challenging until
we, as a community, find a
solution to living with COVID-19
and its variants. At the time of
writing this report, the NSW
government has extended the
Greater Sydney lockdown to
mid-October 2021, extending
its length to at least 16 weeks to
limit the spread of the
Delta variant.
The impact of COVID-19 on
IncentiaPay is evident in our
FY2021 revenues of $19.4m; being
a 54% reduction from the prior
year. The fall is predominantly due
to Entertainment Membership
subscription revenues falling
from $24.8m in FY2020 to $8.2m
in FY2021, as the traditional
fundraising activities of our
community and not-for-profit
sales channel were restricted and
existing Entertainment Members
elected not to renew their
annual subscription in the
current environment.
Management have responded
to these challenges. We have
changed the way the Company
operates and manages its
physical presence. Since the
lockdowns began to ease, the
Company has managed a hybrid
workplace with most employees
working at least two days per
week from home. In addition,
and to offset the impact of
COVID-19, many staff, Executives
and the Board took pay
reductions of up to 40%, which
were re-instated from January
2021. IncentiaPay received
$2.3m in JobKeeper payments in
FY2021 ($0.9m in FY2020) from
the Federal Government. This
enabled employee expenses to
be reduced by around 45% in
FY2021 vs FY2020. We note, the
Federal Government ceased the
JobKeeper payments program
in March 2021.
We moved our head office into
smaller and more cost-effective
premises in Spring Street, Sydney
in the final quarter of FY2021.
Notwithstanding the impact
of COVID-19, we continue to
progress the transformation
of our business foundations,
including enhanced customer
service, customer experience and
technology platforms. The rate of
change has been slowed as we
managed our financial resources
in the current environment. Our
strategic intent is to realise the
potential we possess through our
market position, business assets
and relationships. We have a
clear strategy and focus to drive
value in the following areas:
• Merchants
• B2C (Book to digital
transition, enhanced
customer experience,
additional distribution
channels to consumers,
brand and marketing
investment)
• B2B (significantly grow
the number of consumers
via Enterprise clients using
our white label loyalty and
rewards programs, reduced
cost to service, growing
revenues on adopting a
transactional pricing model)
IncentiaPay has been
strongly supported by
its majority shareholder,
Suzerain Investment Holdings
Limited/SkyBound Capital
through the year. Suzerain
has a 74% ownership interest
in IncentiaPay and two
representatives on our Board.
Over the past 24 months they
have injected $26m in new
equity capital into IncentiaPay
to fund our transformation and
strategic intent.
Notwithstanding the impact of COVID-19, we continue to
progress the transformation of our business foundations,
including enhanced customer service, customer experience
and technology platforms.
5
1
On 3 June 2021, New Gold
Coasts Holdings Limited, an
associate of Suzerain, provided
a further $5 million loan
facility for the Company to
pursue additional growth and
contingent working capital. The
Company will ask shareholders
to approve the granting of
security at its upcoming AGM.
The Board would also like to
acknowledge and thank its CEO,
Executive leadership team and
all employees, Members and
partners for their support and
hard work through the past year.
On behalf of the Board, I would
like to thank our shareholders
for their continued support.
Finally, I would like to thank my
colleagues on the Board for their
contributions and guidance.
Stephen Harrison
Chairman
7,000+
BUSINESS
PARTNERS
15,000+
LOCATIONS
440,000+
MEMBER BASE
6
CHAIRMAN’S INTRODUCTION
7
8
REVIEW
502CEO’S
8 CEO’S REVIEW
Dear Shareholders,
FY2021 was a successful
year for IncentiaPay against
the backdrop of a challenging
operating environment due
to COVID-19 and its impact
on consumer spending
across our key sectors of
dining, entertainment, travel
and leisure activities.
Our Company made significant
progress with the ongoing
transformation of our business
which we first outlined to
shareholders in 2019. The aims
of our transformation are simple:
We want to better serve our
customers with enhanced value
propositions and acquisition
capabilities. These will position
IncentiaPay for growth and
further establish our market
position as Australasia’s premier
entertainment, lifestyle and
rewards platform.
Our business strategy is
to provide a marketplace,
connecting Merchants that want
growth with consumers looking
for great offers and experiences.
Our strategy has the following
channels to market:
1. Our strong Merchant
relationships that provide
the offers and rewards for
our B2C and B2B channels;
2. Our B2C channel,
Entertainment, that gives
our Members exclusive offers
on dining, travel, activities,
shopping and more; and
3. Our emerging B2B
channel, Frequent Values
by Entertainment, where
our Enterprise customers
can access best in market
entertainment and lifestyle
content via multiple
different tools and payment
mechanisms.
The progress we have made
on our strategy in FY2021 has
delivered a solid foundation for
growth and I look forward to
updating the market over the
course of FY2022 on
our progress.
15,000+
Entertainment
+ Lifestyle
Merchant
Locations
IncentiaPay
Content,
Offers + Rewards
Platform
B2C CHANNEL
185,000+
Members
B2B CHANNEL
30+
Enterprise Clients
255,000+
Customers of
Enterprise Clients
1M+
Addressable
Consumers
9
2
OPERATIONS COMMENTARY
1. Merchants
The scale and depth of the
Merchant relationships we have
developed over the past 27
years is a significant competitive
strength of IncentiaPay.
We have contracts with over
7,000 Merchants operating from
over 15,000 locations across
Australia, New Zealand and Bali
with more than 10,000 offers.
Members redeemed over 1.5
million Merchant offers in
FY2021 (compared to 2 million
redemptions in FY2020).
Our Merchants experienced
an extremely challenging year,
with many based in areas
facing extensive COVID-19
restrictions. IncentiaPay worked
hard to assist our Merchants to
continue to attract customers
and generate incremental
revenue through this period.
For example, we converted
thousands of Merchants to
accept Entertainment offers
on takeaway and sent monthly
promotions to our entire
Member base, highlighting new
and popular businesses and
offers. We also provided more
lockdown-accessible options to
our Members by signing new
gift card and retail Merchants,
and adding offers from the
rapidly expanding Carl’s Jr.
franchise across Australia.
Number of
Offers by
Category
13%
14%
14%
15%
28%
16%
Cafe, Casual & Family Dining
Hotels & Accommodation
Arts, Sports & Activities
Quick Service Restaurants
Retail & Local Services
Fine & Contemporary Dining
Number of
Locations
by State
WA
VIC
QLD
NSW
NZ - 19%
NSW - 19%
QLD - 18%
VIC - 17%
WA - 11%
SA
NZ
TAS
ACT
NT
SA - 10%
TAS - 3%
ACT - 2%
NT - 1%
SOME OF OUR MOST POPULAR MERCHANTS
NT
The Precinct
WA
Kailis Fishmarket Café
Harbourside Freo
Matilda Bay
Clancy’s
SA
The Holdy
Carl’s Jr.
Hidden Brew Taphouse
10 CEO’S REVIEW
QLD
Nu Nu
The Palm House
Brooklyn Depot
Domanis
Carl’s Jr.
NSW
Pilu at Freshwater
Automata
Carl’s Jr.
Vines at Hollydene
VIC
Carl’s Jr.
Bistro Guillaume
Flying Brick Cider House
TAS
Billy’s Burgers and Bar
Mekong Vietnamese
AUCKLAND
The Grove
WELLINGTON
Shed 5
CHRISTCHURCH
Bloody Mary’s
11
2. B2C (Entertainment)
LOGO TRANSFORMATION
Our B2C channel generates
revenues via annual and
bi-annual Membership
subscriptions. During FY2021,
Membership renewals fell
as COVID-19 continued to
impact consumer confidence.
This was further exacerbated
by restrictions on traditional
fundraising activities by
community groups and not-for-
profits (NFPs) and our first year
operating exclusively under a
digital app-based model, as well
as the Membership program
offers being heavily skewed
toward COVID-19 affected
categories. Despite this, we
sold over 100,000 Memberships
during the financial year.
We saw a strong start to
renewal, with March to June
surpassing Membership
revenue expectations despite
the challenging environment.
Implementation of the first
lifecycle program to drive
renewal conversion was
successful, with the month of
June’s lifecycle Membership
renewal activity delivering
conversion rates of up to 50%.
We are continually testing
digital acquisition activity,
and the solid onboarding,
activation, and redemption
programs in place for many of
our Enterprise clients have seen
strong increases in activation
and redemption results. We
onboarded M&C Saatchi and
delivered a brand refresh in
collaboration with FutureBrand.
The new look reflects our
revised identity as a more
responsive, rich and personal
digital experience and builds a
stronger emotional connection
with our stakeholders.
A new app and website were
also delivered in late 2020. While
the desired functionality was not
implemented as quickly as we
anticipated and we saw a natural
resistance to change from some
Members, we have been engaged
in ongoing enhancements to
improve the way customers search,
browse, and navigate. We also
supported our Members through
Gift with Purchase and upgrade
campaigns, targeted Membership
extensions during lockdown
periods, and app updates directly
related to their feedback.
Fundraising Groups
The Australian and New Zealand
NFP sector was hit hard by
COVID-19 during early FY2021.
We responded by increasing our
focus on product improvement
and secured more than 500 new
COMMUNITY +
NFP FUNDRAISERS
MEMBER SALES
CHANNEL
13,000+
COMMUNITY/NFP
GROUPS
Fundraisers retain up to 20% of the
subscription revenues raised by
Memberships sold to their networks
APPROACHING
$100M
FUNDS RAISED!
for schools, sporting associations,
NFPs and community groups
12 CEO’S REVIEW
high-quality offers before the
end of December 2020, so our
NFP partners could continue to
provide a quality Membership to
their donors and supporters.
In February, we launched our
Fundraising Kick Off (FKO), a
series of virtual events attracting
over 3,000 NFPs. We also
introduced our 13,000+ NFPs to
our new fundraiser asset portal,
improving their ability to build
communication assets and kick
off their fundraising faster and
easier. We also provided them
with a link to bespoke assets
customised to their cause, a
service that IncentiaPay has not
offered before.
Our fundraising team was also
redesigned to streamline and
improve our services offering.
Key Account Management
personnel now focus on the
larger NFPs, with a tailored
solution designed for our
school sector. We improved and
expanded our customer service,
self-serve, and digital assistance
approach, including launching
a closed Fundraiser Facebook
group, to continue to improve the
fundraising abilities of our NFPs.
3. B2B (Frequent Values by
Entertainment)
SOME OF AUSTRALIA’S MOST
RESPECTED CORPORATES
Our Enterprise B2B channel has
maintained a 90% retention rate
throughout COVID-19, which
has also accelerated the shift to
digital coupons and integrated
payment options.
The third key pillar of our
business strategy involves
leveraging the growing need
of corporates and loyalty
programs for card-linked
content to drive customer
retention, engagement and
acquisition. As a result,
we are transforming our
existing capabilities into a
B2B marketplace, where our
Enterprise clients can access
market-leading entertainment
and lifestyle content via
multiple different tools and
payment mechanisms. This
will allow us to significantly
grow our Member base with
a reduced cost to service and
a higher gross margin, as we
move to a transaction-based
revenue model.
30+
LARGE ENTERPRISE
CLIENTS
POTENTIAL TO
REACH MILLIONS
OF CUSTOMERS
90%+
CLIENT
RETENTION
13
FINANCIAL PERFORMANCE
FY2021 revenues totalled
$19.4m, down 54% on the
previous corresponding period.
This was primarily due to a
fall in Membership revenues,
due to the impact of COVID-19
on Australia’s hospitality,
entertainment, travel and leisure
industries from continued
lockdowns, restrictions,
and border closures. Our
Membership revenues continue
to be impacted by COVID-19,
but we anticipate a rebound as
Australia commences opening
up again and starts to overcome
COVID-19’s impact.
In response to COVID-19 we
took decisive action in FY2021
to reduce our operating costs.
These actions resulted in our
underlying EBITDA (after
including Jobkeeper payments
of $2.3m in FY2021 and $0.9m
in FY2020) being restricted to
a loss of $2.4m compared to a
loss of $3.4m in the prior year.
CASH POSITION
As at 30 June 2021, cash
reserves totalled $3.2m.
Over FY2021, IncentiaPay
reduced its cash payments at
a faster rate than the fall in its
customer cash receipts. This
resulted in a reduction of the
deficit in operating cash flow
from -$13.8m in FY2020 to
-$5.3m in FY2021 (including
$2.6m Government Assistance
payments). Net cash used
in investment activities in
FY2021 totalled $2.9m, an
increase of $2.85m over the
previous corresponding period
as we invested in our digital
capabilities and technology
and customer experience
platforms in support of our
strategic objectives.
Results
Direction %
FY2021
FY2020
Revenue ($'000's)*
54% to
19,425 from
42,185
Underlying EBITDA
($'000's)**
29% to
(2,406)
from
(3,391)
Operating Cashflow
61% to
(5,335)
from
(13,788)
Net loss after tax
($'000's)
Basic loss per share
(NPAT) (cents)
Net tangible assets
per share (cents)
66% to
(8,402)
from (24,662)
87% to
(1.1)
from
(8.2)
63% to
(1.0)
from
(2.7)
* Revenue excludes interest income.
** Non - AIFRS items. See section 3 of Appendix 4E.
environment with key
platform investments
including customer service,
customer experience and
technology; and
2. B2B: introducing a new B2B
focussed growth strategy
with a transactional revenue
model on both sides of the
marketplace (merchant
and consumer).
I would like to take this
opportunity to thank our
Members, fundraisers, Merchant
partners and Enterprise clients
for their loyalty and for being
our most vocal champions.
Thanks also goes to my fellow
Board members, Executive
team and all IncentiaPay
employees for their hard work
and dedication throughout
a challenging period for our
business. Finally, thank you to
our Shareholders for your faith
in the longer-term potential
of IncentiaPay.
PEOPLE & CULTURE
IncentiaPay’s purpose is to
empower people, businesses,
and fundraisers to live life to
the fullest and make a positive
impact on the world. Our values
of Community, Challenge,
Courage and Together were
critical as we responded to
the challenges presented by
COVID-19 during the past
financial year. In the face of
these challenging times, I am
immensely proud of our people
and their resilience as we have
continued the transformation of
our corporate culture.
OUTLOOK
IncentiaPay ended FY2021 in
a strong position to advance
its business strategy despite
the ongoing challenges of
the COVID-19 pandemic. Our
business has strong foundations,
a significant opportunity
to deliver better value to
customers and shareholders
and plans to execute on our
strategy to deliver scale across
our business. We plan to deliver
scale via two channels:
1. B2C: transforming our
business foundations to
enable a simpler operating
Henry Jones
Chief Executive Officer
14 CEO’S REVIEW
15
15
16
REVIEW
503FINANCIAL
16 FINANCIAL
REVIEW
Gross revenue for FY2021 was
$19.4 million, underlying EBITDA
for FY2021 was a loss of $2.4
million, and negative operating
cash flow was $5.3 million. Net
loss after tax (NLAT) from
ordinary activities was $8.4
million. Australian revenue
accounted for $17.5 million,
or 90.0 per cent (FY2020:
$37.6 million, 89.0 per cent),
while New Zealand revenue
accounted for $1.9 million, or
10.0 per cent (FY2020: $4.6
million, 11 per cent).
GROSS REVENUE
Overall gross revenue for FY2021
was $19.4 million compared to
$42.2 million in FY2020. This
included $0.7 million, or 3.6 per
cent from fee income, travel
booking and paid advertising
(FY2020: $2.5 million), $8.2
million, or 42.3 per cent from
Membership sales (FY2020: $24.8
million), $3.0 million, or 15.5 per
cent from Enterprise client sales
(FY2020: $4.1 million) and $7.3
million, or 37.6 per cent from gift
card sales (FY2020: $10.7 million).
Government assistance provided
during the financial year was $2.4
million (2020: $1.05 million) and
consisted of a cash boost of $0.1
million and JobKeeper payments
of $2.3 million.
The decrease in revenue was
predominantly attributed to
a $16.6 million or a 66.9 per
cent decline in Entertainment
Membership sales from $24.8
million down to $8.2 million;
a $3.4 million or 31.8 per cent
decline in gift cards sales from
$10.7 million to $7.3 million; a $1.4
million or 66.7 per cent decline in
paid advertising and travel from
$2.1 million down to $0.7 million;
and a $1.1 million decrease in
Enterprise client revenue from
$4.1 million to $3.0 million or a
26.8 per cent decrease.
All categories of revenue have
continued to be significantly
affected by the impacts of
COVID-19 on Australia and
New Zealand’s hospitality,
entertainment, travel and
leisure industries from
continued statewide lockdowns
and border restrictions.
access to collateral and
content has assisted in the re-
engagement of fundraisers.
Gift cards, although reduced from
FY2021, was the second strongest
performing revenue line when
compared to the prior year due
to tangible value in discounts
and the ability to use gift cards
online. This financial year also
experienced a full year impact
of restrictions on cinemas which
traditionally has been a high
performing gift card category.
Paid advertising has continued
the downward trend from FY2020
principally because of restrictions
on travel and commercial activity
linked to travel insurance, car
rentals and both domestic and
international airlines.
Financial year 2021 is the first
full year affected by lower sales
and extensions to Memberships.
Prior year was only partially
impacted as a significant amount
of revenue related to book sales,
with earnings accounted for up
to 31 May 2020.
To counter the economic
downturn and changed
consumer sentiment, the
Company invested in customer
experience and marketing
capabilities to drive Membership
renewals and conversions. The
success of these changes saw an
uplift in sales in the last quarter
of FY2021.
Additionally, the launch of
cloud-based tools to streamline
NET LOSS AFTER TAX AND
IMPAIRMENTS
Reported net loss after tax
(NLAT) from ordinary activities
in FY2021 was $8.4 million
compared to a net loss after
tax from ordinary activities in
FY2020 of $24.7 million. The
net loss was predominantly
attributed to:
• A 54.0 per cent or $22.8
million reduction in
underlying revenue,
Investment expenditure
into the capability and
effectiveness of customer
experience and marketing
teams,
•
• Restructure costs incurred
as part of the next phase
of the digital and business
transformation program.
“To counter the economic downturn and changed consumer
sentiment, the Company invested in customer experience
and marketing capabilities to drive Membership renewals
and conversions. The success of these changes saw an uplift
in sales in the last quarter of FY2021.”
17
3
With the challenging revenue
raising environment, the
company continued to focus
on strategies to reduce fixed
costs and invest in growth
opportunities, these include:
• Organisational restructure
to reduce employee costs,
• Reduced salaries to
employees in the first half of
the financial year,
• Closure of branches prior to
the end of leases,
• Early termination of
infrastructure and
communication contracts,
• Cautious approach to and
the close monitoring of
technology costs.
Despite a reduction in gross
revenue, the NLAT has reduced
from the prior year due to the
reduction of fixed costs and the
elimination of print and book
production related costs, and the
full year effect of digital versus
print. Furthermore, property
costs have continued to decline
with the closure of branches. The
Company has also continued to
take active steps to receive all
available support from both state
and federal governments.
TRANSACTION, INTEGRATION
AND RESTRUCTURING COSTS
The Company continued
with the next phases of the
restructure and transformation
program with the view to
remove ongoing fixed costs and
actively streamline the agility
of the business. In line with
that, the Company incurred
restructure costs associated
with employee terminations
and redundancies. Furthermore,
the Company continued to
review leased office space and
vacated multiple locations
early to eliminate unnecessary
operational costs.
DISCONTINUED OPERATIONS
During the financial year
the Group did not divest or
discontinue any operations.
DEBT MANAGEMENT AND
BANKING COVENANTS
During FY2021, IncentiaPay
continued to review, assess
and manage its funding and
capital requirements, given the
impacts of COVID-19 on the
hospitality and leisure industries
and the focus to invest in
growth initiatives.
As announced on 29 September
2020, the Company and
Suzerain Investment Holdings
Limited (Suzerain) entered
into a convertible loan deed
which provided for the previous
unsecured loan of $9.8 million to
be secured over the Companies
present and future assets,
and the option for Suzerain to
convert the loan into ordinary
shares, subject to shareholder
approval. A conversion request
was received on 29 January
2021 to convert $6.4 million
of operational funding into
ordinary shares.
Additionally, on 20 September
2021, Suzerain converted the
remaining amount of $3.4
million of the convertible loan
into ordinary shares.
As announced on 15 October
2020, the Company raised
$0.5 million of capital through
a share purchase plan, with
the proceeds to be used for
working capital and investment
in the Company’s technology
transformation.
The Company announced,
on 3 June 2021, an additional
unsecured loan of $5 million to
be used for contingent working
capital due to seasonality of
revenue, and to expedite the
development of the Company’s
technology and Customer
Experience platforms.
DIVIDENDS
No dividend has been declared
in relation to the FY2021 results.
The Board of Directors of
IncentiaPay do not expect to
declare any dividends in FY2022.
18
FINANCIAL REVIEW
1919
504LEADERSHIP
TEAM
20
20 BOARD OF DIRECTORS
MEET INCENTIAPAY’S BOARD OF DIRECTORS – A GROUP OF KNOWLEDGEABLE BUSINESS
EXECUTIVES WITH A TRACK RECORD OF GROWING AND BUILDING BUSINESSES.
STEPHEN HARRISON CHAIRMAN
Stephen Harrison has over 35 years of experience in the financial services, funds
management, private equity, and accounting fields.
He has held director positions with Investec Funds Management and the Australian
subsidiary of US based fund manager Sanford C. Bernstein. He has been a founder and
held Directorships in a number of listed companies both in Australia and overseas.
He is currently Chairman of NobleOak Life Limited.
JEREMY THORPE NON-EXECUTIVE DIRECTOR
Jeremy Thorpe holds BA and LLB degrees, is a qualified attorney in South Africa, and
the Managing Director and Chief Executive Officer of Skybound Capital Australia.
He serves on the boards of all subsidiary and associate companies within Skybound
Australia’s diverse range of investments and is directly responsible for their
performance and investment returns. He has over 30 years of experience in corporate
finance, private equity, consumer and business credit, and structured finance.
In the recent past he has served on the Board of the National Credit Providers
Association in Australia.
CHARLES ROMITO NON-EXECUTIVE DIRECTOR
Charles Romito is an experienced management consultant and investment
professional. He was previously in the London office of the global strategy consultancy
McKinsey & Company and a co-founder of their Innovation & Growth Strategy practice.
As a PE professional, Charles has held senior roles including as a COO and General
Operating Partner in a Venture and Growth Equity fund. He has 15+ years track record
and held Board positions in 5 countries.
Charles is also an accomplished management-academic with expertise in Business-
Model Innovation, Growth Strategy and Business Transformation; he has published
and presented at international conferences; and designed, developed and delivered
Masters’ level degree programmes and Executive Education.
DEAN PALMER NON-EXECUTIVE DIRECTOR
Dean Palmer is a chartered accountant with more than 20 years of experience.
He is the founder and CEO of Skybound Fidelis Investment Limited - a specialist
structured finance, commercial credit, and property fund manager. He has held
numerous senior executive roles both in Australia and the UK.
He has a Bachelor of Commerce, Bachelor of Laws and is a member of Chartered
Accountants Australia and New Zealand.4
21
EXECUTIVE TEAM
INCENTIAPAY HAS AN OUTSTANDING LEADERSHIP TEAM WITH A DEEP HISTORY IN BUSINESS
MANAGEMENT, TECHNOLOGY AND MARKETING.
HENRY JONES CHIEF EXECUTIVE OFFICER
Henry Jones has more than 25 years of executive experience, predominantly in the
technology sector, having held senior positions at IBM across Australia, New Zealand,
and North America. He is considered an entrepreneur, having been involved in a
number of small disruptive ventures.
His role as CEO is key to leading and accelerating the Company’s turnaround and
building on our existing and solid foundation.
Henry has an MBA from Harvard Business School, and an LLB (Law) and BA
(Economics and Politics) from the University of Melbourne.
BEN NEWLING CHIEF OPERATING OFFICER
Ben Newling has more than 15 years of experience across general management and
corporate advisory within investment banking, retail banking and technology. His
executive experience spans equities, capital markets, M&A’s, and people management.
His role as COO spans finance, operations, human resources and commercial and legal
compliance.
Ben has a Master of Business Administration (MBA) focused in Finance and Financial
Management Services from MGSM.
LINDA MCDONALD CHIEF CUSTOMER EXPERIENCE OFFICER
Linda McDonald has more than 20 years of experience in delivering exceptional results
in the retail, FMCG and consumer healthcare industries, having held several senior
executive leadership roles.
Her role as CCXO is key to driving significant revenue, the creation of a transformation
digital program and a clear focus on customer acquisition, retention, and value growth.
Linda has a Bachelor Commerce (Marketing) from the University of Wollongong.
STACEY HAMPTON GENERAL MANAGER OF PEOPLE
Stacey Hampton has over 18 years of experience managing people and culture across
finance and technology companies, with previous roles focused on building a culture
of engagement, diversity, and inclusion.
Her role as GM of People is key to leading the Company through transformational
change, focusing on employee lifecycle and workforce planning, attraction and
selection performance management, talent identification, leadership, learning and
development, and reward and recognition.
Stacey has a Bachelor of Business (Human Resources) and a Graduate Diploma of
Human Resources and Industrial Relations.
22
LEADERSHIP TEAM
23
RISKS
505BUSINESS
24
24 BUSINESS RISKS
IncentiaPay faces a number of business risks that may impact the Company’s ability to
achieve its strategic objectives and create shareholder value. The Board considers the
following to be the key risks currently facing the business.
RISK
NATURE OF RISK
There is no certainty that IncentiaPay will remain sufficiently funded.
IncentiaPay recently secured additional funding from its largest
shareholder Suzerain Investments Holdings Ltd (Suzerain) to provide it
with sufficient working capital for the short term.
FUNDING
MACRO-ECONOMIC
UNCERTAINTY
DUE TO COVID-19
PERSONNEL
IncentiaPay continually manages its cash position and regularly
monitors its investments to balance the risk, outlay, and timings.
The Company has seen operating cash inflows decline due to the wide-
ranging impacts of the global pandemic particularly in the dining and
entertainment verticals. Recent lockdowns in a number of Australian and
New Zealand states and territories have had a short term impact on our
Membership sales.
As the COVID-19 pandemic continues to evolve, the Board and
Management continue to monitor the situation and adapt, and
expenditure continues to be closely monitored and managed based
on revenue. The team remains vigilant in managing austerity measures
across the business whilst commencing the implementation of
transformational initiatives to ensure the business is well placed in a
post COVID environment.
IncentiaPay’s success depends, in part, upon the continued performance,
efforts, abilities and expertise of its key management personnel, as
well as other management and technical personnel. The loss of the
services of these personnel without replacement could have an adverse
impact on the successful operation, management, and marketing
of IncentiaPay’s product/service offerings and platforms. Further, a
substantial increase in labour costs for employees or contractors may
have an adverse impact on the financial performance and/or financial
position of IncentiaPay.
The Board reviews the incentive structures of key personnel and
senior management to ensure their remuneration is in line with the
market, with a proportion deferred as a long-term/retention incentive.
Management regularly undertakes succession planning analysis of key
lead roles with the view to understand suitable internal talent and their
readiness to assume these roles.
25
5
RISK
NATURE OF RISK
TECHNOLOGY
REGULATORY
REPUTATION
IncentiaPay is increasingly reliant on its technology to deliver
services to its customers. In the event of a technology outage or
planned upgrade not fit for purpose, this could create an adverse
reputational or financial impact to IncentiaPay.
IncentiaPay has insourced a number of core technology functions
from Paywith Worldwide. This gives greater flexibility to control
our technology delivery roadmap.
IncentiaPay is subject to substantial regulatory and legal oversight.
The agencies with regulatory oversight of IncentiaPay and its
subsidiaries include, among others, the ASX and ASIC. Failure to
comply with legal and regulatory requirements may have a material
adverse effect on IncentiaPay and its reputation among customers
and regulators, and in the market.
IncentiaPay has compliance frameworks, policies, and procedures
in place to manage the risk of non-compliance and is prepared to
play an active role in consulting with regulators on changes that
could impact the business.
Reputation risk may arise through the actions of IncentiaPay or its
employees and adversely affect perceptions of IncentiaPay held
by the public, customers, shareholders, or regulators. These issues
include appropriately dealing with product outages or issues,
potential conflicts of interests, legal and regulatory requirements,
ethical issues, privacy laws, information security policies and sales
and trading practices. Damage to IncentiaPay’s reputation may have
an adverse impact on IncentiaPay’s financial performance, capacity
to source funding, cost of sourcing funding, and liquidity.
IncentiaPay actively manages the above risks by regularly
monitoring its market reputation amongst customers and
shareholders, as well as maintaining an open dialogue with
regulators and financiers.
26 BUSINESS RISKS
RISK
NATURE OF RISK
COMPETITION
THIRD PARTY
FAILURE
INTELLECTUAL
PROPERTY RISK
New competitors are emerging in the loyalty and incentives markets,
within which IncentiaPay operates. The loyalty space is particularly
competitive, with many well-funded international competitors. An
inability to adapt to technological advancement, including further
digitisation and flexibility of products, could negatively impact the
ability to attract customers and have a material adverse effect on the
business of IncentiaPay.
To mitigate this, IncentiaPay continues to invest in its Merchant
content, including the signing of exclusive & superior content
where applicable. The Company’s ongoing investment in its digital
technology and customer experience platform will also assist to
lessen this risk.
IncentiaPay is reliant on several third-party contractors. These third
parties provide essential services, on an outsourced basis, including
software and/or product development activities. Accordingly,
IncentiaPay is reliant on contractors properly performing their
contractual obligations and performance failures may have an
adverse effect on IncentiaPay. IncentiaPay is also an extensive user
of third party provided IT hardware and software platforms, systems,
and infrastructure. IncentiaPay is reliant on these suppliers properly
performing their contractual obligations, and performance failures
or unreasonable price increases may have a material adverse impact
on the Company. A failure by any of these suppliers to provide
those services or a failure of their systems may adversely affect
IncentiaPay’s ability to provide services to its customers.
To minimise these risks, IncentiaPay actively engages with its key
third party providers on a regular basis, and remains abreast of
potential risks within these providers through regular interaction at
the senior management level.
Whilst every effort has been made to secure the technology
supporting IncentiaPay’s various platforms, IncentiaPay does not
intend to apply to register patents for all the intellectual property
associated with the Entertainment and Frequent Values platforms.
Other parties may claim infringement of patents, or alternatively
other parties may develop and patent other very similar, potentially
substitutable products, processes or technologies.
IncentiaPay sees the unique value of its intellectual property, in the
content of its Entertainment and Frequent Values platforms, as a
mitigant to this risk.
27
REPORT
506DIRECTORS’
28
28 DIRECTORS’
REPORT
The Directors present their
report on the consolidated
entity IncentiaPay Ltd
and its controlled entities
(IncentiaPay) for the financial
year ended 30 June 2021. The
information in the Financial
Review forms part of this
Directors’ report and should be
read in conjunction with this
section of the Annual Report.
GENERAL INFORMATION
DIRECTORS
The following persons were
Directors of IncentiaPay Ltd
during or since the end of the
financial year up to the date of
this report:
• Stephen Harrison (appointed
15 February 2019)
• Dean Palmer (appointed 15
August 2019)
• Charles Romito (appointed
28 June 2019)
• Jeremy Thorpe (appointed
16 May 2019)
Particulars of each Director’s
experience and qualifications
are set out later in this report.
DIVIDENDS PAID
OR DECLARED
No dividends were paid or
declared for payment during
the financial year. Investors
should note that the Board of
Directors of IncentiaPay Ltd do
not expect to declare dividends
from the Company during the
next financial year.
INDEMNIFYING DIRECTORS
AND OFFICERS
The Company has entered into
a deed of indemnity in favour
of each Director and Officer of
the Company. The indemnity
operates so that officers are
indemnified on a full indemnity
basis and to the full extent
permitted by law against
liabilities and losses incurred as
an officer of the Company.
During or since the end of the
financial year, the Company has
paid premiums to insure the
Directors and officers against
liabilities for costs and expenses
incurred by them in defending
legal proceedings arising from
their conduct while acting in
the capacity of Directors or
officers of the Company, other
than conduct involving a wilful
breach of duty in relation to the
Company. The insurance is in
accordance with section 199B of
the Corporations Act 2001 (Cth).
In accordance with the terms of
the policy, the policy prohibits
disclosure of its terms, including
the amount of the premium.
PROCEEDINGS ON BEHALF
OF COMPANY
No person has applied to the
court under Section 237 of the
Corporations Act 2001 for leave
to bring proceedings on behalf
of the Company, or 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.
NON-AUDIT SERVICES
The Board of Directors, pursuant
to advice from the Audit and
Risk Committee, is satisfied
that the provision of non-audit
services during the year is
compatible with the general
standard of independence
for auditors imposed by the
Corporations Act 2001. The
Directors are satisfied that the
services disclosed below did
not compromise the external
auditor’s independence for the
following reasons:
• all non-audit services are
reviewed and approved
by the Audit and Risk
Committee prior to
•
commencement to ensure
they do not adversely affect
the integrity and objectivity
of the auditor; and
the nature of the services
provided does not
compromise the general
principles relating to auditor
independence in accordance
with APES 110: Code of
Ethics for Professional
Accountants set by the
Accounting Professional and
Ethical Standards Board.
The following fees were paid or
payable to KPMG for non-audit
services provided during the
year ended 30 June 2021:
Taxation services
Other services
Total
$
12,420
2,018
14,438
AUDITOR’S INDEPENDENCE
DECLARATION
The lead auditor’s independence
declaration for the year ended
30 June 2021 has been received
and can be found on page 44 of
the Annual Report.
ASIC INSTRUMENT 2016/191
ROUNDING IN FINANCIAL
STATEMENTS / DIRECTORS’
REPORT
The Company is an entity to
which ASIC Instrument 2016/191
applies. Accordingly, amounts
in the financial statements
and Directors’ report have
been rounded to the nearest
thousand dollars, or in certain
cases, to be nearest dollar
MATTERS ARISING AFTER THE
END OF THE FINANCIAL YEAR
The impact of the COVID-19
pandemic is ongoing and it is
not practicable to estimate the
potential impact, positive or
negative, after the reporting
date. The situation is rapidly
29
6
7. Any unvested loan funded
shares that do not meet their
vesting conditions (after
rollover, if applicable) will
cease to become eligible to
become vested loan funded
shares and will be cancelled,
bought-back or transferred to
a third party nominated by the
Board on terms determined by
the Board in its sole discretion.
8. Prior to the shares becoming
unencumbered, the executive
is required to repay the loan.
The terms of the current LFS
arrangements can be summarised
as follows:
1.
IncentiaPay provides its key
executives, (‘the executive’)
with a loan to purchase an
agreed number of IncentiaPay
shares at an issue price
based on the 5-day Volume
Weighted Average Price
(VWAP) immediately before
issue date;
If there is an outstanding
amount owing under the
Loan, all dividends declared
and paid with respect to
the shares (after deduction
for tax payable in relation
to those dividends) shall be
applied to repaying the Loan,
therefore the executives shall
have no right to receive those
dividends;
2.
3. The loan provided is interest
free and limited recourse,
such that the executive has
the option to either repay the
loan or return the shares at the
loan repayment date, being
30 business days after the last
vesting date;
4. Vesting conditions apply
to each executive’s shares,
being related to time, meeting
budgeted targets, share price
hurdles, and the conversion of
existing loans into shares, and
are outlined in table below;
5. Vesting of each tranche is
subject to the continued
employment of the executive
up to the relevant date on
which the vesting conditions
are tested.
6. The Board will retain a broad
discretion to determine or
vary any vesting conditions
if they consider that the
commercial performance
and circumstances of the
Company justify that variation
or waiver.
developing and is dependent
on measures imposed by the
Australian Government and
other countries.
There were no other matters
arising after the end of the
financial year which may
significantly affect IncentiaPay’s
operations, their results in future
financial years or the state of
affairs in future financial years.
ENVIRONMENTAL
REGULATION
The Group is not subject to
any significant environmental
regulation under a law of the
Commonwealth or of a State
or Territory.
OPTIONS
There were no options over
ordinary shares granted to or
vested by directors or other key
management personnel as part
of compensation during the year
ended 30 June 2021. There were
no ordinary shares of the Group
issued on the exercise of options
during the year ended 30 June
2021 and up to the date of
this report.
Any reference to options in the
annual financial statements or
remuneration report is related
to the way the fair value for the
Loan Funded Shares issued to
key management personnel,
was calculated.
LOAN FUNDED SHARE PLAN
As at 30 June 2021, there were
38,771,227 shares issued to
key management personnel
as part of Loan Funded Share
(LFS) arrangements approved
by shareholders at the AGM in
December 2020.
30 DIRECTORS’ REPORT
INFORMATION RELATING TO DIRECTORS AND COMPANY SECRETARY
STEPHEN HARRISON - CHAIRMAN
Board appointment
15 February 2019 as Non-Executive Director
28 June 2019 as Chairman
13 August to 14 October 2019 as Interim Executive Chairman
Interest in shares and options
Nil
Special responsibilities
Member of the Audit and Risk Committee
Member of the Nominations and Remuneration Committee
Directorships held in other listed
entities during the three years prior
to the current year
Sinetech Ltd
MEC Resources Limited
Qualifications
Bachelor of Economics, CPA
Experience
Experienced Chairman and Director with a demonstrated history
of working in the investment management industry. Skilled
in negotiation, asset management, management, mergers &
acquisitions, and start-ups.
JEREMY THORPE - NON-EXECUTIVE DIRECTOR
Board appointment
16 May 2019
Interest in shares and options
Jeremy Thorpe has an indirect interest in 647,817,141 shares.
Jeremy Thorpe’s family trust is a unit holder in Australian Fintech
Pty Ltd ACN 619 156 099 as trustee of the Australian Fintech Trust,
and Jeremy Thorpe is an employee of a related entity of Suzerain.
Special responsibilities
Member of the Audit and Risk Committee
Member of the Nominations and Remuneration Committee
Directorships held in other listed
entities during the three years prior
to the current year
Nil
Qualifications
Experience
Bachelor of Laws (LLB)
Bachelor of Arts
Experienced in private equity, corporate finance, and consumer
and business credit.
31
CHARLES ROMITO - NON-EXECUTIVE DIRECTOR
Board appointment
28 June 2019
Interest in shares and options
Nil
Special responsibilities
Member of the Audit and Risk Committee
Chairman of the Nominations and Renumeration Committee
Directorships held in other listed
entities during the three years prior
to the current year
Nil
Qualifications
Doctor of Philosophy (Ph.D)
MSci, Physics
Experience
Experienced management consultant with an extensive
background in VC/PE and management academia. Expertise lies
in the intersection of innovation management, growth strategy,
and business transformation.
Passion for business model innovation, growth, transformation,
venturing and new businesses. Worked in VC/PE and been a
Lead Syndicate Investor for several private deals.
Published academic that has presented at world-leading
conferences on innovation management and designed,
developed, and delivered postgraduate and executive education
to several thousand high-performers from all five continents.
DEAN PALMER - NON-EXECUTIVE DIRECTOR
Board appointment
15 August 2019
Interest in shares and options
Special responsibilities
Dean Palmer has an indirect interest in 647,817,141 shares. Dean
Palmer’s family trust is a unit holder in Australian Fintech Pty Ltd
ACN 619 156 099 as trustee of the Australian Fintech Trust, and
Dean Palmer is an employee of a related entity of Suzerain.
Chairman of the Audit and Risk Committee
Member of the Nominations and Renumeration Committee
Directorships held in other listed
entities during the three years prior
to the current year
Nil
Qualifications
Experience
Bachelor of Laws (LLB) Bachelor of Commerce
Member of the Institute of Chartered Accountants Australia &
New Zealand
Chartered accountant with more than 20 years of experience.
Founder and CEO of Skybound Fidelis Investment Limited - a
specialist structured finance, commercial credit, and property
fund manager. Has held numerous senior executive roles both in
Australia and the UK.
32 DIRECTORS’ REPORT
BEN NEWLING - COMPANY SECRETARY
Ben was appointed as the Company Secretary on 11 February 2019. Ben is employed at IncentiaPay as
the Chief Operating Officer. He holds an MBA.
MEETINGS OF DIRECTORS
During the financial year, the following meetings of Directors (including committees of Directors) were
held. Attendances by each Director during the year was as follows:
DIRECTORS’ MEETINGS
AUDIT AND RISK
COMMITTEE
REMUNERATION
AND NOMINATIONS
COMMITTEE
NUMBER
ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
NUMBER
ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
NUMBER
ELIGIBLE TO
ATTEND
NUMBER
ATTENDED
Stephen Harrison
Jeremy Thorpe
Charles Romito
Dean Palmer
15
15
15
15
15
15
15
15
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
This Directors’ report, incorporating the CEO’s Operating Review and Financial Review and the
Remuneration report is signed in accordance with a resolution of the Board of Directors.
Stephen Harrison
Chairman
30 September 2021
33
REPORT
507REMUNERATION
34
34 REMUNERATION REPORT
FRAMEWORK
1. KEY MANAGEMENT PERSONNEL
KMP are those people who have authority and responsibility for planning, directing and controlling
the strategic activities of the Group, directly or indirectly, including any Group (the Board) or any
individual acting under delegated authority.
KEY MANAGEMENT PERSONNEL FOR THE YEAR COMPRISED:
NON - EXECUTIVE DIRECTORS AS AT 30 JUNE 2021
NAME
POSITION
DATES
Stephen Harrison
Non-Executive Chairman
Full Financial Year
Jeremy Thorpe
Charles Romito
Dean Palmer
Non-Executive Director
Full Financial Year
Non-Executive Director
Full Financial Year
Non-Executive Director
Full Financial Year
EXECUTIVES AS AT 30 JUNE 2021
NAME
Henry Jones
Ben Newling
POSITION
CEO
COO
DATES
Full Financial Year
Full Financial Year
2. REMUNERATION POLICY
The remuneration policy of IncentiaPay has been designed to attract the most qualified and
experienced KMP and align objectives with those of the business and shareholders. All executives
receive a base salary which is based upon factors such as the length of service, experience, and skills,
as well as superannuation as required by law. Executives may sacrifice part of their salary to increase
payments towards superannuation.
The Board approved an Employee Gift Plan, which saw the Company issue $1,000 worth of shares to eligible
staff under section 83A-35 of the Income Tax Assessment Act 1997. The Board issued these shares from its
placement capacity and were subsequently ratified by shareholders at the AGM on 16 December 2020. Key
Management Personnel did not participate in the Employee Gift Plan despite being eligible.
Due to the impacts of COVID-19, the KMP temporarily reduced their remuneration by between 30 per cent
and 40 per cent for the period up to 31 December 2020. Further, the Board approved a Loan Funded Share
Scheme (LFS) for Henry Jones and Ben Newling on 23 July 2020, and an Employee Share Scheme (ESS)
for other senior executives.
The Board and shareholder approved LFS Scheme is a three-year long-term incentive plan for the CEO and
COO, which will vest over a three-year period. Vesting conditions relate to achieving the FY2021 Board approved
budget, and for the FY2022 and FY2023 financial years, will vest where the share price is greater than $0.10 and
$0.15, respectively. Shareholder approval was granted at the AGM held on 16 December 2020.
The Board and shareholder approved ESS for senior management and executive directors, will result in
shares being issued into a trust controlled by the Company. Maximum number of performance rights to
be issued under the plan is 7,500,000. These shares will be issued in 4 tranches and will be subject to the
same vesting hurdles as those applicable to tranches 2 – 5 under the LFS scheme and detailed under section
35
7
10 of this report. No shares were issued under this scheme during the financial year. The Board’s policy is to
review remuneration for KMP annually, based on market practice, duties and accountability. All remuneration
paid to Directors and Executives is valued at the cost to the Company and expensed in accordance with
Australian Accounting Standards. Independent advice is proactively sought when required, particularly
around the employment arrangements of new KMP including long-term incentive plans.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to
approval at the AGM. The maximum amount currently approved by shareholders is $500,000 per annum.
3. REMUNERATION COMMITTEE AND EXECUTIVE COMPENSATION
The Remuneration Committee has the responsibility for providing advice in relation to the
remuneration packages of senior executives, non-executive and executive directors. The Committee
is also responsible for the design and oversight of any share option schemes, performance incentive
packages, superannuation entitlements, and retirement and termination entitlements.
The Remuneration Committee reviews the compensation package for senior executives on an annual
basis and makes recommendations to the Board for approval. Compensation packages are reviewed
and determined based on current market rates and benchmarked against comparable roles and
companies of a similar size. The Committee is chaired by Dr Charles Romito.
4. REMUNERATION OBJECTIVES AND PRINCIPLES
Remuneration packages are set at levels that are intended to attract and retain executives capable of
managing the Company’s operations.
The Company’s remuneration strategy is structured to:
• ensure employee remuneration is fair and reasonable;
• attract and retain high calibre executives;
• align performance with shareholder value; and,
• be easily understood by all stakeholders.
5. REMUNERATION FRAMEWORK
The Executive Remuneration Framework is characterised by Fixed Remuneration (base salary,
superannuation plus other fixed benefits) and Variable/Performance Related Remuneration (including
short-term incentive (STI) and long-term incentive (LTI) linked to performance).
EMPLOYEE GIFT PLAN
On 29 September 2020, the Board implemented an Employee Gift Plan for all eligible employees
under section 83A-35 of the Income Tax Assessment Act 1997. The Board accepts, since the onset of
COVID-19, many staff worked reduced hours or were on reduced salaries. Commensurate with this,
the Shareholders approved the scheme at the AGM on 16 December 2020, and all eligible employees
received $1,000 worth of shares which were issued from the Company’s placement capacity. No KMP
participated in the gift plan, and the maximum number of shares available could not exceed $100,000,
additionally there are no vesting conditions applicable. Additional information is included in note 19 to
the Financial Statements.
FIXED COMPENSATION
This component is not performance linked and generally consists of salary, superannuation entitlements
and a motor vehicle allowance. The base amount is reviewed annually by the Remuneration Committee
for the Chief Executive Officer and other senior executives. Any adjustments made during the year will
either be as a result of market rate changes for the Company to remain competitive, or to reflect any
changes in the level of responsibility in the event the role has expanded.
36 REMUNERATION REPORT
PERFORMANCE RELATED COMPENSATION
Performance related compensation includes both short-term and long-term incentives and is
designed to reward key management personnel for meeting or exceeding their financial and personal
objectives. The STI is an ’At Risk’ bonus provided in the form of cash and its calculation is based on
the achievement of agreed KPIs and goals. The LTI is provided predominantly as exposure to the price
performance of ordinary shares of the consolidated entity, and to align management incentives with
long-term shareholder value.
SHORT-TERM INCENTIVES (STI)
The STI performance arrangements in which executives are incentivised with KPI’s and targets as set out in
their contracts, are board approved and do not constitute a formal scheme. Targets and KPI’s can change
each year depending on business priorities and are determined to increase business performance. Final
payment amounts are subject to individual, divisional and group measurement metrics, and are reviewed
and approved by the Board. Given the impact of COVID-19 on business performance, the Board has
determined that no STI’s will be paid for the financial year ending 30 June 2021 (2020: nil).
LONG-TERM INCENTIVES (LTI)
LTI’s are linked to the achievement of operational targets, and share price performance, and are
provided to certain KMP as part of their remuneration package, at the discretion of the Board.
Shareholders, at the AGM in December 2020, approved an Employee Incentive Share Scheme and a
Loan Funded Share Plan, both of which include vesting arrangements on the achievement of the Board
approved 2021 budget and share price hurdles and conversion of current loans into shares.
The exercise prices are set at or above the share price on the date of issuance, and thereby assist in the
alignment of management and shareholders’ objectives.
During the financial year no shares were issued under the Employee Incentive Share Scheme and
Ben Newling and Henry Jones were beneficiaries of the Loan Funded Share Plan, details of which are
included under section 10 of this report. The number of rights issued to each participant were 100%
discretionary and based on commercial arrangements and negotiations.
6. GROUP PERFORMANCE AND CHANGES IN SHAREHOLDER WEALTH
The table below sets out summary information about the Company’s performance and its impact on
shareholder wealth for the five years to 30 June 2021:
Revenue ($’000)
19,435
42,205
64,5721
75,8091
110,464
FY2021
FY2020
FY2019
FY2018
FY2017
Revenue ex Gift Cards ($’000)
12,110
31,513
37,265
41,158
88,575
Profit/(loss) for the period
before tax ($’000)
(8,588)
(20,945)
(27,367)1
(23,197)1
11,349
Dividends paid ($’000)
-
-
-
2,666
3,877
Share price as at 30 June
$0.024
$0.026
$0.045
$0.245
$0.740
Change in share price
($0.002)
($0.019)
($0.200)
($0.495)
($0.212)
1.
Amounts exclude discontinued operations.
37
7. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
MOVEMENT IN SHARES
DIRECTORS
Jeremy Thorpe1
Dean Palmer1
EXECUTIVES
Henry Jones
HELD AT
1 JULY 2020
36,732,674
36,732,674
OTHER CHANGES2
HELD AT
30 JUNE 2021
16,591,240
16,591,240
53,323,914
53,323,914
2,528,631
1,153,846
3,682,477
1. Ordinary shares are held by Australian Fintech Pty Ltd as trustee for the Australian Fintech Trust. Jeremy Thorpe and Dean Palmer are
Directors of Australian Fintech Pty Ltd and beneficiaries of the Australian Fintech Trust.
2. Other changes represent shares that were purchased or sold during the year.
OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Certain key management personnel (KMP), or their related parties, hold positions in other entities that
result in them having control, or joint control, over the financial or operating policies of those entities.
Some of these entities transacted with the Group during the year. The terms and conditions of the
transactions with KMP and their related parties were no more favourable than those available, or
which might reasonably be expected to be available, on similar transactions to non-key management
personnel related entities on an arm’s length basis. Details of transactions with related entities are
detailed in the tables below:
Sales of goods and services
Membership subscriptions1
Enterprise sales2
Purchases of services
Rent3
Technology consultancy4
Customer service5
2021
$’000
2020
$’000
44
92
13
-
324
-
-
-
96
339
1. Sale of Entertainment Memberships to Fair Go Finance, a controlled entity of Skybound.
2. Enterprise sales to NobleOak Life Insurance, an entity related to Stephen Harrison, the Chairman of the Group.
3. Gold Coast office space provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
4. Technology consultancy services with Fintech Services (AUST) Pty Ltd, a related party due to common directors Dean Palmer and Jeremy Thorpe.
5. Customer service provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
Outstanding balances arising from sales/purchases of goods and services:
Current payables
Leisurecom Group1
2021
$’000
29
2020
$’000
-
1. Customer service provided by a related entity controlled by Suzerain.
38
REMUNERATION REPORT
Outstanding balances arising from loan agreements:
Borrowings
Interest bearing loan
Additional growth operational facility
Transformational capital facility
2021
$’000
571
2,800
1,208
2020
$’000
517
2,691
-
Loans provided by Suzerain, Skybound and New Gold Coast Holdings, related parties to Jeremy
Thorpe (Director) and Dean Palmer (Director), have provided a total of $16.5m loan facilities to the
Group. During the period, the Group drew down $7.3m of the line of credit facility. See note 16 in the
Financial Statements for additional detail.
8. DETAILS OF REMUNERATION (KMP)
Details of the remuneration of KMP of the consolidated entity are set out in the following tables.
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE BASED
PAYMENTS
2021
CASH
NON-
SALARY AND
MONETARY
FEES
BENEFITS
BONUS OTHER SUPERAN-
OTHER
NUATION
LONG
SERVICE
LEAVE
TERMINATION
BENEFITS
RIGHTS AND
OPTIONS
CASH
SETTLED
OTHER
E.G
TOTAL
HYBRIDS
% OF
REMUNER-
ATION
LINKED TO
PERFORMANCE
DIRECTORS6
Stephen
Harrison1
93,075
Jeremy Thorpe2 67,707
Charles Romito3
125,910
Dean Palmer2
61,320
EXECUTIVES
Henry Jones5
257,800
Ben Newling4
219,800
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,110
19,492
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
254,039
108,255
-
-
-
-
-
-
-
-
-
-
-
-
93,075
0%
67,707
0%
125,910
0%
61,320
0%
531,949
36%
347,547
23%
Remuneration was paid to an associated entity.
1.
2. Directors’ fees were paid to an associated entity of Jeremy Thorpe and Dean Palmer and a related party of IncentiaPay Ltd.
3. Directors’ fees were paid to an associated entity of Charles Romito and a related party of IncentiaPay Ltd. Directors fees include payments for
both fees as a director and a one-off consulting review engagement.
4. Ben Newling is employed by IncentiaPay as a permanent full-time employee. For details relating to his notice period required to terminate his
contract, and termination payments provided for under the contract, refer to section 9 of the remuneration report.
5. Henry Jones is employed by IncentiaPay as a permanent full-time employee. For details relating to his notice period required to terminate his
contract, and termination payments provided for under the contract, refer to section 9 of the remuneration report.
6. All Directors are Non-Executive Directors other than where noted for an interim period. Directors do not receive performance related
compensation and are not provided with retirement benefits, apart from statutory superannuation where applicable.
7. Group issued 38,771,277 shares at $0.03 under its loan funded share plan approved by shareholders during the Annual General Meeting “AGM”
in December 2020. These shares have been issued to Ben Newling and Henry Jones who are key management personnel of the Group. The
loan funded shares are issued through a series of 5 tranches for each respective person which include market and non-market conditions, see
section 10 of this report for additional detail. The fair value of the loan funded shares has been determined using a Monte Carlo simulation
model. For the inputs to the model see Note 20 to financial statements.
39
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE BASED
PAYMENTS
2020
CASH
NON-
SALARY AND
MONETARY
FEES
BENEFITS
BONUS OTHER SUPERAN-
OTHER
NUATION
LONG
SERVICE
LEAVE
RIGHTS
TERMINATION
AND
CASH
BENEFITS
OPTIONS
SETTLED
OTHER
E.G
HYBRIDS
% OF
REMUNER-
TOTAL
ATION
LINKED TO
PERFOR-
MANCE
DIRECTORS9
Stephen Harrison1 145,156
Jeremy Thorpe6
74,542
Charles Romito7
83,220
Dean Palmer2,6
65,270
EXECUTIVES
Henry Jones3
189,750
Ben Newling8
201,831
-
-
-
-
-
-
Darius Coveney4 94,717 3,590
Heidi Halson5
46,835
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
292
-
-
-
15,752
15,498
(68)
10,105
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,256
126,426 189,319
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
145,448
0%
74,542
0%
83,220
0%
65,270
0%
205,502 0%
217,329
0%
120,495
0%
372,685
0%
1.
Stephen Harrison was appointed as Interim Executive Chairman from 30 August 2019 to 14 October 2019. This amount includes remuneration
related to that temporary appointment. Remuneration was paid partly in salary and partly to an associated entity.
2. Appointed as Director on 15/08/2019.
3. Appointed as CEO on 14/10/2019. Henry Jones is employed by IncentiaPay as a permanent full-time employee. For details relating to
his notice period required to terminate his contract, and termination payments provided for under the contract, refer to section 9 of the
remuneration report.
Terminated on 30/08/2019. Termination benefits include unused annual leave paid on termination.
Terminated on 23/08/2019. Termination benefits include unused annual leave, redundancy, and notice period.
4.
5.
6. Directors’ fees were paid to an associated entity of Jeremy Thorpe and Dean Palmer and a related party of IncentiaPay Ltd.
7. Directors’ fees were paid to an associated entity of Charles Romito and a related party if IncentiaPay Ltd.
8. Remuneration disclosed is for period as KMP, commencing from 30/08/2019. Ben Newling is employed by IncentiaPay as a permanent full-
time employee. For details relating to his notice period required to terminate his contract, and termination payments provided for under the
contract, refer to section 9 of the remuneration report.
9. All Directors are Non-Executive Directors other than where noted for an interim period. Directors do not receive performance related
compensation and are not provided with retirement benefits, apart from statutory superannuation where applicable.
40 REMUNERATION REPORT
9. SERVICE AGREEMENTS
Remuneration and other terms of employment for key management personnel are formalised in
service agreements. Details of these agreements are as follows:
NAME
Title
Henry Jones
Chief Executive Officer
Agreement commenced
14 October 2019
Term of engagement
Ongoing
Details
Termination of employment
• By either party on giving twenty-six (26) weeks’ notice; or
•
Immediately on payment in lieu of notice or if any of the conditions for
summary terminations are met including serious misconduct, gross
negligence, breach of contract, bankruptcy, crime, or repeated absence
without explanation.
Excluding payment in lieu of notice and statutory entitlements to accrued leave,
the contract does not specify any termination payment.
Equity compensation
•
27,186,234 loan funded shares.
NAME
Title
Ben Newling
Chief Operating Officer
Agreement commenced
30 August 2019
Term of engagement
Ongoing
Details
Termination of employment
• By either party on giving thirteen (13) weeks’ notice; or
•
Immediately on payment in lieu of notice or if any of the conditions for
summary terminations are met including serious misconduct, gross
negligence, breach of contract, bankruptcy, crime, or repeated absence
without explanation.
Excluding payment in lieu of notice and statutory entitlements to accrued leave,
the contract does not specify any termination payment.
Equity compensation
•
11,585,043 loan funded shares.
41
10. SHARE BASED COMPENSATION
As at 30 June 2021, there were 38,771,277 shares issued to key management personnel as part of Loan
Funded Share (LFS) arrangements approved by shareholders at the AGM in December 2020.
The terms of the current LFS arrangements can be summarised as follows:
1.
2.
IncentiaPay provides its key executives, (‘the executive’) with a loan to purchase an agreed number
of IncentiaPay shares at an issue price based on the 5-day Volume Weighted Average Price
(VWAP) immediately before issue date;
If there is an outstanding amount owing under the Loan, all dividends declared and paid with
respect to the shares (after deduction for tax payable in relation to those dividends) shall be
applied to repaying the Loan, therefore the executives shall have no right to receive those
dividends;
3. The loan provided is interest free and limited recourse, such that the executive has the option to
either repay the loan or return the shares at the loan repayment date, being 30 business days after
the last vesting date;
4. Vesting conditions apply to each executive’s shares, being related to time, meeting budgeted
targets, share price hurdles, and the conversion of existing loans into shares, and are outlined in the
table below;
5. Vesting of each tranche is subject to the continued employment of the executive up to the relevant
date on which the vesting conditions are tested;
6. The Board will retain a broad discretion to determine or vary any vesting conditions if they
consider that the commercial performance and circumstances of the Company justify that variation
or waiver;
7. Any unvested loan funded shares that do not meet their vesting conditions (after rollover,
if applicable) will cease to become eligible to become vested loan funded shares and will
be cancelled, bought-back or transferred to a third party nominated by the Board on terms
determined by the Board in its sole discretion; and
8. Prior to the shares becoming unencumbered, the executive is required to repay the loan.
MOVEMENT IN LOAN FUNDED SHARES
HELD AT
1 JULY
GRANTED
EXPIRED
HELD AT 30
JUNE 2021
VESTED AND
EXERCISABLE AT
30 JUNE 2021
Henry Jones
Ben Newling
-
-
27,186,234
11,585,043
-
-
27,186,234
3,573,220
11,585,043
1,522,679
42 REMUNERATION REPORT
Details of loan funded shares issued on 9 October 2020 to key management personnel as part of
compensation during the year and their terms as at 30 June 2021 are set out below:
TRANCHE
NO. OF
OPTIONS
ISSUED
VALUE
$
VESTED AND
EXERCISABLE
AT
30 JUNE 2021
FAIR
VALUE
OPTIONS
$
VESTING
CONDITION
VESTING
DATE4
Henry Jones
Ben
Newling
1
2
3
4
5
1
2
3
4
5
2,640,000
52,531
2,640,0005
52,531 Grant date
4,986,667
-
-1
-
Budget FY 2021
9 Oct
2020
30 Jun
2021
4,986,667
149,626
-2
53,874
4,986,667
96,615
-3
25,731
Share price hurdle
of $0.10
30 Sep
2021
Share price hurdle
of $0.15
30 Sep
2023
9,586,234
162,733
933,220
121,903 Proportion of
the Suzerain
convertible
loan converted
into shares and
proportion of
shares vested in
tranches 1 to 4.
27,186,234
461,505
3,573,220 254,039
1,125,000
22,386
1,125,0005
22,386 Grant date
31 Oct
2023
9 Oct
2020
30 Jun
2021
2,125,000
-
2,125,000
63,761
2,125,000
41,171
-1
-2
-3
-
Budget FY 2021
22,957
Share price hurdle
of $0.10
30 Sep
2021
10,965
Share price hurdle
of $0.15
30 Sep
2023
4,085,043
69,346
397,679
51,947 Proportion of
the Suzerain
convertible
loan converted
into shares and
proportion of
shares vested in
tranches 1 to 4.
31 Oct
2023
11,585,043
196,664
1,522,679
108,255
Total Shares
38,771,277
658,169
5,095,899
362,294
Shares will be carried over to tranche 3 as vesting condition not satisfied.
1.
2. Where the vesting price hurdle condition is not satisfied, tranche 2 shares will expire and only tranche 3 shares will roll-over to tranche 4.
3. Where the vesting price hurdle condition is not satisfied, tranche 3 and 4 shares will expire and will not be eligible for vesting.
4.
5.
Expiry date for these options is the last vesting date for tranche 5, being 31 October 2023.
Tranche 1 is not linked to performance conditions as it reflects retrospective outcomes already achieved during the set up and establishment.
43
INDEPENDENCE
DECLARATION
508AUDITOR’S
44
44 AUDITORS’ INDEPENDENCE
DECLARATION
8
45
1 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of IncentiaPay Limited I declare that, to the best of my knowledge and belief, in relation to the audit of IncentiaPay Limited for the year ended 30 June 2021 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPMG John Wigglesworth Partner Sydney 30 September 2021 46 9FINANCIAL
STATEMENTS
46 INCENTIAPAY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2021
Revenue and other income
Direct expenses of providing services
Impairments
Employee expenses
Depreciation and amortisation expense
Building occupancy expense
Finance costs
Legal and professional costs
Marketing expenses
Website and communication
Bad debts reversals/(expense)
Other expenses
Loss before income tax
Tax benefit/(expense)
Loss for the period
Net profit attributable to:
- Members of the parent entity
Other comprehensive income
CONSOLIDATED GROUP
NOTE
FY2021
$’000
FY2020
$’000
2
3
3
3
3
3
3
3
4(a)
19,435
(8,931)
-
(9,450)
(3,344)
(132)
(794)
(1,078)
(1,071)
(1,628)
101
(1,696)
(8,588)
186
(8,402)
42,205
(23,937)
(4,990)
(16,980)
(5,466)
(279)
(1,295)
(674)
(779)
(2,017)
(2,810)
(3,923)
(20,945)
(3,717)
(24,662)
(8,402)
(24,662)
Loss rising from translating foreign controlled entities from continuing
operations
20
(6)
(29)
Total comprehensive loss for the period
(8,408)
(24,691)
(1.1)
(1.1)
(1.1)
(1.1)
5(a)
5(a)
(8.2)
(8.2)
(8.2)
Total
Total
Loss per share
Basic loss per share (cents)
Diluted loss per share (cents)
The accompanying notes form part of these financial statements.
479
(8.2)
INCENTIAPAY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
CONSOLIDATED GROUP
NOTE
FY2021
$’000
FY2020
$’000
6
8
9
10
8
11
12
13
14
15
16
4(d)
17
18
15
16
17
18
19
20
3,228
1,000
155
1,968
6,351
523
158
811
15,813
17,305
23,656
5,981
1,055
4,579
-
4,526
1,042
17,183
1,123
28
32
132
1,315
18,498
5,158
5,307
992
134
2,351
8,784
-
2,781
1,327
14,387
18,495
27,279
6,235
1,731
517
186
6,219
764
15,652
2,158
2,691
350
182
5,381
21,033
6,246
122,984
733
(118,559)
5,158
116,026
377
(110,157)
6,246
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Trade and other receivables
Right-of-use assets
Property plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Tax Liabilities
Deferred revenue
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Borrowings
Deferred revenue
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
The accompanying notes form part of these financial statements.
48 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
ORDINARY
SHARE
CAPITAL
ACCUMULATED
LOSSES
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE BASED
PAYMENTS
RESERVE
TOTAL
NOTE
$’000
$’000
$’000
$’000
$’000
96,006
(85,495)
406
730
11,647
-
-
-
(24,662)
-
-
(24,662)
(29)
(29)
19
19
20
20,050
(30)
-
20,020
-
-
-
-
-
-
-
-
-
-
-
-
-
(730)
(24,662)
(29)
(24,691)
20,050
(30)
(730)
(730)
19,290
Balance at 1 July 2019
Comprehensive income
Loss for the period
Other comprehensive income
Exchange differences on
translation of foreign operations
Total comprehensive loss for
period
Transactions with owners, in
their capacity as owners and
other transfers
Shares issued during the period
Transaction costs
Movement during the period
Total transactions with owners
and other transfers
Balance at 30 June 2020
116,026
(110,157)
377
-
6,246
ORDINARY
SHARE
CAPITAL
ACCUMULATED
LOSSES
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE BASED
PAYMENTS
RESERVE
TOTAL
NOTE
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2020
Comprehensive income
Loss for the period
Other comprehensive income
Exchange differences on
translation of foreign operations
Total comprehensive loss for
period
Transactions with owners, in their
capacity as owners and other
transfers
Shares issued during the period
Transaction costs
Movement during the period
Total transactions with owners
and other transfers
116,026
(110,157)
377
-
-
-
(8,402)
-
(8,402)
19
19
20
7,000
(42)
-
6,958
-
-
-
-
-
(6)
(6)
-
-
-
-
Balance at 30 June 2021
122,984
(118,559)
371
-
-
-
-
-
-
362
362
362
6,246
(8,402)
(6)
(8,408)
7,000
(42)
362
7,320
5,158
49
INCENTIAPAY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Cashflows from operating activities
Receipts from customers
Payments to suppliers and employees
Government assistance received
Interest received
CONSOLIDATED GROUP
NOTE
FY2021
$’000
FY2020
$’000
19,503
(27,544)
2,696
10
33,126
(47,616)
677
25
Net cash used in continuing operations
7
(5,335)
(13,788)
Cashflows from investing activities
Purchase of property, plant and equipment
Purchase of intangibles
Proceeds from sale of business
Net cash used in from investing activities
Cashflows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Payment of lease liabilities
Interest paid
Net cash from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of financial period
Effects of movements in exchange rates on cash and
cash equivalents held
19
(53)
(2,854)
-
(2,907)
531
7,326
(1,661)
(214)
5,982
(2,260)
5,307
181
(40)
(169)
155
(54)
-
17,585
(1,610)
(249)
15,726
1,884
3,460
(37)
Cash and cash equivalents at the end of the financial period
in continuing operations
6
3,228
5,307
The accompanying notes form part of these financial statements.
50
FINANCIAL STATEMENTS
51
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 1
Summary of significant accounting policies .............................................................................................53
Note 2
Revenue .................................................................................................................................................................. 58
Note 3
Expenses.................................................................................................................................................................. 61
Note 4
Income tax ............................................................................................................................................................. 63
Note 5
Dividends, earnings per share and franking credit ................................................................................ 65
Note 6
Cash and cash equivalents .............................................................................................................................. 66
Note 7
Cash flow information ....................................................................................................................................... 67
Note 8
Trade and other receivables............................................................................................................................ 69
Note 9
Inventories...............................................................................................................................................................72
Note 10 Other assets ...........................................................................................................................................................72
Note 11 Right-of-use assets ..............................................................................................................................................73
Note 12 Property, plant and equipment ...................................................................................................................... 76
Note 13
Intangible assets ...................................................................................................................................................78
Note 14 Trade and other payables ................................................................................................................................ 83
Note 15 Leases ...................................................................................................................................................................... 84
Note 16 Borrowings ............................................................................................................................................................. 85
Note 17 Deferred revenue ................................................................................................................................................. 88
Note 18 Provisions ............................................................................................................................................................... 89
Note 19
Issued capital ......................................................................................................................................................... 91
Note 20 Reserves .................................................................................................................................................................. 92
Note 21 Key management personnel compensation ............................................................................................. 96
Note 22 Auditor’s remuneration ..................................................................................................................................... 96
Note 23
Interests in subsidiaries and business combinations ............................................................................ 97
Note 24 Parent company information .......................................................................................................................... 98
Note 25 Segment information ....................................................................................................................................... 100
Note 26 Capital commitments .......................................................................................................................................102
Note 27 Contingent liabilities and contingent assets ...........................................................................................102
Note 28 Financial risk management ............................................................................................................................102
Note 29 Related party transactions .............................................................................................................................108
Note 30 Events after the reporting period ............................................................................................................... 109
52
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 1 | Summary of Significant
Accounting Policies
Basis of preparation
These general-purpose financial statements for the year ended 30 June 2021 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 (IFRS). Consequently, this financial report
is compliant with IFRS. IncentiaPay Limited is a listed public Company incorporated and domiciled
in Australia. The Company 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 accruals 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.
These audited consolidated financial statements were authorised for issue on 30 September 2021.
Going concern
The consolidated financial report has been prepared on a going concern basis, which contemplates the
continuation of normal business operations and the realisation of assets and settlement of liabilities in the
normal course of business.
During the year the Group continued with its transformation journey with efforts focused on the redesign
and replacement of the Entertainment and Frequent Value apps and websites. Additionally, the Customer
Experience team has worked to address useability feedback to ensure improved app store ratings and
facilitate renewals through targeted app messaging and notifications. To supplement the new technology
platforms, the Group invested in enhanced direct marketing capabilities and data analytics to facilitate
targeted marketing campaigns, focused on both renewals and new Membership acquisitions. Due to
extensions added to Memberships during the financial year, the first quarter of financial year 2022 is
expected to see a number of renewals, which have been considered in preparing the cash flow projections.
Additionally, timing and quantum of Membership renewals have been adjusted to accommodate
restrictions imposed because of recent lockdowns.
At 30 June 2021 the Group had cash on hand of $3.2 million, net assets of $5.2 million and a net
current asset deficiency of $10.8 million. During the year ended 30 June 2021, the Group incurred a
net loss before tax from continuing operations of $8.6 million, and incurred net cash outflows from
operating activities of $5.3 million.
The Directors have prepared cash flow forecasts for the period from 1 July 2021 to 30 September 2022
that support the ability of the Group to continue as a going concern. Most notable aspects of the cash
flow forecasts include:
• Continued technology transformation centred around enhancement of new Entertainment and Frequent
Value apps and updated websites built on a technology platform which will serve as a foundation for new
revenue opportunities, such as credit card linking.
Improved trading conditions on a progressive basis to support Merchant accessibility for Members in the
short to medium term especially in the 2nd half of the 2022 financial year in a post vaccination Australia;
•
• Continued cost cutting through streamlining of operations and processes with the introduction of
efficiency tools;
53
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
• Partnering with key strategic service providers to reduce fixed costs;
• Continued support from the Group’s major shareholder, Suzerain, through the availability of
additional financing facilities, accommodative repayment terms and the conversion of the remaining
“Additional Growth Operational Facility” balance on 20 September 2021. Additionally, there is an
expectation that the Group will defer the repayment of $1.8 million in respect of the loans provided
by Suzerain and its related entities, due to be settled in the next 12 months;
• Share rights issue in financial year 2022.
The funding of ongoing operations of the Group is dependent upon the Group continuing to access
the Suzerain and related parties’ facilities and/or the successful share rights issue and/or the Group
reducing expenditure in-line with current cash and funding resources. As of 30 June 2021, the Group
had undrawn financing facilities from Suzerain and related parties’ totalling $5.8 million. See note 16
for further information. This undrawn amount has reduced to $4.5m at the date of the approval of this
annual financial report.
The Directors have reasonable grounds to believe that the ongoing financial support of Suzerain and
its related entities is likely to continue and therefore, the going concern basis on which the financial
report has been prepared is appropriate. However, should the Group not meet its cash flow forecasts,
the achievement of which is inherently uncertain and highly sensitive to assumptions made in respect
of revenue performance, including not obtaining further financing from Suzerain and its related entities
as required and the successful rights issue, there is a material uncertainty as to whether the Group will
be able to continue as a going concern.
These conditions give rise to material uncertainties that may cast significant doubt upon the Group’s
ability to continue as a going concern.
In the event the Group is unable to continue as a going concern, the Group may be required to realise
assets at an amount different to that recorded in the statement of financial position, settle liabilities
other than in the ordinary course of business and make provision for other costs which may arise.
(a) Key statements of financial position items and related disclosures that have been impacted by
COVID-19 were as follows:
The COVID-19 pandemic and the various mutated strains, in particular the Delta variant, together with
low vaccination rates, have continued to force Australian state authorities to take strict measures to
manage and stop outbreaks. These measures, in addition to continued elevated cases across the world,
have significantly impacted the Australian economy, and have increased the level of uncertainty in
the preparation of these financial statements. The Group has considered the impact of COVID-19 in
preparing its financial statements.
Given the dynamic nature of COVID-19, the Group has considered the potential impacts on carrying
values of assets and liabilities and potential liabilities. Other than adjusting events that provide
evidence of conditions that existed at the end of the reporting period, the impact of events that arise
after the reporting period will be accounted for in future reporting periods.
Processes applied
As a consequence of COVID-19 and in preparing these financial statements, management:
• Re-evaluated whether there were any additional areas of judgement or estimation uncertainty
beyond what has been disclosed above in the going concern assumption;
• Updated its economic outlook – principally for the input into the impairment analysis of financial
and non-financial asset classes and disclosures.
• Reviewed external market communications to identify other COVID-19 related impacts.
• Reviewed public forecasts and experience from previous downturns.
• Conducted several internal processes to ensure consistency in the application of the expected
54 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
impact of COVID-19 across all asset classes.
• Considered the impact of COVID-19 on the Group’s financial statement disclosures.
Key statements of financial position items and related disclosures that have been impacted by
COVID-19 were as follows:
Intangible assets
Consistent with the Group’s accounting policies, the Group has tested goodwill and indefinite life
intangible assets for impairment and has reviewed the carrying value of its finite life intangible assets
at the reporting date for indicators of impairment and, where applicable, reviewed the measurement
of the carrying value of these intangible assets. The assessment incorporated a consideration for
COVID-19. See note 13.
Property, plant and equipment and Right-of-use asset
Given the impact of COVID-19, the Property, plant and equipment and Right-of-use assets were subject
to impairment testing as part of the cash generating unit review for intangible assets.
Trade and other receivables
The Group has reassessed expected credit losses in light of current COVID-19 pandemic impacts on
customers as at 30 June 2021 with an adjustment to the loss rate where applicable. See note 8.
(b) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
IncentiaPay Limited and all of its subsidiaries (also referred to as “the Group”). Subsidiaries are entities
the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity.
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 adjusted where necessary to ensure uniformity of the
accounting policies adopted by the Group.
(c) 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.
Transactions 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.
55
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
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;
•
• Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Income and expenses are translated at average exchange rates for the period; and
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 Group disposes of the operation.
(d) 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 relevant taxation authority.
Receivables and payables are stated exclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the relevant taxation authority 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 relevant taxation authority are
presented as operating cash flows included in receipts from customers or payments to suppliers.
(e) Comparative figures
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 statements is
presented.
(f) Rounding of amounts
The parent entity has applied the relief available to it under ASIC Instrument 2016 / 191. Accordingly,
amounts in the consolidated financial statements and Directors’ report have been rounded off to the
nearest $1,000.
(g) New Australian Accounting standards and amendments to Australian Accounting Standards and
Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory
for 30 June 2021 reporting period and have not been early adopted by the Group. These amended
standards and interpretations are not expected to have a material impact on the Group’s consolidated
financial statements in the current or future reporting periods.
56 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
(h) Critical acccounting estimates and judgements
The Directors’ estimates and judgments are incorporated into the financial statements and are based
on historical knowledge and the 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 from within the Group.
Key judgements
Revenue recognition
The Group recognises revenue over time, using a method that reflects the manner in which its
obligations are fulfilled. See note 2.
Lease term
The Group assesses whether it is reasonably certain that an extension option or hold over period will
be exercised.
Key estimates
Measurement of ECL allowance for trade receivables and contract assets
ECLs are measured at an unbiased, probability-weighted amount, using reasonable and supportable
information that is available without undue cost or effort at the reporting date. Refer to note 8.
Deferred tax assets “DTA”
Availability of future taxable profit against which deductible temporary differences and tax losses
carried forward can be utilised. Refer to note 4.
Goodwill and other intangibles
The Group assesses impairment at the end of each reporting period by evaluating conditions and
events specific to the Group that may be indicative of impairment triggers. Recoverable amounts
of relevant assets are reassessed using the higher of fair value less costs of disposal or value-in-use
calculations which incorporate various key assumptions.
Further details on the key estimates used in the impairment evaluation in respect of goodwill or other
intangibles for the year ended 30 June 2021 can be found in note 13.
Costs relating to Technology Transformation Projects “TTPs” were capitalised during the year, and
“ready to use” TTPs were allocated to web development when they were in a condition for use as per
the expectations of management. These costs included estimates covering the amount of time resources
and corresponding values that were allocated to key project components. They were amortised in
accordance with the company accounting policies. See note 13.
(i) Changes in significant accounting policies
The Group has adopted all of the new amended Accounting Standards and interpretations issued
by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting
period. These standards did not have a material impact on the financial statements.
57
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 2 | Revenue
Accounting policy
Revenue from contracts with customers
Other than for a limited number of exceptions, including leases, the revenue model in AASB 15 applies
to all contracts with customers as well as non-monetary exchanges between entities in the same line of
business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity recognises revenue to depict the transfer of
promised goods or services to customers at an amount that reflects the consideration to which the
entity expects to be entitled in exchange for the goods or services. To achieve this objective AASB 15
provides the following five-step process:
•
•
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contract(s); and
• Recognise revenue when (or as) the performance obligations are satisfied.
Identify the contract(s) with a customer;
Identify the performance obligations in the contract(s);
In November 2019, Entertainment launched a wholly digital version of the Entertainment Membership
that incorporates a rolling 12-month subscription period. The subscription period commences when
the Membership is activated and expires after a period of between 12 to 24 months, depending on the
applicable period of the Memberships. During the height of COVID in the first half of 2021 financial
year, the company sold Memberships with extended periods to accommodate limited access to
Merchants and rewards. The extended periods have been considered in calculating revenue under
AASB15. The Membership year for the 19/20 edition of the book ran from 1 June 2019 to 31 May 2020.
The Group satisfies its obligations as services are rendered to Members during the period of
Membership. Benefits must be provided constantly throughout the period and Entertainment
Publications has concluded that a straight-line basis is the most appropriate method. The Group has
consistently applied this revenue recognition model to both the 19/20 physical book, which expired on
31 May 2020 and the relaunched rolling digital Membership.
58 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
The following table provides information about the nature and timing of the satisfaction of
performance obligations in contracts with customers, including significant payment terms, and the
related revenue recognition policies.
Type of services
Nature and timing of satisfaction of performance obligations and
revenue recognition policies
Fee income -
Paid advertising
Fee income -
Travel booking
Revenue from Entertainment Publications marketing and Merchant support fees
through the placement of advertisements and the distribution of offers and
promotions on behalf of businesses to Members is recognised at point in time when
the advertisement or offer is placed, distributed and invoiced. Revenue from the
successful promotion of Merchant offers is recognised when the transaction occurs
which evidences the take up of the promotion.
Revenue from commission receivable for bookings are recognised at point in time
when the bookings are made, and it is paid for. Members have access to a range
of discounts and deals from hotels, airlines and car rental companies through the
Group’s platform through which the Group acts as an agent on behalf of the hotels,
airlines and car rental companies.
Fee income -
Consulting and media
Revenue relates to rendering of information technology consulting services and it is
recognised at point in time by reference to the stage of completion of the contract.
Membership
subscriptions
Enterprise sales
On commencement of Memberships, Entertainment Publications enters into a
performance obligation to deliver benefits in the form of special offers, discounts,
promotions and booking facilities to Members during the period of Membership
when revenue is recognised over time. A contract liability is recognised for unearned
revenue for performance obligations to Members that have not yet been satisfied.
Payment for Membership is made prior to the commencement of Membership. Gift
with purchase promotion is treated as a reduction in revenue over the life of the
subscription.
Entertainment Publications enters into contracts with corporate customers to
develop a program of special offers, discounts, promotions and booking facilities
for their customers or employees over the period of time applicable in the contract.
Entertainment Publications has taken the view that the performance obligations
defined in the contract should be bundled into one performance obligation centred
around access to the program of benefits.
Gift card sales
Revenue from the sale of gift cards to Members is recognised at a point in time
when the gift card is provided to the customer, and it is paid for. The Group is a
principal in these transactions as it purchased the gift cards and obtains full control
of them before selling them to Members.
Payment terms are highly varied for the different sources of revenue, different customers and contract
terms are individually negotiated.
59
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Revenue from government grants
Revenue from government grants is recognised when there is reasonable assurance that the Group will
comply with the conditions attaching to them and the grants will be received.
The Group has made an election to present JobKeeper on a net basis, being set off against the related
employee expense.
Cash flow boost assistance received during the period has been presented as other income.
Fee income - Paid advertising
Fee income - Travel booking
Fee income - Consulting and media
Membership subscriptions
Enterprise sales
Gift card sales
Revenue from contracts with customers
Profit on sale of assets1
Government assistance
Interest received
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
600
66
-
8,216
3,039
7,325
19,246
67
112
10
1,887
221
347
24,767
4,121
10,692
42,035
-
150
20
Total revenue and other income
19,435
42,205
1.
Sales of certain office equipment in Entertainment Publication New Zealand and the digital platform for Entertainment Digital.
Trade receivables (included in ‘Trade and other receivables’)
Contract liabilities
CONSOLIDATED GROUP
FY2021
$’000
640
4,558
FY2020
$’000
870
6,569
NOTE
8
17
The contract liabilities primarily relate to the advance consideration received from Members for subscriptions
and Enterprise customers, for which revenue is recognised over time. See note 17 for details.
60 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 3 | Expenses
Loss before income tax from continuing operations includes the following significant expenses:
CONSOLIDATED GROUP
NOTE
FY2021
$’000
FY2020
$’000
Direct expenses of providing services
Variable expenses relating to book printing and production
Amortisation of deferred commission
Enterprise book printing
Gift cards
Other
Total
Bad debts written off
Deferred consideration
Other debtors
Movement in expected credit losses
Total
Employee expenses
Employee related expenses
JobKeeper payments earned
Total
Building occupancy expense
Variable lease expense
Total
Finance costs
Finance costs on borrowings
Interest expense on lease liabilities
Other finance costs
Total
Depreciation and amortisation expense
Plant & equipment
Intangibles
Right-of-use assets
Total
Impairments
Goodwill
Intangible assets
Total
10
8
16
15
12
13
11
-
1,455
169
7,069
238
8,931
-
-
(101)
(101)
11,753
(2,303)
9,450
132
132
518
166
110
794
569
1,428
1,347
3,344
-
-
-
2,503
9,359
584
10,508
983
23,937
2,966
59
(215)
2,810
17,889
(909)
16,980
279
279
894
249
152
1,295
521
3,299
1,646
5,466
3,605
1,385
4,990
61
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Direct expenses of providing services
Sales commission paid to fundraiser partners for the sale of Entertainment Memberships is an incremental
cost of obtaining contracts with customers and is initially recognised as a prepayment on the balance sheet,
and subsequently amortised as an expense through the income statement in line with the recognition of
revenue from associated Membership sales.
Gift cards expenses represents the cost of gift cards sold to Members. Some gift cards are held as inventory first,
prior to being sold, and others are acquired from third parties at the time of the transaction. Unsold gift cards at
30 June 2021 are classified as inventory and carried on the balance sheet.
Bad debts written off
Movement in expected credit losses relates to the loss allowance adjustment to update the expected credit loss
allowance at year end. See note 8 for details.
Bad debts written off during the prior year relates to $2.9 million deferred consideration for the sale of
a group of previous subsidiaries known as the Bartercard business, (see ASX release 24 December 2019
Settlement of Claim with TCM), and $0.06 million owing from Blackglass Pty Ltd also a previous subsidiary,
for deferred consideration held for working capital adjustments.
Employee expenses
Employee related expenses include all costs associated with human resources and is offset by JobKeeper
payments earned as part of the COVID-19 government assistance package.
The Group has elected to present JobKeeper payments on a net basis, with the income being set off against
the related salary expense.
The contributions to defined contribution plans were $0.8m and equity settled share-based expenses were
$0.4m in the reporting period.
Impairment of intangible assets
See note 13.
Depreciation and amortisation expense
Depreciation of Plant & equipment relates to leasehold improvements and office equipment. Amortisation
of intangibles relates to software assets. Amortisation of right-of-use assets relates to offices and office
equipment assets recognised in accordance with AASB 16.
During the first half of the financial year, the Group re-assessed the useful life of the software intangible asset,
largely comprising costs associated with “legacy” capitalised web development. As a result of the strategic
digital transformation during the financial year, the Group determined that the period over which the written
down value should be consumed was shorter than previously estimated. Amortisation was accelerated to reflect
this, resulting in the legacy assets being fully written down by 31 December 2020.
During the second half of the year, costs relating to Technology Transformation Projects “TTPs” were
capitalised and “ready to use” TTPs were allocated to web development when they were in a condition
for use as per the expectations of management. They are amortised in accordance with the company
accounting policies. See note 13 for details.
Building occupancy expense
Building and occupancy expenses represent variable lease payments related to leases that have not been
incorporated into the measurement of lease liabilities.
62 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Finance costs on borrowings
The decrease in finance costs on borrowings is predominately due to conversion of the $6.3 million
convertible loan into 187,544,529 ordinary shares at $0.034 per share during the year and conversion
of the $19.3 million convertible loan into 410,643,766 ordinary shares at $0.047 per share in the second
half of last financial year. See note 16.
Note 4 | Income Tax
Accounting policy
The income tax expense for the year comprises current income tax expense and deferred
tax expense.
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax
liabilities are measured at the amounts expected to be paid to the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year.
Current and deferred income tax expense is charged outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
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.
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.
In the current circumstances, the Group do not believe that sufficient taxable profit will be available in
the short term to utilise the carry forward tax losses.
The Group has considered the following factors:
• There is a history of tax losses being incurred over the past few years.
• Management is forecasting further large taxable losses again for FY2022.
• Whilst assessable income is forecast from FY2023 onwards, it is not sufficiently large enough
to generate taxable income that will fully utilise the carry forward tax losses (Per 30 June 2020
Income Tax Return, $42,147,068) in the near term.
• The accounting standard requirement is for there to be convincing evidence to support the
recognition of deferred tax assets where the entity incurs losses.
Accordingly, the Group has not recognised a deferred tax asset at 30 June 2021.
63
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Tax consolidation group
Incentiapay (the head entity) and its wholly owned Australian subsidiaries implemented the tax
consolidation legislation.
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into
a tax sharing and funding agreement which, in the opinion of the directors, limits the joint and several
liability of the wholly-owned subsidiaries in the case of a default by the head entity.
This agreement provides that the wholly-owned subsidiaries will continue to fully compensate Incentiapay
for any current tax payable assumed and be compensated by Incentiapay for any current tax receivable
and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to
Incentiapay under the tax consolidation legislation.
a) The components of income tax (expense)/income comprise:
Current tax
Deferred tax
Income tax benefit/(expense)
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
186
-
186
-
(3,717)
(3,717)
b) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax expense
(8,588)
(20,945)
The prima facie tax payable on profit from ordinary activities before
income tax is reconciled to income tax as follows:
Prima facie tax payable (benefit) on profit from ordinary activities before
income tax at domestic statutory rate of 30% (2020: 30%)
(2,577)
(6,284)
Add/(less) tax effect of:
Permanent differences
Temporary differences
Unrecognised tax losses
Derecognised deferred tax assets
Unders/(overs) from prior periods
Income tax (benefit)/expense
2,502
(3,467)
3,542
-
(186)
(186)
642
(410)
6,053
3,717
-
3,717
No tax losses were recognised for the financial year. This income tax benefit arising from tax losses will
only be realised if:
•
the Group derives future assessable income of a nature and of an amount sufficient to enable the
Group to benefit from the deductions for the losses to be realised;
the Group continues to comply with the conditions for deductibility imposed by tax legislation; and
•
• no changes in tax legislation adversely affect the Group in realising the benefit from the
deductions for the losses.
64 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
c) Deferred tax
Deferred tax assets
Provisions
Employee benefits
Intangibles
Other
BALANCE AS AT 30 JUNE
2020
BALANCE AS AT 30 JUNE
2021
OPENING
BALANCE
CHARGED TO
INCOME
CHARGED
DIRECTLY TO
EQUITY
DISPOSAL
DURING
DIVESTMENT
DERECOGNISED
DEFERRED TAX
ASSETS
TOTAL
742
666
(1,846)
4,155
3,717
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(742)
(666)
1,846
(4,155)
(3,717)
-
-
-
-
-
-
-
The Group has estimated unutilised tax losses of $51.7m. Additionally, there are other deductible temporary
differences resulting in a net potential deferred tax assets position for the Group of approximately $2.2m,
calculated using the prevailing rate of Australia corporation tax of 30% for the Group.
After considering the above, the Group determined in the prior year that these deferred tax assets will
no longer be recognised as it is uncertain whether future taxable profits in the foreseeable future will be
sufficient to utilise the losses. The Group completed phase 1 of the transformation plan which is comprised
of a mobile application, website, and Membership widget, and is currently at the feasibility stage of phase 2.
The outcome of phase 2 is focused on Merchants and corporate partnerships to deliver growth and stability.
Current projections indicate a return to profitability however given the levels of uncertainty with respect to
economic recovery, it is not sufficiently convincing for the purposes of recognition of these tax losses.
d) Current tax
Income tax payable
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
-
186
The income tax payable in 2020 related to provisional estimates in relation to estimated New Zealand tax. This
income tax payable was derecognised during the year as no income tax was ultimately payable.
Note 5 | Dividends, earnings per share
and franking credit
Franking account
Balance of franking account at year end adjusted for franking credits
arising from:
Payments of income tax
FRANKING CREDITS AVAILABLE FOR SUBSEQUENT FINANCIAL YEAR
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
6,493
-
6,493
6,493
-
6,493
The Directors have advised that they do not intend to declare dividends for the 2021 financial year. The ability
to utilise the franking credits is dependent upon the ability to declare dividends. In accordance with the tax
consolidation legislation, Incentiapay Limited as the head entity in the tax consolidated group has also assumed
the benefit of $6.5m (2020: $6.5m) franking credits.
65
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
a) Reconciliation of earnings to profit or loss
Loss for the period from continuing operations
Loss for the period from discontinued operations
EARNINGS USED TO CALCULATE BASIC EPS
Weighted average number of ordinary shares outstanding during the
year used in calculating basic EPS1
Weighted average of dilutive convertible notes and equity instruments
outstanding
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
(8,402)
(24,662)
-
-
(8,402)
(24,662)
746,647,173
302,134,914
-
-
Weighted average number of ordinary shares outstanding during the
year used in calculating diluted EPS
746,647,173
302,134,914
1.
The 38,771,277 ordinary shares issued on 9 October at a price of $0.029 each under the loan funded shares plan are not included in
the weighted average number of ordinary shares as they are treated as in substance options for accounting purposes and would be
considered anti-dilutive in nature.
Note 6 | Cash and cash equivalents
Accounting policy
Cash and cash equivalents include cash on hand, deposits available on demand with banks and other
short-term highly liquid investments with original maturities of three months or less. Bank overdrafts, if
any, are reported within short-term borrowings in current liabilities in the Statement of Financial Position.
Cash at bank and on hand
Short-term bank deposits
TOTAL CASH AND CASH EQUIVALENTS
RECONCILIATION OF CASH
CONSOLIDATED GROUP
FY2021
$’000
3,228
-
3,228
FY2020
$’000
5,304
3
5,307
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
TOTAL CASH AND CASH EQUIVALENTS
3,228
3,228
5,307
5,307
66 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 7 | Cash flow information
RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW
FROM OPERATIONS
Loss after income tax
Non-cash flows in loss
Amortisation-intangibles
Loss on disposal of leasehold improvements
Depreciation-property plant and equipment
Depreciation-right-of-use
Impairment of intangibles in continuing operations
Share based payment expense
Net interest included within investing
Changes in assets and liabilities, net of effects of purchase and
disposal of subsidiaries
(Increase)/decrease in trade receivables
(Increase)/decrease in prepayments
(Increase)/decrease in inventories
(Increase)/decrease in deferred taxes receivable
Increase/(decrease) in trade payables and accruals
Increase/(decrease) in deferred income
Increase/(decrease) in income taxes payable
Increase/(decrease) in provisions
CASH FLOW FROM OPERATING ACTIVITIES
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
(8,402)
(24,662)
1,428
-
569
1,347
-
454
794
417
333
(21)
-
(285)
(2,011)
(186)
228
(5,335)
3,299
690
521
1,646
4,990
(730)
1,295
4,867
5,502
(38)
3,717
1,044
(14,825)
-
(1,104)
(13,788)
67
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Reconciliation of liabilities arising from cash flows from financing activities
INTEREST
BEARING
LOAN
ADDITIONAL
GROWTH
OPERATIONAL
FACILITY
LEASE
LIABILITIES
TRANSFORM-
ATIONAL
CAPITAL
FACILITY
NZ
BUSINESS
CASH FLOW
LOAN
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
517
2,691
3,889
-
-
-
-
54
-
-
-
6,099
-
-
-
267
-
120
(6,377)
-
(50)
(1,661)
(166)
166
-
-
-
-
1,199
-
-
(48)
55
(20)
22
-
-
7,097
28
7,326
-
-
-
-
-
-
-
(50)
(1,661)
(214)
542
(20)
142
(6,377)
571
2,800
2,178
1,208
28
6,785
BALANCE AS AT
30 JUNE 2020
Drawn down
Rent concessions or deferred
rents
Repayment or amortised
Interest paid
Interest expenses
Line fees paid
Line fees
Loan converted to equity
BALANCE AS AT
30 JUNE 2021
68 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 8 | Trade and other receivables
Accounting policy
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, less any provision for loss allowance.
Current
Trade receivables
Provision for loss allowance
Net trade receivables
Sublease rent receivable1
Other receivables
TOTAL CURRENT TRADE AND OTHER RECEIVABLES
Non-current
Sublease rent receivable1
TOTAL NON-CURRENT TRADE AND OTHER RECEIVABLES
1.
Sublease Sydney office rent receivable. See note 11 for details.
CONSOLIDATED GROUP
FY2021
$’000
FY2020
$’000
640
(140)
500
427
73
1,000
523
523
870
(241)
629
-
363
992
-
-
Movement in the provision for loss allowance of receivables is as follows:
Current trade receivables
TOTAL
Opening
balance
1/07/2020
Loss
allowance
adjustment
for year
Amounts
written
off
Closing
balance
30/06/2021
$’000
$’000
$’000
$’000
(241)
(241)
Opening
balance
1/07/2019
101
101
-
-
(140)
(140)
Amounts
written
off
Closing
balance
30/06/2020
Loss
allowance
adjustment
for year
$’000
$’000
$’000
$’000
Current trade receivables
TOTAL
(580)
(580)
215
215
124
124
(241)
(241)
69
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
The Group impairs the value of individual trade debtors based on an assessment of the credit quality
of the customer, the previous trading pattern of the customer and management’s assessment of the
likely recovery. All trade debtors which are not likely to be recovered are either written off or an
impairment for lifetime expected credit losses is recognised. Minimal risk is expected in respect of
recoverable which are not written off or provided against. The remainder of receivables, after credit
losses, are of high credit quality.
The Group uses a “roll rate” method to calculate expected credit losses for trade receivables from
individual customers that is made up of variable mix of number and size of balances. Loss rates
are calculated based on the probability of receivables progressing through successive stages of
delinquency to write off. Roll rates are calculated using an analysis of how balances change from
one month to next until they reach 90 days. Data over the last 12 months was reviewed to determine
the level of recovery of those receivables older than 90 days. Combining these two measurements
provided the Group with the ability to determine the loss allowance as of 30 June. Due to the severe
economic impacts of the COVID-19 outbreak, the Group reviewed the expected credit loss allowance
and determined that the adjusted loss rate for trade debtors past due over 90 days should be 100%.
On that basis, the expected credit loss allowance as at 30 June 2021 was determined as follows for
trade receivables:
REPORT CATEGORY
DAYS
ADJUSTED
LOSS RATE
Current
Past due 1-30
Past due 31-60
Past due 61-90
Past due over 90
0-30
31-60
61-90
91-120
121-150
Greater than over 90 days overdue
Greater than 150
%
7
24
51
100
100
100
Total
RECEIVABLES
BALANCE
AS AT
30 JUNE 2021
$’000
LOSS
ALLOWANCE
AS AT
30 JUNE 2021
$’000
393
148
43
-
-
56
640
27
35
22
-
-
56
140
The expected credit loss allowance as at 30 June 2020 was determined as follows for trade receivables:
REPORT CATEGORY
DAYS
ADJUSTED
LOSS RATE
Current
Past due 1-30
Past due 31-60
Past due 61-90
Past due over 90
0-30
31-60
61-90
91-120
121-150
Greater than over 90 days overdue
Greater than 150
%
16
31
14
100
100
100
Total
RECEIVABLES
BALANCE
AS AT
30 JUNE 2020
$’000
LOSS
ALLOWANCE
AS AT
30 JUNE 2020
$’000
641
101
22
9
7
90
870
101
31
3
9
7
90
241
70 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Credit risk
The Group has a sublease rent receivable of $0.9 million for the Sydney office. The sub lessee has
provided a bank guarantee of $0.2 million as a security. Apart from the sublease rent receivable, the
Group has no significant concentration of credit risk with respect to any single counterparty or group
of counterparties other than those receivables specifically impaired. The class of assets described as
“trade and other receivables” are the main source of credit risk related to the Group.
No collateral is held in respect of these exposures and there are no other credit enhancement
arrangements. All trade receivables have been investigated and, other than those which have been
written off or for which credit losses have been recognised, there are no indicators of poor credit
quality for trade receivables. Securities in the form of personal guarantees from directors, or registered
mortgages are regularly taken to support customer trading activities.
Gross amount
Impaired (past due)
Total
Within initial trade terms
Past due not impaired - 30 days
60 days
90 days
90 days +
Total
Geographical credit risk
CONSOLIDATED GROUP
2021
$’000
2020
$’000
640
(140)
500
366
113
21
-
-
500
870
(241)
629
540
70
19
-
-
629
The Group has significant operations in Australia and New Zealand. The Group’s exposure to credit risk
for trade and other receivables at the end of the reporting period in these regions is as follows:
Australia
New Zealand
Total
CONSOLIDATED GROUP
2021
$’000
2020
$’000
473
27
500
565
64
629
71
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 9 | Inventories
Accounting policy
Inventories represent gift cards. These assets are valued at the lower of cost and net realisable value.
CONSOLIDATED GROUP
2021
$’000
155
155
2020
$’000
134
134
Gift cards held for sale
TOTAL INVENTORIES
Note 10 | Other assets
Accounting policy
Other assets relate to prepaid fundraiser commission incurred as a result of the sale of Memberships
and short-term investments that relate to security deposits for leased premises. Prepayments are the
right to receive future goods or services within the next 12 months.
CURRENT
Short-term investments
Prepayments
Deferred commission1
TOTAL OTHER ASSETS
CONSOLIDATED GROUP
2021
$’000
2020
$’000
855
220
893
1,968
1,018
337
996
2,351
1.
Sales commission paid to fundraiser partners for the sale of Entertainment Memberships is an incremental cost of obtaining contracts with
customers, and is initially recognised as a prepayment on the balance sheet, and subsequently amortised as an expense through the income
statement in line with the recognition of revenue from associated Membership sales.
72 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
30 JUNE 2020
Balance as at 1 July 2019
Commission deferred
Amortisation
BALANCE AS AT 30 JUNE 2020
30 JUNE 2021
Balance as at 1 July 2020
Commission deferred
Amortisation
BALANCE AS AT 30 JUNE 2021
Note 11 | Right-of-use assets
Accounting policy
Deferred
commission
$’000
7,264
3,091
(9,359)
996
996
1,352
(1,455)
893
The Group leases offices and equipment. The majority of the leases will expire in financial year 2022
except for Sydney Harrington office lease which is currently subleased for the reminder of the lease
term, which ends in financial year 2023.
Right-of-use assets relate to leased property that do not meet the definition of investment property
and are classified as property, plant and equipment.
Right-of-use assets are initially measured at cost comprising the following:
• The amount of the initial measurement of lease liability (See note 15);
• Any lease payments made at or before the commencement date less any lease incentive received;
• Any initial costs; and
• Restoration costs.
Right-of-use assets are subsequently measured at cost less any accumulated depreciation and
adjustments for remeasurement of the lease liability.
In determining the lease term, management considers all facts and circumstances that create an
economic incentive to exercise an extension option, or not exercise a termination option. Extension
options (or periods after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). The Group has determined that it will not be
exercising the options to renew, as such, extension options are not included in the calculation. The
Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value and
short-term leases, including certain land and building leases. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-
lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use
73
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-
term lease to which the Group applies the exemption described above, then it classifies the sub-lease
as an operating lease.
Depreciation of right-of-use assets
The right-of-use asset is depreciated over the shorter of the asset’s life and the lease term on a
straight-line basis.
Land and buildings
At cost
Accumulated depreciation
Total
Equipment
At cost
Accumulated depreciation
Total
TOTAL RIGHT-OF-USE ASSETS
Movements in carrying amounts
CONSOLIDATED GROUP
2021
$’000
2020
$’000
1,805
(1,720)
85
270
(197)
73
158
4,068
(1,510)
2,558
359
(136)
223
2,781
Movements in the carrying amounts for each class of right-of-use assets between the beginning and
the end of the current financial year are set out below.
CONSOLIDATED GROUP
Balance as at 1 July 2019
Initial recognition of right-of-use assets
Additions to right-of-use assets
Depreciation charge for the year
BALANCE AS AT 30 JUNE 2020
Balance as at 1 July 2020
Exchange difference
Additions to right-of-use assets
Depreciation charge for the year
Derecognition1 2
BALANCE AS AT 30 JUNE 2021
LAND AND
BUILDINGS
EQUIPMENT
TOTAL
$’000
$’000
$’000
-
4,068
-
(1,510)
2,558
2,558
(68)
-
(1,216)
(1,189)
85
-
259
100
(136)
223
223
38
-
(131)
(57)
73
-
4,327
100
(1,646)
2,781
2,781
(30)
-
(1,347)
(1,246)
158
1.
2.
Derecognition of the right-of-use asset is as a result of entering into a finance sub-lease for 100% of the floor space in Harrington Street office.
Termination of phone leases relating to Harrington Street office.
74 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Amounts recognised in profit and loss
Variable lease expense
Interest on lease liabilities
Loss from sub-leasing Harrington Street office1
Loss from terminating phone leases relating to Harrington Street office1
1.
Losses are included in other expenses in the statement of profit and loss.
CONSOLIDATED GROUP
2021
$’000
2020
$’000
132
166
167
18
279
249
-
-
Amounts recognised in statement of cash flows
CONSOLIDATED GROUP
Interest on lease liabilities
Principal element of lease payments
Total cash flow for leases
Leases as lessor
2021
$’000
166
1,661
1,827
2020
$’000
249
1,610
1,859
During the year, the Group subleased the office space for Harrington Street for the remaining term
of the lease. There were no other factors suggesting that Incentiapay Limited has retained significant
risks and rewards associated with the term of the office space for the remaining 2 years 5 months. As a
result, the Group has derecognised the whole of the right-of-use asset relating to the remaining period,
recognised the present value of the lease payments as lease receivable under the sub-lease (See note
8) and the difference was recognised in the profit and loss. The Group received $334 interest income
relating to subleasing during the reporting period.
As the Group is still responsible for all of the lease payments relating to the head lease, the lease
liability is still recognised in lease liabilities in note 15.
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease
payments to be received after the reporting date.
Not later than 1 year
Between 2 and 3 years
Later than 3 years
Total undiscounted lease receivable
Unearned finance income
Net investment in the lease
CONSOLIDATED GROUP
2021
$’000
2020
$’000
443
461
120
1,024
(74)
950
-
-
-
-
-
-
75
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 12 | Property, plant and equipment
Accounting policy
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.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not more
than 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.
Where material, the expected net cash flows are discounted to their present values in determining
recoverable amounts. 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.
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 of plant and equipment
The depreciable amount of all fixed assets including buildings, but excluding freehold land, is
depreciated on a straight-line basis over the asset’s useful life to the consolidated group. Useful life
is taken to commence 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.
Estimated useful life for each class of depreciable assets are:
CLASS OF FIXED ASSET
ESTIMATED USEFUL LIFE
Leasehold improvements
Plant and equipment
2-4 years
3-5 years
76 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
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 its 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.
Plant and equipment
At cost
Accumulated depreciation
Total
Leasehold improvements
At cost
Accumulated depreciation
Total
TOTAL PROPERTY, PLANT AND EQUIPMENT
Movements in carrying amounts
CONSOLIDATED GROUP
2021
$’000
2020
$’000
T
874
(669)
205
2,090
(1,484)
606
811
821
(579)
242
2,090
(1,005)
1,085
1,327
Movements in the carrying amounts for each class of property, plant and equipment between the
beginning and the end of the current financial year are set out below.
Consolidated Group
Balance as at 1 July 2019
Additions
Reclassified as held for sale
Depreciation expense
BALANCE AS AT 30 JUNE 2020
Balance as at 1 July 2020
Additions
Depreciation expense
BALANCE AS AT 30 JUNE 2021
Plant and
equipment
Leasehold
improvements
$’000
$’000
Total
$’000
316
16
-
(90)
242
242
53
(90)
205
2,067
135
(686)
(431)
1,085
1,085
-
(479)
606
2,383
151
(686)
(521)
1,327
1,327
53
(569)
811
77
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 13 | Intangible assets
Accounting policy
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the
excess of the sum of the following items, over the acquisition date fair value of net identifiable assets
acquired:
•
• any non-controlling interest (determined under either the full goodwill or proportionate interest
the consideration transferred;
method); and
the acquisition date fair value of any previously held equity interest.
•
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 financial statements.
Fair value re-measurements in any pre-existing equity holdings are recognised in the 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.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is tested for
impairment at least annually and/or when other indicators of impairment exist and is allocated to the
Group’s cash-generating units or groups of cash-generating units, (“CGUs”). These CGUs represent
the lowest level at which goodwill is monitored but are not larger than an operating segment. Gains
and losses on the disposal of an entity include the carrying amount of goodwill of the entity that has
been sold. 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.
Technology, web development and database assets
Technology and software assets acquired separately are capitalised at cost. Where the technology and
software asset has been acquired as part of a business acquisition, these assets are recognised at fair
value as at the date of acquisition.
Amounts capitalised as part of internally-developed intellectual property include the total cost of any
external services and labour costs directly attributable to development. Management judgement is
involved in determining the appropriate internal costs to capitalise and the amounts involved. Research
costs are expensed as incurred.
The useful lives of these assets are then assessed to be either finite or indefinite. Assets with a finite
life are amortised over that life with the expense being recognised in the profit and loss. Expenditure
on the development of technology and software assets are capitalised until the software is ready
for use and then amortised over their expected useful life of 3 years. The total cost of the “ready for
use” asset is based on the costs capitalised monthly. Any additional costs capitalised to the “ready
for use” asset, are only those that will extend future economic benefits, and as such, will attract
immediate amortisation.
These assets are tested for impairment at least annually as part of the value in use analysis associated
with the cash-generating unit.
78 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Brand names and international rights
The brand names and international rights were acquired in a separate transaction. These assets are
recognised using the cost model, which requires an intangible asset to be recorded at cost less any
accumulated amortisation and any accumulated impairment losses.
These intangible assets have been assessed as having an indefinite useful life as neither brand names
nor international rights are subject to contractual or statutory time limits. There is no foreseeable
limit to the period over which the asset is expected to generate net cash inflows. As a result, no
amortisation will be charged.
These assets are tested for impairment at least annually, either individually or within a cash-generating unit.
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 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 to sell 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 (e.g. 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. IncentiaPay Limited
manages the Group as one cash-generating unit, being the Entertainment Publications business, and
all intangibles are associated to this cash-generating unit.
Impairment testing is performed at least annually for goodwill, intangible assets with indefinite lives
and intangible assets not yet available for use.
79
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Goodwill
Cost
Accumulated impairment losses
Total
Technology and software
Cost
Accumulated amortisation and impairment losses
Total
Software under development
Cost
Accumulated amortisation and impairment losses
Total
Purchased brand names and international rights
Cost
Accumulated impairment losses
Total
Other intangibles
Cost
Accumulated amortisation
Total
TOTAL INTANGIBLES
CONSOLIDATED GROUP
2021
$’000
2020
$’000
31,199
(21,108)
10,091
31,199
(21,108)
10,091
10,200
9,196
(8,386)
(8,000)
1,814
908
-
908
3,000
-
3,000
752
(752)
-
15,813
1,196
100
-
100
3,000
-
3,000
752
(752)
-
14,387
80 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
GOODWILL
TECHNOLOGY
& SOFTWARE
SOFTWARE
UNDER
DEVELOPMENT
BRAND
NAME &
INTERNATIONAL
RIGHTS
OTHER
INTANGIBLES
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
3,000
752
22,507
-
100
-
-
100
100
Balance as at 1 July 2019
13,696
5,059
Additions-internally
developed
Amortisation charge1
-
-
Impairment2,3
(3,605)
69
(3,299)
(633)
BALANCE AS AT
30 JUNE 2020
Balance as at 1 July
2020
Additions-internally
developed
Transfers4
Amortisation charge
Impairment
BALANCE AS AT
30 JUNE 2021
10,091
1,196
10,091
1,196
-
-
-
-
-
2,854
2,046
(1,428)
-
(2,046)
-
-
-
-
-
3,000
3,000
-
-
-
-
-
-
169
(3,299)
(752)
(4,990)
-
-
-
-
-
-
-
14,387
14,387
2,854
-
(1,428)
-
15,813
10,091
1,814
908
3,000
1.
During the prior year, The Group re-assessed the useful life of the software intangible asset, largely comprising costs associated with
capitalised web development, as a result, the Group has written down the value of the existing platform as it determined the effective life
was shorter than previously estimated. Amortisation has been accelerated to reflect this, resulting in the asset being fully written down by 31
December 2020. During the year, the Group moved to a new platform supporting a new application and website.
2. During the prior year, as a result of the Group’s decision to seek expressions of interest with respect to Entertainment Digital business assets,
it was assessed that the assets would not produce any future economic benefits to the Group, as such, the assets were impaired to reflect
an estimate of their fair value less costs of disposal. During the year, Entertainment Digital business assets were sold, as the assets was fully
amortised and impaired, the net impact of the disposal is zero.
3. As at 30 June 2020 the estimated recoverable amounts determined using the method outlined below were found to be less than the carrying
4.
value of the net assets of the cash-generating unit and accordingly, an impairment adjustment on Goodwill was required.
TTPs were allocated to Technology and software when they were in a condition for use as per the expectations of management. These costs
included estimates covering the amount of time resources were allocated to key project components. They were amortised in accordance
with the company accounting policies.
Current market conditions brought on by COVID-19, has triggered an assessment whether the carrying
value of the Groups’ goodwill and other non-current assets may be impaired.
The recoverable amount of the cash-generating unit is determined based on a value-in-use calculation,
covering a detailed five-year forecast, followed by an expected perpetuity cash flow for the unit’s
remaining useful life using the growth rates determined by management. Where appropriate the
value of any proposed sale of cash-generating units has been considered and the model includes a
sensitivity analysis allowing for a range of growth rates and changes to the discount rate.
81
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
The following assumptions were used in the value-in-use calculations:
Year ended 30 June 2021
2022-2026
Entertainment
Publications
GROWTH RATES
2022-2026
GROWTH RATES
2026 ONWARD1
DISCOUNT RATE/
WEIGHTED AVERAGE
COST OF CAPITAL2
3-10%3
2%
13%
Based on long-term forecasts
Post-tax discount rate
1.
2.
3. Growth rates relate to existing revenue streams. From 2023 financial year, the discounted cash flows assumed new revenue streams
associated with the next phase of the business transformation, called Seamless Rewards. The growth attributed to this revenue item reflects
confidence in the planned product and market development strategies.
Year ended 30 June 2020
2021-2025
Entertainment
Publications
1.
2.
Post-tax Growth rate
Post-tax Discount rate
GROWTH RATES
2021-2025
GROWTH RATES
2025 ONWARD1
DISCOUNT RATE/
WEIGHTED AVERAGE
COST OF CAPITAL2
2.5-5%
2%
11%
Cash flows used in the value-in-use calculations are based on forecasts produced by management.
The growth rates are based on a proposed strategic repositioning of the core operations of the
business focusing on long-term sustainability. Forecasts for 2022 consider the increased level of
market volatility and uncertainty caused by COVID-19, the technology transformation, opening up of
the economy, new revenue opportunities, a strategic technology partnership, efficiency savings, and
enhanced marketing capabilities. The Directors consider these forecasts to reflect the best estimates
of revenue based on facts and circumstances available as at 30 June 2021. Given the nature of the
uncertainty associated with the underlying assumptions, any changes over the coming months not
factored in the cash flow forecasts may result in material changes to the assumptions.
The key assumptions to which the model is most sensitive include:
• Forecast Membership revenue and expenditure taking into account the continued impacts of
COVID-19 and the opening up of the economy from the vaccination program, the cost savings from
efficiencies, strategic outsourcing;
• The Company is taking the view that the hospitality and leisure industries will open up in the new
year with much of Australia returning to what could be considered reasonably normal, with some
restrictions still in place. This would also see domestic travel returning to regular and consistent
operating levels. Given this and the information available as at 30 June 2021, it is expected that
from February 2022 volumes will start recovering with a return to normal sales volumes by June
2022 and will form the basis for expected growth of existing revenue lines from 2023 onwards.
Timing may be uncertain, and the model is highly sensitive to the COVID-19 recovery pathway.
• The addition of a new revenue stream from 2023 onwards relates to Phase 2 of the transformation
of the business, called Seamless Rewards. The growth attributed to this revenue item reflects
confidence in the planned product and market development strategies, and relies on a successful
launch; and
• The discount rate of 13% (post tax) and 13% (pre tax).
82 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
The Group has performed sensitivity analysis of the reasonably possible changes in the assumptions
used in the discounted cash flow model, which are detailed in the table below. Based on the sensitivity
analysis, changes in when the recovery from COVID-19 commences, an increase in the discount rate
and a reduction and dela in revenue from the new revenue stream will result in the recoverable amount
equalling the carrying amount.
Assumption
From
To
COVID-19 recovery
Commencing February 2022
Commencing July 2022
Growth rates from 2023 - 2026
Discount rate
10%
13%
New revenue stream
Commences 2023
8%
14%
Commences 2024 and is reduced
revenue by 25%
As at 30 June 2021 the estimated recoverable amounts determined using the method outlined above
were found to be more than the carrying value of the net assets of the cash-generating unit and
accordingly, no impairment adjustment was required.
Note 14 | Trade and other payables
Accounting policy
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 60 days of recognition of the liability. The non-current payables are
amounts not expected to be settled within the next 12 months.
CURRENT
Unsecured liabilities
Trade payables
Other payables and accruals
Litigation claim payables1
TOTAL CURRENT UNSECURED LIABILITIES
CONSOLIDATED GROUP
2021
$’000
2020
$’000
2,903
3,078
-
5,981
2,359
3,553
323
6,235
1.
Litigation claim payables relate to various settlement fees incurred during the business restructure process.
83
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 15 | Leases
Accounting policy
Lease liabilities are measured on a present value basis. Lease liabilities include the net present value of
the following lease payments:
• Fixed payment, less any lease incentives receivable;
• Amounts expected to be payable by the lessee under residual value guarantees;
• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
and Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising
that option.
The lease payments are discounted using the lessee’s incremental borrowing rate of 5.54%, being the
rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value in a similar economic environment with similar terms and conditions.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value
assets and short-term leases. The Group recognises the lease payments associated with these leases
as an expense on a straight-line basis over the lease term.
CURRENT
Lease liabilities
TOTAL CURRENT LEASE LIABILITIES
NON-CURRENT
Lease liabilities
TOTAL NON-CURRENT LEASE LIABILITIES
TOTAL LEASE LIABILITIES
CONSOLIDATED GROU
Balance as at 1 July 2019
Initial recognition of lease liabilities
Interest charges
Repayments (Including interest)
Rent concessions or deferred rents
Balance as at 30 June 2020
Interest charges
Repayments (Including interest)
Rent concessions or deferred rents
BALANCE AS AT 30 JUNE 2021
84 FINANCIAL STATEMENTS
CONSOLIDATED GROUP
2021
$’000
2020
$’000
1,055
1,055
1,123
1,123
2,178
1,731
1,731
2,158
2,158
3,889
Lease liabilities
$’000
-
5,711
249
(1,859)
(212)
3,889
166
(1,827)
(50)
2,178
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 16 | Borrowings
Accounting policy
Non-derivative
Non-derivative loans and borrowings are financial liabilities with fixed or determinable payments
that are not quoted in an active market and are subsequently measured at amortised cost using
the effective interest rate method. Gains or losses are recognised in profit or loss when the financial
liability is derecognised.
Amortised cost is calculated as the amount at which the financial liability is measured at initial
recognition less principal repayments, 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 expense over the relevant period and
is equivalent to the rate that exactly discounts estimated future cash payments (including fees,
transaction costs and other premiums or discounts) through 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 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.
CURRENT
Transformational capital facility
Additional growth capital facility
Interest bearing loan
TOTAL CURRENT BORROWINGS
NON-CURRENT
Additional growth capital facility
NZ Business cashflow loan
TOTAL NON-CURRENT BORROWINGS
TOTAL BORROWINGS
CONSOLIDATED GROUP
2021
$’000
2020
$’000
1,208
2,800
571
4,579
-
28
28
4,607
-
-
517
517
2,691
-
2,691
3,208
85
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Interest
bearing loan
Facility limit
Unused facility
$’000
500
-
Additional
growth
operational
facility
$’000
9,825
803
Transformational
capital facility
New Gold Coast
Holdings Loan
facility
NZ Business
Cashflow
Loan
$’000
1,200
-
$’000
5,000
5,000
$’000
28
-
Interest rate
10% per annum 10% per annum
12.5% per annum
12.5% per annum 3% per annum1
Line fees
N/A
$9,708 per
month
$2,000 per month
N/A
A fee of 2% per
annum accrues
daily from the
date of the initial
drawdown,
calculated in
respect of the
undrawn capital
Maturity date
30/09/2020
31/12/2021
11/02/2022
31/12/2022
16/07/2025
Security
Security over
all the Group’s
present and
future property
Security over
all the Group’s
present and
future property
Unsecured
Second ranking
security over
all the Group’s
present and future
property
Security over
all the Group’s
present and future
property, the
security is subject
to shareholders’
approval
Drawn down as
at 1 July 2020
Drawn down
Interest expenses
Line fees
Interest repaid
Line fees repaid
Loan converted
to equity
Drawn down as
at 30 JUNE 2021
517
-
54
-
-
-
-
571
2,691
6,099
267
120
-
-
(6,377)
2,800
-
1,199
55
22
(48)
(20)
-
1,208
1.
3% per annum, no interest charge on the loan if full repayment is made on or before 16 July 2022.
-
-
-
-
-
-
-
-
-
28
-
-
-
-
-
28
Interest bearing loan
On 9 August 2019 the Group entered into a loan deed with Suzerain for total funding of $19 million to
support working capital requirements and to restructure the business.
The loan was to be repaid on 30 September 2020 with interest capitalised at 10% per annum. During
the 2020 AGM, resolutions were passed to enter into a General Security Deed over the assets of
the Group in the form attached to the Convertible Loan Deed and for the loan to be convertible to
ordinary shares at the higher of $0.047 per share or 30 days volume weighted average price prior
to conversion.
86 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Accordingly, $19.3 million including accrued interest of the convertible loan was converted to equity with
the issuance of 410,643,766 ordinary shares (4.7cent per share) in the Company. $0.5m of the convertible
loan was left in the loan in which Suzerain had the option to convert up until 30 June 2020. The option
lapsed as the loan was not converted at 30 June 2020. The balance remaining on this loan is $0.571m
(Including interest) and will remain as a secured interest-bearing loan until repaid. The Interest-bearing
loan matured on 30 September 2020 and the updated repayment terms are yet to be agreed.
Additional growth operational facility
The Group entered into a new Loan Deed with Suzerain on 27 February 2020 for the provision of a
$5.83 million facility (including associated borrowing costs). Subsequently, Suzerain agreed to increase
the facility limit of the original loan by $4 million to $9.825 million. During the AGM in December
2020, the resolutions were passed to enter into a first ranking security deed and for the loan to be
convertible to ordinary shares at the higher of $0.0275 per share or the volume weighted average price
of shares traded on ASX during the period 30 trading days and concluding on the trading day before
the issue date of the relevant shares, plus an additional 20%.
On 19 January 2021, Suzerain opted to convert $6,376,514 of their convertible loan into 187,544,529
ordinary shares at $0.034 per share. Suzerain may also give more than one notice to convert.
As disclosed as a subsequent event in note 30; Suzerain opted to convert the remaining amount of
$3.4m of their convertible loan into 104,939,367 ordinary shares at 3.29c per share, on 20 September
2021, in accordance with the convertible loan agreement approved by shareholders at the AGM held in
December 2020.
Transformational capital facility
Skybound Fidelis Investment limited as trustee for the Skybound Fidelis Credit Fund (Skybound)
(a related entity of Suzerain) provided the Group with a $1.2 million facility for the transformational
capital expenditures. During the AGM in December 2020, the resolutions were passed to enter into a
second ranking security deed (ranking behind Suzerain). As at 30 June 2021 this loan facility has been
fully drawn down.
New Gold Coast Holdings Loan Facility
New Gold Coast Holdings (NGC)’s, a related party of Suzerain, $5 million Loan facility was approved on
3 June 2021 and is available for use at balance date. The funds will predominantly be used to expedite
the development of the company’s technology and customer experience platforms and to provide
contingent working capital due to seasonal cash inflows. This facility will initially be unsecured with the
view to obtaining shareholder approval for security at the Company’s next Annual General Meeting,
anticipated to be held in November 2021.
NZ Business Cashflow Loan
The Group applied for and was granted a one-off loan provided by New Zealand government in July
2020 to support New Zealand business during the Pandemic.
87
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 17 | Deferred revenue
Accounting policy
Deferred revenue constitutes contract liabilities under AASB 15, as it relates to performance obligations
to the Members of Entertainment Publications not yet satisfied. See note 2.
CURRENT
Deferred revenue
TOTAL CURRENT DEFERRED REVENUE
Deferred revenue
TOTAL NON-CURRENT DEFERRED REVENUE
TOTAL DEFERRED REVENUE
CONSOLIDATED GROU
YEAR ENDED 30 JUNE 2020
Balance as at 1 July 2019
Revenue deferred
Revenue recognised
BALANCE AS AT 30 JUNE 2020
YEAR ENDED 30 JUNE 2021
Balance as at 1 July 2020
Revenue deferred
Revenue recognised
BALANCE AS AT 30 JUNE 2021
CONSOLIDATED GROUP
2021
$’000
2020
$’000
4,526
4,526
32
32
4,558
6,219
6,219
350
350
6,569
Deferred Revenue
$’000
21,394
14,768
(29,593)
6,569
6,569
9,248
(11,259)
4,558
The contract liabilities primarily relate to cash receipts from Membership sales, for which revenue is
recognised over time. The reduction in contract liabilities is predominantly due to the impact of the
COVID-19 pandemic.
88 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 18 | Provisions
Accounting policy
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.
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 within 12 months
after the end of the annual reporting period in which the employees render the related service. These
benefits include 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 are recognised as a component of current
trade and other payables 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 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 of
high quality corporate bonds that have maturity dates that approximate the terms of the obligations.
Any re-measurements 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.
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 this case the obligations are
presented as current provisions.
Retirement benefits
All employees of the Australian entities and the majority of employees of foreign subsidiaries in
the Group receive defined contribution superannuation entitlements, for which the Group pays a
fixed superannuation contribution based on a percentage of the employee’s ordinary salary. All
contributions in respect of employees’ defined contribution entitlements are recognised as an expense
when they become payable. The Group’s obligation with respect to employees’ defined contribution
entitlements is limited to its obligation for any unpaid superannuation contributions at the end of
the reporting period. All obligations for unpaid superannuation contributions are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled and are presented as
current liabilities in the Group’s Statement of Financial Position.
89
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Make good provision
The Group is required to restore the leased premises of its offices to their satisfactory condition at
the end of the respective lease terms. A provision has been recognised for the present value of the
estimated expenditure required for the restoration. These costs have been capitalised as part of the
cost of leasehold improvements and are amortised over the shorter of the term of the lease and the
useful life of the assets.
BALANCE AS AT 30 JUNE 2020
Balance as at 1 July 2020
Additional provisions1
BALANCE AS AT 30 JUNE 2021
1. Make good provision for occupied premises. The amount was adjusted to the net present value.
ANALYSIS OF TOTAL PROVISIONS
Current
Make good provision
Employee benefits
Total current provisions
Non-current
Make good provision
Employee benefits
Total non-current provisions
TOTAL PROVISIONS
Make good provision
$’000
128
128
8
136
CONSOLIDATED GROUP
2021
$’000
2020
$’000
63
979
1,042
73
59
132
1,174
-
764
764
128
54
182
946
90 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 19 | Issued Capital
Ordinary shares - fully paid on
issue
INP has no limit to its authorised
share capital.
Movements in ordinary share
capital
Ordinary shares at beginning of
the year
CONSOLIDATED GROUP
2021
shares
2020
shares
867,002,904
655,940,612
2021
$’000
122,984
2020
$’000
116,026
Date
Number of
shares
242,618,274
Issue price $
$’000
Issues during the year:
1 November 2019
2,678,572
28 February 2020
410,643,766
Less, costs of issues
-
BALANCE AS AT 30 JUNE 2020
Ordinary shares at beginning of
the year
655,940,612
655,940,612
Issues during the year:
9 October 20201
3,066,667
19 October 20202
2 February 20213
20,451,096
187,544,529
Less, costs of issues
-
BALANCE AS AT 30 JUNE 2021
867,002,904
0.28
0.05
-
0.03
0.03
0.03
-
96,006
750
19,300
(30)
116,026
116,026
92
531
6,377
(42)
122,984
1. The Group issued 3,066,667 shares at $0.03 under the employee gift plan on Friday, 9 October 2020.
2. The Group issued 20,451,096 shares at $0.026 under the share placement plan on Friday, 16 October 2020.
3. On 19 January 2021, Suzerain opted to convert $6,376,514 of their convertible loan into 187,544,529 ordinary shares at $0.034 per share.
Ordinary shares participate in dividends and the proceeds on winding-up of the parent entity in
proportion to the number of shares held. Shares have no par value.
At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise
each shareholder has one vote on a show of hands.
The entity manages its capital to ensure that it maximises the returns to shareholders as dividends
and in capital value, whilst maintaining sufficient equity to ensure the Company can meet its business
development objectives and continue as a going concern. The Group only has ordinary shares on issue
and is not subject to any externally imposed capital requirements.
Capital is also managed having regard to the Group’s long-term growth requirements.
91
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Performance rights
Movements in performance rights
Performance rights at 1 July 2019
EP PREP wind up
BALANCE AS AT 30 JUNE 2020
Performance rights at 1 July 2020
EP PREP wind up
BALANCE AS AT 30 JUNE 2021
Number of
performance rights
2,072,000
(2,072,000)
Issued price $
$
0.875
1,813,000
(1,813,000)
-
-
-
-
-
-
-
-
Performance rights were issued to management and employees of Entertainment Publications entities
in May 2017. The Board, on 22 July 2019 voted to wind up the original performance rights equity plan.
On 29 September 2020, the Board implemented an Employee Gift Plan for all eligible employees
under section 83A-35 of the Income Tax Assessment Act 1997. The Board accepts, since the onset of
COVID-19, many staff worked reduced hours or were on reduced salaries. Commensurate with this, the
Board approved the scheme, and all eligible employees received $1,000 of ordinary shares which were
issued from the Company’s placement capacity.
The Board also implemented a Loan Funded Share Scheme being a three-year long-term incentive plan
for the CEO and COO, which will vest over a three-year period. Vesting conditions relate to achieving
the FY2021 Board approved budget, and for the FY2022 and FY2023 financial years, will vest where
the share price is greater than $0.10 and $0.15, respectively. Shareholder approval was granted at the
AGM held on 16 December 2020. Refer to note 20 for further details.
Additionally, the Board implemented an Employee Share Scheme for senior management and executive
directors, will result in shares being issued into a trust controlled by the Company. Maximum number of
performance rights to be issued under the plan is 7,500,000. These shares will be issued in 4 tranches
and will be subject to the same vesting hurdles as those applicable to tranches 2 – 5 under the LFS
scheme and detailed in note 20. No shares were issued under this scheme during the financial year.
Note 20 | Reserves
Accounting policy
Share based payments
The fair value of unissued ordinary shares granted is recognised as a benefit expense with a
corresponding increase in equity. The fair value is measured at grant date and recognised over the
period during which the recipients become unconditionally entitled to the equity-based incentive.
Upon the issue of shares, the balance of the share based payments reserve relating to those equity-
based incentives are transferred to share capital.
Shares issued under the loan funded share scheme is accounted for as a substance option and share
based payments were measured using a Monte Carlo simulation model.
92 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entity are recognised in other
comprehensive income as a foreign currency translation reserve. The cumulative amount is reclassified
to profit or loss when the net investment is disposed.
Balance as at 1 July 2019
Amortised during the period
Unvested during the period1
Movement during the period
BALANCE AS AT 30 JUNE 2020
Balance as at 1 July 2020
Amortised during the period2
Unvested during the period
Movement during the period
BALANCE AS AT 30 JUNE 2021
CONSOLIDATED GROUP
SHARE BASED
PAYMENTS
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
TOTAL
$’000
$’000
$’000
730
-
(730)
-
-
-
362
-
-
362
406
-
-
(29)
377
377
-
-
(6)
371
1,136
-
(730)
(29)
377
377
362
-
(6)
733
1.
Performance rights were issued to management and employees of Entertainment Publications entities in May 2017. The Board, on 22 July
2019, voted to wind up the original performance rights equity plan and replaced it with a new broad-based employee share equity plan. The
share based payment reserve relating to these Performance rights was reversed to reflect the wind up in the prior year.
2. During the period, the Group issued 38,771,277 shares at $0.03 under its loan funded share plan approved by shareholders during the Annual
General Meeting “AGM” in December 2020. These shares have been issued to Ben Newling and Henry Jones who are key management
personnel of the Group. The loan funded shares are issued through a series of 5 tranches for each respective person which include market and
non-market conditions.
Share based payments - Loan funded shares
As at 30 June 2021, there were 38,771,277 shares issued to key management personnel as part of Loan
Funded Share (LFS) arrangements approved by shareholders at the AGM in December 2020.
The terms of the current LFS arrangements can be summarised as follows:
1.
IncentiaPay provides its key executives, (‘the executive’) with a loan to purchase an agreed number
of IncentiaPay shares at an issue price based on the 5-day Volume Weighted Average Price
(VWAP) immediately before issue date;
If there is an outstanding amount owing under the Loan, all dividends declared and paid with
respect to the shares (after deduction for tax payable in relation to those dividends) shall be
applied to repaying the Loan, therefore the executives shall have no right to receive those
dividends;
2.
3. The loan provided is interest free and limited recourse, such that the executive has the option to
either repay the loan or return the shares at the loan repayment date, being 30 business days after
the last vesting date;
4. Vesting conditions apply to each executive’s shares, being related to time, meeting budgeted
targets, and share price hurdles, and are outlined in table below;
5. Vesting of each tranche is subject to the continued employment of the Executive up to the relevant
date on which the vesting conditions are tested;
93
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
6. The Board will retain a broad discretion to determine or vary any vesting conditions if they
consider that the commercial performance and circumstances of the Company justify that variation
or waiver;
7. Any unvested loan funded shares that do not meet their vesting conditions (after rollover,
if applicable) will cease to become eligible to become vested loan funded shares and will
be cancelled, bought-back or transferred to a third party nominated by the Board on terms
determined by the Board in its sole discretion; and
8. Prior to the shares becoming unencumbered, the executive is required to repay the loan.
The 38,771,227 restricted fully paid ordinary shares were issued under the LFS on 9 October 2020 as follows:
Under the applicable accounting standards, the LFS shares are accounted for as options, which give
rise to share based payments.
KMP
Henry Jones
Ben Newling
Total
Held at
1 July 2020
Granted
Expired
-
-
-
27,186,234
11,585,043
38,771,277
Held at
30 June 2021
27,186,234
11,585,043
Vested and
exercisable at
30 June 2021
3,573,220
1,522,679
38,771,277
5,095,899
-
-
-
Details of options issued to key management personnel as part of compensation during the year and
their terms as at 30 June 2021 are set out below:
Henry Jones
Ben Newling
Total Shares
Tranche
No. of
options
Issued Value
$
No. Vested and
Exercisable 30 June
2021
Fair Value
of Options
$
1
2
3
4
5
1
2
3
4
5
2,640,000
52,531
2,640,000
52,531
4,986,667
4,986,667
4,986,667
9,586,234
27,186,234
1,125,000
2,125,000
2,125,000
2,125,000
4,085,043
11,585,043
38,771,277
-1
149,626
96,615
162,733
461,505
22,386
-1
63,761
41,171
69,346
196,664
658,169
-1
-2
-3
-
53,874
25,731
933,220
121,903
3,573,220
254,903
1,125,000
22,386
-1
-2
-3
397,679
-
22,957
10,965
51,947
1,522,679
108,255
5,095,899
362,294
Shares will be carried over to Tranche 3 as vesting condition not satisfied.
1.
2. Where the vesting price hurdle condition is not satisfied, tranche 2 shares will expire and only tranche 3 shares will roll-over to tranche 4.
3. Where the vesting price hurdle condition is not satisfied, tranche 3 and 4 shares will expire and will not be eligible for vesting.
4.
5.
Expiry date for these options is the last vesting date for tranche 5, being 31 October 2023.
Tranche 1 is not linked to performance conditions as it reflects retrospective outcomes already achieved during the set up and establishment
of the scheme.
94 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
The fair value of the loan funded shares has been determined using a Monte Carlo simulation model
which includes the following inputs:
Grant date
Vesting date
Maturity date
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
9-Oct-20
9-Oct-20
9-Oct-20
9-Oct-20
9-Oct-20
9-Oct-20
30-Jun-21
30-Sep-21
30-Sep-23
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
31-Oct-23
Share price at grant date
0.029
Dividend yield
Volatility1
0%
114%
Risk free rate/G Bond rate
0.138
Vesting condition
Grant date
0.029
0%
114%
0.138
0.029
0%
114%
0.138
0.029
0%
114%
0.138
0.029
0%
114%
0.138
Budget FY
2021
Share price
hurdle of $0.10
Share price
hurdle of $0.15
Proportion of
the Suzerain
convertible
loan converted
into shares
vested in
tranches 1 to 4.
1.
Volatility is based on 3 years historical data adjusted from 6 December 2018 to 11 February 2019 due to specific events relating to the sale of
business assets.
95
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 21 | Key Management Personnel compensation
The total remuneration paid to KMP of the Group during the year was as follows:
CONSOLIDATED GROUP
2021
$’000
2020
$’000
826
40
-
362
1,228
904
42
338
-
1,284
CONSOLIDATED GROUP
2021
$’000
2020
$’000
257
12
2
271
294
81
1
376
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share based payments1
TOTAL KMP COMPENSATION
1.
Refer to note 20 for details.
Note 22 | Auditor’s remuneration
Auditing or reviewing the financial statements
Taxation services - compliance
Other services
TOTAL
96 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 23 | Interests in subsidiaries and business combinations
The subsidiaries listed below have share capital consisting solely of ordinary shares which are held
directly by the Group. The proportion of ownership interests held equals the voting rights held by the
Group. Each subsidiary’s principal place of business also reflects its country of incorporation.
Name of entity
a) Information about Principal Subsidiaries
Entertainment Publications of Australia
Pty Ltd
Entertainment Publications Ltd
Entertainment Digital Pty Ltd
(previously MobileDEN Pty Ltd)
Entertainment Trus Co Pty Ltd¹
OWNERSHIP INTEREST
HELD BY THE GROUP
Principal place
of business
2021
%
2020
%
Australia
New Zealand
Australia
Australia
100
100
100
100
100
100
100
100
1.
The Employee share plan trust (“ESP”) was established on 24 April 2020 to provide benefits to current employees, directors and contractors
(“the Beneficiaries”). Under the employee shares scheme, the trustee, Entertainment Trus Co Pty Ltd will purchases the Company’s shares
currently held under the previous directors. The shares will be held until the vesting day for the benefit of the Beneficiaries, in such numbers
or proportions that the trustee deem reasonable.
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, using the same
accounting policies. There are no significant restrictions over the Group’s ability to access or use the
assets and settle liabilities of the Group.
97
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 24 | Parent company information
a) Information relating to IncentiaPay Limited (the Parent Entity):
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Total loss
TOTAL COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets
TOTAL ASSETS
Liabilities
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2021
$’000
2020
$’000
(6,726)
(6,726)
(15,508)
(15,508)
1,562
21,779
23,341
8,522
1,255
9,777
122,983
345
(109,764)
13,564
1,724
23,253
24,977
2,648
9,341
11,989
116,026
-
(103,038)
12,988
Details of the contingent assets and liabilities of the Group are detailed in note 27. Details of the
contractual commitments are detailed in note 26.
Deed of cross guarantee
IncentiaPay Limited, Entertainment Publications of Australia Pty Ltd and Entertainment Digital Pty
Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the
others. By entering into the deed, the wholly owned entities have been relieved from the requirement
to prepare a financial report and directors’ report under ASIC Corporations (Wholly owned
Companies) Instrument 2016/785.
98 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Set out below is a consolidated balance sheet as of 30 June 2021 of the parties to the Deed of Cross
Guarantee.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Right-of-use asset
Intangible assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Deferred revenue
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Borrowings
Deferred revenue
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
2021
$’000
2020
$’000
2,420
940
120
1,761
5,241
523
792
134
15,813
17,262
22,503
5,373
1,081
4,552
3,716
1,103
15,825
1,352
1,072
28
32
59
2,543
18,368
4,135
122,983
687
(119,535)
4,135
4,394
924
100
1,961
7,379
-
1,252
2,564
14,387
18,203
25,582
5,727
1,542
517
5,174
728
13,688
1,725
2,124
2,691
350
52
6,942
20,630
4,952
116,026
322
(111,396)
4,952
See note 25 for the Consolidated Statement of Profit or Loss for the year ended 30 June 2021 of the
parties to the Deed of Cross Guarantee. All entities incorporated in Australia are the parties to the
Deed of Cross Guarantee.
99
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 25 | Segment information
Accounting policy
Reportable segments are identified on the basis of internal reports on the business units of the Group
that are regularly reviewed by the Board of Directors in order to allocate resources to the segment
and assess its performance. IncentiaPay Limited manages the Group as one segment, being the
Entertainment Publications business. The geographic information presented in the table below is
included to facilitate a better understanding of Entertainment’s geographic footprint, however, is not
regularly monitored or reviewed by management as separate segments.
Geographical location
The profit and loss, excluding revenue from discontinued operations, attributable to external customers
is disclosed below based on the country in which the revenue is derived and billed.
YEAR ENDED 30 JUNE 2021
Revenue
AUSTRALIA
$’000
NEW ZEALAND
$’000
TOTAL
$’000
Revenue from Contracts with customers
17,321
1,925
19,246
Profit on sale of assets
Government assistance
Interest
Total Revenue
Expenses
Direct expenses of providing services
Employee expenses
Depreciation and amortisation
Impairments
Interest
Other expenses
Total expenses
Segment profit before tax
52
112
10
15
-
-
67
112
10
17,495
1,940
19,435
(8,484)
(8,643)
(3,096)
-
(758)
(4,650)
(25,631)
(8,136)
(447)
(807)
(248)
-
(36)
(854)
(2,392)
(452)
(8,931)
(9,450)
(3,344)
-
(794)
(5,504)
(28,025)
(8,588)
Segment total assets
22,501
1,155
23,656
Segment total non-current assets
17,261
44
17,305
Segment total liabilities
17,017
1,481
18,498
100 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
YEAR ENDED 30 JUNE 2020
Revenue
Revenue from Contracts with customers
Government assistance
Total revenue
Expenses
Direct expenses of providing services
Employee expenses
Depreciation and amortisation
Impairments
Interest
Other expenses
Total expenses
Segment profit before tax
AUSTRALIA
$’000
NEW ZEALAND
$’000
TOTAL
$’000
37,464
150
37,614
(21,765)
(16,020)
(5,155)
(4,990)
(1,277)
(10,276)
(59,483)
(21,869)
4,591
-
4,591
(2,172)
(960)
(311)
-
(18)
(206)
(3,667)
924
42,055
150
42,205
(23,937)
(16,980)
(5,466)
(4,990)
(1,295)
(10,482)
(63,150)
(20,945)
Segment total assets
25,583
1,696
27,279
Segment total non-current assets
18,167
292
18,495
Segment total liabilities
19,037
1,996
21,033
Major customers
The Group has no major customers with all customers contributing small balances to revenues.
101
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 26 | Capital commitments
Capital Commitments
No capital commitments as at 30 June 2021.
Note 27 | Contingent liabilities and contingent assets
Security deposit
The parent entity has given the following guarantees as at 30 June 2021:
•
•
•
Lease of the Sydney office space, $0.7m.
Guarantee for credit cards facility, $0.1m.
Letter of credit for payroll payment facility, $0.1m.
Note 28 | Financial risk management
Accounting policy
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and
payable, loans to and from subsidiaries and leases.
The totals for each category of financial instruments, measured in accordance with AASB 9: Financial
Instruments as detailed in the accounting policies to these financial statements, are as follows:
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL FINANCIAL ASSETS
FINANCIAL LIABILITIES
Trade and other payables
Lease liabilities
Borrowings
TOTAL FINANCIAL LIABILITIES
102 FINANCIAL STATEMENTS
CONSOLIDATED GROUP
2021
$’000
2020
$’000
3,228
1,523
855
5,606
5,981
2,178
4,607
12,766
5,307
992
1,018
7,317
6,235
3,889
3,208
13,332
MATURITY
ANALYSIS
FINANCIAL
ASSETS
Cash
Trade debtors
Other current
assets
FINANCIAL
LIABILITIES
Trade and other
payables
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Financial risk management policies
Senior management meet on a regular basis to review currency and interest rate exposure and to
evaluate treasury management strategies where relevant, in the context of the most recent economic
conditions and forecasts.
The overall risk management strategy seeks to assist the consolidated Group in meeting its financial
targets, while minimising potential adverse effects on financial performance. Its functions include the
review of the use credit risk policies and future cash flow requirements.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted, and include contractual liabilities interest payments and exclude
the impact of netting agreements.
CONTRACTUAL CASH FLOWS
2021
Carrying
value
$’000
2020
Carrying
value
$’000
Within 1 year
1- 5 years
> 5 years
Total
2021
2020
2021
2020
2021
2020
2021
2020
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3,228
1,523
5,307
992
3,228
1,035
5,307
992
855
1,018
-
-
-
488
855
-
-
1,018
(5,981)
(6,235)
(5,981)
(6,235)
-
-
Lease liabilities
(2,178)
(4,205)
(1,055)
(1,888)
(1,261)
(2,317)
Borrowings
(4,607)
(3,208)
(4,716)
(517)
(28)
(2,691)
-
-
-
-
-
-
-
-
-
-
-
-
3,228
1,523
5,307
992
855
1,018
(5,981)
(6,235)
(2,316)
(4,205)
(4,744)
(3,208)
Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial assets and financial
liabilities, including their levels in the fair value hierarchy. It does not include fair value information for
financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable
approximation of fair value.
103
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
30 June 2021
Assets and
liabilities
not at fair
value
Assets and
liabilities
at fair
value
Assets
and
liabilities
at
carrying
value
Fair value
$’000
$’000
$’000
Level 1
$’000
Level 2
Level 3
$’000
$’000
Total
$’000
Financial assets
Cash
Trade debtors
Other receivables
Other current assets
Financial liabilities
Trade and other
payables
3,228
500
1,023
855
3,228
500
1,023
855
(5,981)
(5,981)
Lease liabilities
(2,178)
(2,178)
Borrowings
(4,607)
(4,607)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,228
500
1,023
855
(5,981)
(2,178)
(4,607)
30 June 2020
Assets and
liabilities
not at fair
value
Assets and
liabilities
at fair
value
Assets
and
liabilities
at
carrying
value
Fair value
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Level 1
Level 2
Level 3
Total
Financial assets
Cash
Trade debtors
Other receivables
Other current assets
Financial liabilities
Trade and other
payables
5,307
5,307
629
363
1,018
629
363
1,018
(6,235)
(6,235)
Lease liabilities
(3,889)
Borrowings
(3,208)
(3,889)
(3,208)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,307
629
363
1,018
(6,235)
(3,889)
(3,208)
104 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Recognised fair value measurements
The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market data and rely as little as possible
on entity-specific estimates. If all significant inputs required to fair value an instrument are observable,
the instrument is included in level 2.
Valuation techniques used to determine fair values
When measuring the fair value of an asset or a liability, the Group uses observable market data as far
as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs
used in the valuation techniques as follows.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
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.
Market risk
a. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by
customers of contract obligations that could lead to a financial loss to the Group.
i. Risk management
Credit risk is managed through the maintenance of systems for the approval, granting and renewal
of credit limits, regular monitoring of exposures against such limits and monitoring of the financial
stability of significant customers, ensuring to the extent possible that customers to transactions are of
sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Depending
on the division within the Group, credit terms are generally 14 to 30 days from the invoice date.
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting
period excluding the value of any collateral or other security held, is equivalent to the carrying amount
and classification of those financial assets (net of any provisions) as presented in the statement of
financial position.
The Group has no significant concentrations of credit risk with any single customer or group of
customers. $15m of the revenue in note 2 is from Memberships and gift cards sales, they are cash on
delivery, therefore, the Group has no significant credit risk.
COVID-19 impacts have increased the possibility of non-performance by customers, in particularly,
customers operating within the travel and leisure sector. The Group started engaging with their
customers since the start of the pandemic, providing discount to the existing debts or assisting
customers with new sales opportunities. As the revenue from travel and leisure was $0.67m which was
only 3% of the total revenue for the financial year, there is no significant credit risk.
105
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
ii. Impairment of financial assets
The Group has trade and other receivables that are subject to the expected credit loss model. Trade
and other receivables that are neither past due nor impaired are considered to be of high credit
quality. Aggregates of such amounts are detailed in note 8. While cash and cash equivalents are also
subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial
because the Group deals with reputable banks with high credit ratings.
The major customers of trade and other receivables have not been identified as having a higher
impairment risk profile as management believe they have not been as impacted by COVID 19.
Trade and other receivables
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all trade receivables. See note 8.
b. Liquidity risk
Included in the $4.7m disclosed in the 2021 borrowings time band is $4.7m which is ‘within 1 year’, the
loan is required to be repaid by the maturity date. See note 16. Management monitors rolling forecasts
of the Group’s liquidity reserve and cash and cash equivalents on the basis of expected cash flows.
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
• monitoring undrawn credit facilities;
• obtaining funding from major financial institutions;
• maintaining a reputable credit profile;
• managing credit risk related to financial assets;
• only investing surplus cash with major financial institutions; and
• comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
i. Financing arrangements
New Gold Coast Holdings, an associate of Suzerain has provided the Group with an additional $5
million loan facility which has been approved during the financial year and is available at year end. The
funds will be used to enhance the Group’s technology capabilities and customer experience platforms
and does not need shareholders’ approval to access. The facility will initially be unsecured with the
view to obtaining shareholder approval for security at the Company’s next Annual General Meeting,
anticipated to be held in November 2021. See note 16 for more details.
ii. Maturities of financial liabilities
Interest bearing loan
As at 30 June 2021, the interest bearing loan with Suzerain will mature on 30 September 2021. See
note 16.
Additional growth operational facility
As at 30 June 2021, the additional growth capital facility with Suzerain will mature on 31 December
2021. See note 16.
106 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Transformational capital facility
As at 30 June 2021, the Transformational capital facility with Skybound will mature on 11 February
2022. See note 16.
New Gold Coast Holdings Loan facility
As at 30 June 2021, the loan facility with New Gold Coast Holdings will mature on 31 December 2022.
There was no draw down as at 30 June 2021. See note 16.
c. Foreign exchange risk
The Group is exposed to foreign currency risk on the sale of Memberships and other fee income from
foreign entities and on the translation of its foreign subsidiaries. Senior management has not hedged
foreign currency transactions as at 30 June 2021 as $1.9m of total revenue is in NZD and the foreign
currency fluctuation between AUD and NZD is historically insignificant at 0.5% during the year. Foreign
exchange risk was therefore, considered insignificant. Senior management continue to evaluate this
risk on an ongoing basis.
The exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar,
was as follows:
Trade debtors
Trade payables
2021
NZD
$’000
31
(180)
2020
NZD
$’000
73
(91)
At the end of the financial year, the effect on profit and equity as a result of changes in the foreign
exchange rate with all other variables remaining constant would be as follows:
Year ended 30 June 2021
+/- 0.5% in foreign exchange rates
Year ended 30 June 2020
+/- 0.5% in foreign exchange rates
d. Interest rate risk
Profit
$’000
13
46
Equity
$’000
51
117
The interest rate relating to the borrowings with Suzerain is capitalised at a fixed rate of 10% per
annum and repayable by 30 September 2020 and 31 December 2021.
Interest relating to the borrowings with Skybound is paid monthly at a fixed rate of 12.5%.
107
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Note 29 | Related party transactions
Key Management Personnel
Any persons having authority and responsibility for planning, directing and controlling the activities of
the entity, directly or indirectly, including any Director (whether Executive or otherwise) of that entity,
are considered key management personnel.
During the year certain remuneration entitlements of executive and non-executive directors were paid,
upon request of the directors, to related entities or associates of those Directors.
See note 21 for the value of the related party transactions above and remuneration report.
Other related parties
Other related parties include entities controlled by the Company and entities over which key
management personnel have joint control. Amounts disclosed in note 21 includes transactions with
associated entities of key management personnel.
Transactions between related parties are on normal commercial terms and conditions that are no more
favourable than those available to other parties unless otherwise stated.
The following transactions occurred with related parties controlled by key management personnel:
Sales of goods and services
Membership subscriptions1
Enterprise sales2
Purchases of services
Rent3
Customer service4
IT Services5
CONSOLIDATED GROUP
2021
$’000
2020
$’000
44
92
13
324
-
-
-
-
339
96
1. Sale of Entertainment Memberships to Fair Go Finance, a controlled entity of Skybound.
2. Enterprise sales to NobleOak Life Insurance, an entity related to Stephen Harrison, the Chairman of the Group.
3. Gold Coast office space provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
4. Customer service provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
5. Technology consultancy services with Fintech Services (AUST) Pty Ltd, a related party due to common directors Dean Palmer and Jeremy Thorpe.
108 FINANCIAL STATEMENTS
INCENTIAPAY LTD AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
Outstanding balances arising from sales/purchases of goods and services:
Current payables
Leisurecom Group Pty Ltd
CONSOLIDATED GROUP
2021
$’000
2020
$’000
29
-
Transactions between the Company and controlled entities include loans, management fees and
interest. These are eliminated on consolidation.
Suzerain, Skybound and NGC, related parties to Jeremy Thorpe (Director) and Dean Palmer (Director),
have provided a total of $16.5m loan facilities to the Group. During the period, the Group drew down
$7.3m of the line of credit facility. See note 16 for additional detail.
Note 30 | Events after the reporting period
COVID-19
Conditions affecting the macro economic environment and the uncertainty brought on by the
COVID-19 pandemic continues after 30 June 2021, and given the nature of the pandemic, the term of
this impact is unknown. The Group will continue to monitor the impacts associated with the pandemic,
with a view to take appropriate and timely action.
Conversion of Convertible Loan
On 20 September 2021, Suzerain opted to convert the remaining amount of $3.4m of their convertible
loan into 104,939,367 ordinary shares at 3.29c per share, in accordance with the convertible loan
agreement approved by shareholders at the AGM held in December 2020.
109
DECLARATION
5010DIRECTORS’
110
110 DIRECTORS’
DECLARATION
In accordance with a resolution of the Directors of IncentiaPay Ltd, the Directors of the
Company declare that:
The financial statements and notes, as set out on pages 46 to 109, are in accordance with
the Corporations Act 2001 and:
a) Comply with Australian Accounting Standards, which, as stated in the notes to
the financial statements, constitutes compliance with International Financial
Reporting Standards (IFRS); and,
b) Give a true and fair view of the financial position as at 30 June 2021 and of the
performance for the year ended on that date of the consolidated Group.
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 s295A of the Corporations Act 2001 from
the Chief Executive Officer and Chief Operating Officer.
S T E P H E N H A R R I S O N
C H A I R M A N
IncentiaPay Limited ABN 43 167 603 992
Level 5, 68 Harrington Street, The Rocks 2000 NSW
p | +61 2 8256 5300 | e | info@incentiapay.com
www.incentiapay.com
111
10
AUDITOR’S
REPORT
5011INDEPENDENT
112
112 INDEPENDENT AUDITOR’S
REPORTS
Independent Auditor’s Report
To the shareholders of IncentiaPay Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report
of IncentiaPay Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
• giving a true and fair view of the
Group’s financial position as at 30
June 2021 and of its financial
performance for the year ended on
that date; and
The Financial Report comprises:
• Consolidated statement of financial position as at
30 June 2021;
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement
of changes in equity, and Consolidated statement
of cash flows for the year then ended;
• Notes including a summary of significant
accounting policies
• Directors’ Declaration.
•
complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
The Group consists of the Company and the entities
it controlled at the year-end or from time to time
during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical
responsibilities in accordance with the Code.
1
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation
113
11
114 INDEPENDENT AUDITOR’S REPORT
2 Material uncertainty related to going concern We draw attention to Note 1, “Going Concern” in the Financial Report. The conditions disclosed in Note 1, indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report. Our opinion is not modified in respect of this matter. In concluding there is a material uncertainty related to going concern we evaluated the extent of uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of going concern. This included: • Analysing the cash flow forecasts by: o Evaluating the underlying data used to generate the forecasts for consistency with other information tested by us, and our understanding of the Group’s intentions, and past results and practices; o Assessing the planned levels of operating and capital expenditures for consistency of relationships and trends to the Group’s historical results, particularly in light of recent loss making operations, results since year end, and our understanding of the business, industry and economic conditions of the Group with consideration to Covid-19; • Assessing significant non-routine forecast cash inflows and outflows for feasibility, quantum and timing. We used our knowledge of the client, its industry and financial position to assess the level of associated uncertainty; • Reading correspondence with existing financiers (of whom are related parties) to assess the level of associated uncertainty with respect to the availability of new and existing facilities, and accommodative repayment terms including the extension of existing maturity dates and the conversion of outstanding facilities into equity; and • Evaluating the Group’s going concern disclosures in the financial report by comparing them to our understanding of the matter, the events or conditions incorporated into the cash flow forecast assessment, the Group’s plans to address those events or conditions, and accounting standard requirements. We specifically focused on the principal matters giving rise to the material uncertainty. 115
3 Key Audit Matters In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the Key Audit Matters: • Recoverable amount of Goodwill and other intangible assets • Capitalised Development Costs 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 Recoverable amount of Goodwill and other intangible assets ($15.813 million) Refer to Note 13 to the Financial Report The key audit matter How the matter was addressed in our audit A key audit matter for us was the Group’s annual testing of goodwill and other intangible assets for impairment, given the size of the balance (being 67% of total assets). We focused on the significant forward-looking assumptions the Group applied in their value-in-use model, including: • forecast cash flows – the Group incurred a loss during the year largely as a result of reductions in revenues (most notably in membership subscriptions this financial year). These conditions increase the possibility of goodwill and other intangible assets being impaired. The Group’s forecast cash flows include further transformation program repositioning costs as well as anticipated impacts from Covid-19 on the volatility of cash flows over the forecast period; • forecast growth rates and terminal growth rate – in addition to the uncertainties described above, the Group’s model is highly sensitive to small changes in these assumptions, indicating a high risk of impairment. This drives additional audit effort specific to their feasibility and consistency of application to the Group’s strategy; and • discount rate – this is complicated in nature and varies according to the conditions and environment the specific Cash Generating Unit (CGU) is subject to from time to time, Working with our valuation specialists, our procedures included: • We reassessed the Group’s determination of their CGUs in light of the impacts of capitalised development costs during the year against the requirements of the accounting standards; • We considered the appropriateness of the value-in-use method applied by the Group to perform the annual test of goodwill for impairment against the requirements of the accounting standards; • We assessed the integrity of the value-in-use model used, including the accuracy of the underlying calculation formulas; • We considered the sensitivity of the model by varying key assumptions, such as forecast growth rates, terminal growth rate and discount rate, within a reasonably possible range. We did this to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further procedures; • We assessed the accuracy of previous Group forecasts to inform our evaluation of forecasts incorporated in the model; • We challenged the Group’s significant forecast cash flow and growth assumptions in light of the recent downturn in 116 INDEPENDENT AUDITOR’S REPORT
4 and the model’s approach to incorporating risks into the cash flows or discount rate. The Group’s modelling is highly sensitive to small changes in the discount rate. The Group’s model used to perform their annual testing of goodwill and other intangible assets for impairment uses adjusted historical performance, and a range of internal and external sources as inputs to the assumptions. The Group has not met prior forecasts, raising our concern for reliability of current forecasts. Complex modelling, using forward-looking assumptions tend to be prone to greater risk for potential bias, error and inconsistent application. These conditions necessitate additional scrutiny by us, in particular to address the objectivity of sources used for assumptions, and their consistent application. membership subscriptions in the short-term as a result of Covid-19, as well as the change in anticipated cash flow cycles following completion of the Group’s transformation program. We compared key events and new income streams to the Board approved plan and strategy and obtained documentation underlying the validity of key changes in the operating model. We performed detail analytical procedures based on our knowledge of the business, industry and recent actual cash flows to test the accuracy of the forecasted cash flows. As part of these procedures, we applied increased scepticism to forecasts in the areas where previous forecasts were not achieved and considered the potential prolonged impacts that Covid-19 may have on cash inflows; • We compared forecast growth rate over the 5 year forecast period to the Group’s stated plan and strategy, past performance of the Group, and our experience regarding the feasibility of these in the industry/economic environment in which they operate. We also compared the terminal growth rate to published studies of industry trends and expectations and considered differences for the Group’s operations. We used our knowledge of the Group, their past and current performance, business and customers, and industry experience to assist with this; • We analysed the Group’s discount rate against publicly available data of a group of comparable entities; • We assessed the difference between the Group’s year-end market capitalisation and the carrying amount of the net assets, by comparing the year-end market capitalisation to the Group’s enterprise value; • We recalculated the impairment charge against the recorded amount disclosed; and • We assessed the disclosures in the financial report using our understanding obtained from our testing and against the requirements of the accounting standards. 117
5 Capitalised Development Costs ($2.854 million) Refer to Note 13 to the Financial Report The key audit matter How the matter was addressed in our audit A key audit matter for us was the capitalisation of the Group’s development costs during the year, given the extent and nature of judgements and estimates involved in the identification and allocation of costs capitalised. These costs relate to the Group’s technology transformation project which have been capitalised under technology and software during the financial year. We focused on the Group’s process for calculating the amount of internally generated costs to be capitalised under this project given their application of judgement against the requirements of the accounting standards. These assessments include: • Estimating time which staff spend developing technology and software, and determining the value attributable to that time; • Allocating costs eligible for capitalisation, including staff and external providers, into relevant and appropriate Technology Transformation Projects; and • Determining when Technology Transformation Projects become available for use in a manner in which management intended, and therefore the appropriate method of depreciation that should be applied using the criteria in the accounting standards. These factors required significant audit effort and involvement of senior audit team members in assessing this key audit matter. Given the rapid changes in technology and market innovations, there remains a risk that impairment indicators exist for capitalized development costs. We therefore focused on those particular for the Group due to expected changes in the manner in which the Group’s developments could be used. Our procedures included: • Assessing the appropriateness of the Group’s accounting policies for the recognition and measurement of Capitalised Development Costs against the requirements of the accounting standards and our understanding of the business and industry practice; • Assessing the nature of a sample of capitalised cost additions against the criteria of AASB 138 to be capitalised and meeting the definition of development assets; • Testing a sample of the staff costs capitalised. Using the monthly management reports containing their estimates of the value of time attributable to development tasks, we checked salaries and/or hourly rates against their underlying employment contracts for accuracy of rates, and interviewed a range of staff and developers to challenge the Group on their estimates of time allocated to development tasks as opposed to other operational tasks which would not meet the capitalisation criteria; and • Testing the allocation of capitalised costs into different Technology and Transformation Projects by challenging the assumptions applied by the Group to underlying work programs. We also used our knowledge of the Group, the overall technology transformation project plan, agreements and invoicing patterns from key suppliers, and our industry experience. For the Technology and Transformation Project‘s that became available for use during the year, we checked this against information evidencing the launch of these Projects, the substance of costs incurred on these Projects after launch, and their AASB 138 eligibility for ongoing capitalisation. For a sample of Projects expected to be available for use in future periods, we challenged the Group’s assessment of 118 INDEPENDENT AUDITOR’S REPORT
6 when they are expected to be available for use, against our analysis of the nature of costs incurred to date, costs to complete, launch patterns and our experience of software launch phases. Additionally, we assessed the factors considered by the Group regarding impairment of capitalised development costs and whether any indicators of impairment existed. This included having regard to: • Significant changes in the extent or manner in which the associated software is used; and • Potential or actual redundancy or disposal of developed software. We assessed the disclosures for capitalised development costs and related impairment considerations in the financial report using our understanding obtained from our testing and against the requirements of the accounting standards. Other Information Other Information is financial and non-financial information in IncentiaPay Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. 119
7 Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • 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 Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our Auditor’s Report. 120 INDEPENDENT AUDITOR’S REPORT
8 Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of IncentiaPay Limited for the year ended 30 June 2021, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 35 to 43 of the Directors’ report for the year ended 30 June 2021. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG John Wigglesworth Partner Sydney 30 September 2021 121
ADDITIONAL
INFORMATION
ASX ADDITIONAL INFORMATION 12ASX
122
122 ASX ADDITIONAL
INFORMATION
AS AT 10 SEPTEMBER 2021
Distribution of equitable securities
Analysis of the number of equitable security holders by size of holding:
RANGE
TOTAL HOLDERS
SECURITIES
% ISSUED CAPITAL
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
TOTAL
*Including Loan Funded Shares in escrow.
Unmarketable parcels
132
204
104
549
210
1,199
25,359
607,496
843,333
21,544,770
882,753,223
905,774,181
0.00
0.07
0.09
2.38
97.46
100
The number of security investors holding less than a marketable parcel of 18,518 securities ($0.027 on
10/09/2021) is 568 and they hold 3,280,385 securities.
Substantial holders
RANK
NAME
CURRENT BALANCE
% ISSUED CAPITAL
1
2
Suzerain Investments Holdings Limited
553,871,863
Australian Fintech Pty Ltd
53,323,914
61.15
5.89
Top 20 holders of fully paid ordinary shares
The names of the twenty largest security holders of quoted equity securities are listed below:
RANK
INVESTOR
CURRENT BALANCE
% ISSUED CAPITAL
ORDINARY/FULLY PAID OR DINARY SHA RES
1
2
3
4
5
SUZERAIN INVESTMENTS HOLDINGS LTD
553,871,863
AUSTRALIAN FINTECH PTY LTD
MUIRSTONE CAPITAL LTD
CITICORP NOMINEES PTY LIMITED
HENRY JONES
53,323,914
40,621,364
38,654,866
30,868,711
61.15
5.89
4.48
4.27
3.00
123
12
6
7
8
9
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
BEN NEWLING
BNP PARIBAS NOMINEES PTY LTD
MR DEVEN HARRISON
10
EVEREST MB PTY LTD
11
MR ZHEN DUO GUO
12
KOOTENAY INVESTMENTS PTY LTD
13
MR BILAL AHMAD
14
MS WENDY CARTER
15
SINETECH LIMITED
16
17
J P MORGAN NOMINEES AUSTRALIA PTY
LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
18
IAIN DUNSTAN
19
YARRAN PARK PTY LTD
20
BEN JOHNSON
Voting Rights
12,630,923
11,585,043
7,743,386
7,684,167
7,518,000
6,877,658
6,500,000
5,115,000
4,649,854
4,535,484
4,441,327
3,718,074
3,035,714
2,170,034
2,139,574
1.39
1.28
0.85
0.85
0.83
0.76
0.72
0.56
0.51
0.50
0.49
0.41
0.34
0.24
0.24
The Company has 905,774,181 fully paid ordinary shares on issue. Each ordinary share is entitled to
1 vote when a poll is called, otherwise each member present at a meeting, or by proxy, has 1 vote
by a show of hands. There are no other classes of equity securities.
Voluntary escrow
The Company has 41,806,991 share in voluntary escrow.
On-market buy-back
There is currently no on-market share buy back.
124
ASX ADDITIONAL INFORMATION
CORPORATE
DIRECTORY
Directors
Mr Stephen Harrison, Chairman
Mr Jeremy Thorpe, Non-Executive Director
Dr Charles Romito, Non-Executive Director
Mr Dean Palmer, Non-Executive Director
Company Secretary
Mr Ben Newling
Registered
office
Level 6, Suite 7, 3 Spring Street
Sydney NSW 2000
+61 2 8256 5300
Principal place of
business
Level 6, Suite 7, 3 Spring Street
Sydney NSW 2000
Share registry
Link Market Services
ACN 083 214 537
Level 12, 680 George Street
Sydney NSW 2000
+61 2 8280 7100
Auditor
KPMG
Level 38, Tower Three, International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000
Legal advisers
Sundaraj & Ker
Level 31, Australia Square
264 George Street
Sydney NSW 2000
Bankers
Commonwealth Bank of Australia
Level 3, 240 Queen Street
Brisbane QLD 4000
Stock exchange listing
IncentiaPay Ltd shares are listed on the Australian Securities
Exchange (ASX code: INP)
Website
www.incentiapay.com
125
LEVEL 6, SUITE 7, 3 SPRING STREET
SYDNEY NSW 2000 AUSTRALIA
EMAIL INFO@INCENTIAPAY.COM
PHONE (02) 8256 5300
WWW.INCENTIAPAY.COM
126