Annual Report
FOR THE YEAR ENDED 30 JUNE 2022
ASX-listed IncentiaPay is the owner 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.
There are over
50 Entertainment
employees working
across Australia
and New Zealand,
with headquarters
in Sydney.
Members
Merchant partners
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.
Enterprise clients
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, HSBC and Budget Direct provide this
offering to their clients.
A choice of Memberships provide access to
thousands of 2-for-1 and up to 50% off offers
from over 6,500 business partners in dining,
travel, activities, and retail across over 12,500
partner locations in Australia and New Zealand.
Our offers are available across 20 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.
Fundraising groups
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 has helped almost
11,000 charities, large and small, local primary
and high schools, sports clubs and community
groups reach their fundraising goals this
financial year.
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1
1. Chairman’s Introduction ________________________________________________
3
2. CEO’s Review __________________________________________________________________
7
3. Financial Review _____________________________________________________________
11
4. The Leadership Team ____________________________________________________
15
5. Business Risks _________________________________________________________________
19
6. Directors’ Report ____________________________________________________________
23
7. Remuneration Report _____________________________________________________
29
8. Auditor’s Independence Declaration __________________________
39
9. Financial Statements _____________________________________________________
41
10. Directors’ Declaration __________________________________________________
109
11. Independent Auditor’s Report _____________________________________
111
12. ASX Additional Information ________________________________________
119
13. Corporate Directory _____________________________________________________
123
2
Chairman’s
Introduction
3
3
Chairman’s Introduction
Chairman’s
Introduction
Chairman’s
Introduction
Dear Shareholders,
On behalf of the Board of Directors of
IncentiaPay, I am pleased to present to you the
2022 Annual Report.
The past financial year has seen IncentiaPay
make strong progress with its business
transformation to rebuild the technology
platform for its two core businesses and with
the launch of a new business channel that offers
our Company transformational growth potential
and underpins our goal of becoming the industry
leader in digital solutions for consumer loyalty
and engagement.
The new business, a B2B2C platform called
Seamless Rewards, offers Card Linked Offer
(CLO)-compatible Merchant content services
that are provided via channel partners and
Enterprise Loyalty program operators such as
banks or other enterprises. By way of explanation,
CLO offers are cashback offers that consumers
automatically receive by transacting in-store or
online after linking their debit or credit cards to a
participating loyalty program.
The Seamless Rewards business, in time, will
provide us with a more diversified revenue base
and allow us to further leverage our leading
loyalty and rewards content.
At the same time, we have focussed on returning
our two core businesses, Entertainment B2C and
Frequent Values B2B, to profitability following
the extremely challenging years of COVID-19.
We are aiming to return the business back
to a profitable path via the management of
Membership renewals and reactivations, improved
marketing campaigns and new payment options
(i.e. Afterpay).
Broadly, our strategy to deliver value and growth
is as follows:
• Frequent Values – Position it as the pre-
eminent ‘Show and Save’ Enterprise Loyalty
program in Australia and NZ
• Entertainment – Deliver strong growth in
revenues and Memberships through better
management of renewals, reactivations and
new Member acquisitions with improved
marketing campaigns and product features
• Seamless Rewards – Deliver the most reputed
Card Linked Offer (CLO)-ready content
services to all CLO-based Loyalty Programs
...with the launch of a new business channel that offers
our Company transformational growth potential and
underpins our goal of becoming the industry leader in
digital solutions for consumer loyalty and engagement.
4
We aim to deliver these business growth priorities
through a lean, digitally enabled operating model.
In December, Ani Chakraborty succeeded Henry
Jones as IncentiaPay’s Chief Executive Officer
and has made a seamless transition in the role.
On behalf of the Board, I’d again like to thank
Henry for his leadership of the Company through
its transition from ‘The Entertainment Book’ to
our current digital offering and establishing our
growth strategy.
During the year, we initiated significant cost
reductions aimed at delivering annualised cost
savings of more than $4 million from the FY22 base
(to be realised throughout FY23) and accelerate
our path to operating cash break even. The cost
reductions are in line with our ongoing investment
in technology and strategy to drive growth in our
Seamless Rewards platform and restore revenues in
our core B2B and B2C businesses.
Our gross operating revenues in FY22 were
$19.96 million; a 2.7% increase from the prior year.
In December, IncentiaPay raised approximately
$4.162 million via a 1 for 4.3 renounceable pro
rata entitlement offer for new fully paid ordinary
shares for eligible shareholders. The shortfall of the
Entitlement Offer, being 45,817,543 Offer Shares
(Placement Shares), were issued to third parties via
a placement on the same terms as the Entitlement
Offer, this resulted in a total raise of $5.2 million.
In addition, we continue to be strongly supported
by our majority shareholder, Suzerain Investment
Holdings Limited and its Associates, which has
a 74% ownership interest in IncentiaPay and two
representatives on our Board.
Over the past 36 months, Suzerain has injected
$29 million in new equity capital into IncentiaPay
to fund our business strategy.
In March, we agreed to a $22.5 million convertible
loan facility, of which $5 million had already been
made available, with Suzerain’s associate, New
Gold Coast Holdings Limited and the facility
was approved at an Extraordinary Meeting of
Shareholders in May 2022. The loan demonstrates
Suzerain’s alignment with IncentiaPay’s strategic
vision and full commitment to the business
strategy whilst also providing us with the
financial certainty and flexibility required to
expedite our transformation projects and execute
our growth strategy.
On behalf of the Board, I would like to
acknowledge our CEO, Ani Chakraborty, our
executive leadership team and all employees,
Members and partners for their support and hard
work through the past year.
I would also like to thank our shareholders and
debt providers for their continued support of
IncentiaPay, especially through a difficult few years.
Finally, I would like to thank my colleagues on the
Board for their contributions and guidance.
Stephen Harrison
Chairman
5
Chairman’s Introduction
6
CEO’s
Review
7
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CEO's Review
CEO’s Review
CEO’s
Review
CEO’s
Review
Dear Shareholders,
I am delighted to be presenting my first Annual
Report as Chief Executive Officer of IncentiaPay.
• Frequent Values: Position our B2B Frequent
Values solution as the pre-eminent ‘Show and
Save’ Enterprise Loyalty program in Australia
and New Zealand
Whilst the Company has endured a difficult few
years, I am excited about the opportunities for
our business and I am confident that our strategy
will set us up for growth over the years ahead.
• Seamless Rewards: Deliver the most reputed
CLO-ready content services to all CLO-
based Loyalty Programs via our new B2B2C
Seamless Rewards business
As the Chair alluded to, our business and growth
strategic plan has four key pillars:
1. Entertainment Digital Membership: Focus on
growing our core B2C revenue.
2. Frequent Values: Growing our active audience
in our B2B Enterprise business, allowing us to
drive effective engagement uplift campaigns
3. Seamless Rewards: In time, build scale for
our new transaction-linked Seamless Rewards
Card Linked Offer (CLO)-based business
4. Cost optimisation: Deliver business growth
priorities through a lean, digitally enabled
operating model
Our vision and ambitions are threefold:
• Entertainment Digital Membership: Re-
position Entertainment as the pre-eminent
fundraising solution for Fundraisers in
Australia and New Zealand, improve our app
and Member satisfaction, and launch our
brand ‘live’ in the market
Operational Review
Cost reductions to lower annual costs by more
than $4 million
During the year, we planned significant cost re-
ductions to accelerate our path to operating cash
break-even and position the Company for long-
term growth, which culminated in a $4 million re-
duction as announced to marked on 25 July 2022.
IncentiaPay has invested heavily in technology
platform capability to support its growing
Seamless Rewards platform as well as its core
B2B and B2C businesses. With these upgrades
largely complete, the Company’s FTE and
contractor requirements are lower due to:
1. The reduction in work teams and associated
expenses associated with the technology
build; and
2. The restructure of IncentiaPay’s operating
model in some areas of the business.
8
B2C (Entertainment)
During the financial year, IncentiaPay remained
focused on its strategic growth pillar of growing its
core B2C business via the management of renewals
and reactivations, improved marketing campaigns
and new payment options (eg. Afterpay).
The B2C business showed an improvement,
recording one of the largest days of Membership
sales in FY22. Membership sales cash receipts are
also increasing, with receipts in the June quarter
of 4 times higher than in Q3.
IncentiaPay also completed the re-platforming
of its B2C (Entertainment) App using the Google
Flutter platform. The re-platforming gives the
Company the ability to implement its product
roadmap and improve features to meet Member
expectations.
As at the end of the financial year, the Company
had over 12,500 Merchant partner locations,
making IncentiaPay a market leader in the sector.
B2B (Frequent Values)
The re-platforming of the base framework for
IncentiaPay’s B2B app was also completed during
FY22 using Google Flutter. This has given the
Company the ability to implement its product
roadmap and improve its features to meet
customer expectations.
The majority of IncentiaPay’s B2B customers will
be migrated to the new app throughout FY23
providing significantly improved user interface
and improved functionality.
Seamless Rewards
During the year we launched a live-pilot of
our B2B2C Seamless Rewards platform, with
the platform already generating first revenues
through two programs that are currently in
market. IncentiaPay also executed several
agreements with additional partners including
Verrency, Opensparkz, PayWith and EML.
These agreements give IncentiaPay access to a
large audience of end customers and provide us
with the ability to distribute our suite of offers
from our Seamless Rewards Merchants to the
partners end customer bases.
IncentiaPay will receive transaction-linked
revenue each time a card holder transacts and
uses a linked card at an IncentiaPay Merchant.
IncentiaPay is also in advanced discussions with
other key players in the Card Linked Offer space
to increase its distribution capacity.
Senior leadership team changes
During the financial year, there were some
changes to our senior leadership team. Our
Chief Operating Officer (COO) and Company
Secretary, Ben Newling was appointed as the
Company’s Chief Financial Officer effective from 1
January 2022 and maintained his existing role as
Company Secretary.
The COO function was amalgamated into a Chief
Technology and Operations Officer role to which
Ryan Rodrigues was appointed in November.
Mr Rodrigues brings more than 25 years of
product and technology delivery experience
and will significantly strengthen IncentiaPay’s
implementation capabilities.
On 21 June 2022, we also appointed Jake Falkinder
as Chief Marketing Officer (CMO) to assist with our
efforts to grow our business offering.
Mr Falkinder brings 14 years’ experience in
senior marketing positions to the role and joins
from Boardriders, a leading action sports and
lifestyle company, where he was the Digital
Marketing Director.
In addition, we brought in senior professionals
in key roles across the business. Some notable
additions are:
• Steve Chant has been brought in to lead our
Merchant Partnerships with an aim to maintain
our leading edge in the market. Mr Chant brings
more than 25 years of business development
and growth delivery experience, out of which
more than 10 years in C-Suite roles in various
growth businesses.
• Saikat Ghosh has been brought in to lead
various strategic growth initiatives in the
business. Mr Ghosh brings more than 25 years
of business building experience and successfully
founded 2 major start-up businesses. Mr Ghosh
will bring a start-up mindset to our key growth
projects
• Louise Lee has been brought in to lead our
People and Culture function. Ms Lee brings
more than 18 years of Human Resources
experience and successfully led her previous
organisations through business transformations
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CEO's Review
Financial Performance
FY22 revenues totalled $19.96 million, up 2.7% on
the previous corresponding period, primarily due
to an increase in gift card sales.
Underlying EBITDA1 totalled ($9.57 million), down
298% on the previous corresponding period. This
was primarily due to investments in setting the
foundation for Seamless Rewards business and
IncentiaPay’s technology re-platforming.
Cash Position
Our core B2C and B2B businesses are starting
to rebound post the COVID-19 impacted
environment and we expect to see continued
growth over the months ahead.
This is underpinned by our unparalleled Merchant
base and our proven ability to deliver loyalty
programs as a service.
In closing, I’d like to thank our Member base,
Fundraiser groups, Merchant partners and
Enterprise clients for their continued support.
As at 30 June 2022, cash reserves totalled $0.98
million. In addition, the Company had an undrawn
remaining cash facility available of $16.4 million.
I’d also like to thank you, our shareholders for
your faith in the longer-term potential of this
Company.
Receipts from customers increased 7% to $20.87
million, driven by a post COVID-19 recovery in
Membership subscription revenue, particularly in
May and June.
Outlook
Finally, a big thank you to the team at IncentiaPay
for all their hard work and dedication.
IncentiaPay enters FY23 in a strong position
with technology re-platforming in our core
business largely complete and our new Seamless
Rewards business.
Ani Chakraborty
Chief Executive Officer
1.
Underlying EBITDA is defined as Earnings Before Interest, Tax, Depreciation and Amortisation before one-off, unusual, and significant items
not representative of the companies’ normal operational activities. This non-IFRS measure has not been subject to audit or review.
10
Financial
Review
1111
Financial Review
Financial
Review
Financial Review
Gross revenue for FY22 was $20.6 million,
underlying EBITDA1 for FY22 was a loss of $9.6
million, and negative operating cash flow was $12.2
million. Net loss after tax (NLAT) from ordinary
activities was $15.6 million. Australian revenue
accounted for $18.9 million, or 91.5 per cent (FY21:
$17.5 million, 90.2 per cent), while New Zealand
revenue accounted for $1.8 million,
or 8.5 per cent (FY21: $1.9 million, 9.8 per cent).
Gross Revenue
Overall gross revenue for FY22 was $20.6 million
compared to $19.4 million in FY21. This included
$0.7 million, or 3.4 per cent from fee income and
paid advertising (FY21: $0.7 million), $7.8 million,
or 37.9 per cent from Membership sales (FY21:
$8.2 million), $2.6 million, or 12.6 per cent from
Enterprise client sales (FY21: $3.0 million) and $8.6
million, or 41.7 per cent from gift card sales (FY21:
$7.3 million). Government assistance provided
during the financial year was $0.7 million (2021:
$2.4 million) and consisted of a COVID-19 Business
Grant of $0.1 million and NSW JobSaver payments
of $0.6 million. JobSaver has been presented as
an item of revenue during the 2022 financial year,
compared to JobKeeper in prior years, which was
presented as a reduction to employee expenses.
Although operating revenue has increased 2.7
per cent, this increase has been driven by the
increase in gift card sales of 17.5 per cent, with key
operating revenues still being impacted by both
technology platform transformations associated
with Enterprise and Corporate customers, and
continuing effects of COVID-19. Business to
Consumer (B2C) revenue, being the Entertainment
Membership subscriptions, decreased 4.9 per
cent because of extended restrictions, and border
closures during the first half of the year; however,
despite the continued challenges, showed signs of
a recovery towards the end of 1H FY22 and during
the last quarter.
The increased sales trend experienced headwinds
in the 3rd quarter due to the Omicron variant
affecting the hospitality and leisure industry via
supply chain constraints and availability of staff.
The June quarter of FY22 saw four times the level
of Membership Sales than the March Quarter,
which points to the success of a renewal program
of incentives and promotions revolving around
reminding customers of the benefits of the
Membership, which will extend into FY23 with the
Group launching a significant brand and advertising
campaign in the first half of FY23.
The Enterprise business invested heavily in the
re-platforming of Frequent Values customers and
relaunched multiple new customised apps and
white-label apps during the second half of FY22.
This was an extensive re-platforming program with
the aim of positioning the corporate product on a
solid foundation for the future. Delays in corporate
renewals during FY22 due to this program of work
is what drove the lower revenue in FY22. Given this,
the business achieved their goal of minimising the
impact.
Gift card sales increased 17.5 per cent due to the re-
opening of the retail industry, the surge in spending
post the easing of restrictions, and the introduction
of a range of new gift card options such as
Sheridan, Harvey Norman, and Kathmandu.
Fee income saw a 14 per cent increase year-
on-year predominantly due to paid advertising
and the re-engagement of the travel industry. A
major focus into FY23 will be to capitalise on the
return of the travel industry back to pre-COVID-19
volumes, but more importantly to target new areas
of marketing opportunities and affiliation.
1.
Underlying EBITDA is defined as Earnings Before Interest, Tax, Depreciation and Amortisation before one-off, unusual, and significant items
not representative of the companies’ normal operational activities. This non-IFRS measure has not been subject to audit or review.
12
Net loss after tax and impairments
Restructuring costs
Reported net loss after tax (NLAT) from ordinary
activities in FY22 was $15.6 million compared to a
net loss after tax from ordinary activities in FY21
of $8.4 million. The net loss was predominantly
attributed to:
• The Government assistance changes between
As part of the Company’s focus on achieving
operating cash break-even, a significant cost
rationalisation program was launched at the end
of FY22, impacting both payroll and project-based
contracting staff – aimed at delivering annualised
cost savings of more than $4 million.
FY21 and FY22 with JobKeeper being replaced
by the NSW backed JobSaver program,
resulting in less support.
• Continued investment in core business
technology platforms.
• Re-platforming of the Entertainment App
to the Google based Flutter technology for
a better user experience and flexible open-
source technology stack.
•
Investment in the re-platforming and migration
of most of the Group’s B2C Frequent Values
customers to the more flexible Google Flutter
technology for improved functionality and
better customer user experience.
• Development associated with the Seamless
Rewards platform, that provides tailored,
entertainment-based incentives and loyalty
and rewards programs to large enterprise
customers via a card linked offer (CLO) or card
scheme and an existing loyalty program.
• Development and set up of The Wine Bunch,
an online marketplace in partnership with
Junovate and Spineka.
Discontinued operations
During the financial year the Group did not divest
or discontinue any operations.
Debt management
During the second half of FY22, IncentiaPay
secured an additional funding facility with New
Gold Coast Holdings Limited (NGCH), an associate
of IncentiaPay’s majority shareholder, Suzerain
Investments Holdings Limited. This commitment
was governed via a convertible loan deed with
NGCH. Additional detail covering this facility
is included in the notes to the annual financial
statements.
The extended funding facility was secured after
an extensive capital management review and is
focused on:
• Expediting technology investment and
Merchant content acquisition resourcing in
IncentiaPay’s new B2B2C Seamless Rewards
business unit;
• External strategic support during the first
• Growing revenues in the existing B2C
half of FY22 to guide, manage and drive key
transformation initiatives.
•
Impairment write-offs associated with the
re-platforming of the previously developed
Entertainment app and the Entertainment
website, as well as Goodwill.
• Restructure and re-alignment costs associated
with cost reduction and future sustainability
strategies.
The cost-based strategies described above are
focused towards:
• Delivering a solid foundation for B2B and B2C
product technology platforms
• Operationalising and embedding the CLO-
based loyalty programs via B2B2C Seamless
Rewards business.
• Forging a path to operating cash break-even
and positioning the Company for long-term
growth and sustainability.
(Entertainment) and B2B (Frequent
Values) business units through technology
enhancements, new marketing initiatives and
increased Merchant content acquisition; and
• Enhancing IncentiaPay’s capability to support
its valued Not-for-Profit partners in meeting
their fundraising objectives.
The facility, which was approved by shareholders at
an Extraordinary General Meeting on 23 May 2022,
provides the Group with $22.5 million, of which
$17.5 million is new funding, and is secured over the
Group’s present and future assets.
Dividends
No dividend has been declared in relation to the
FY22 results. The Board of Directors of IncentiaPay
do not expect to declare any dividends in FY23.
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Financial Review
14
The Leadership
Team
15
15
15
The Leadership Team
Leadership Team
The Leadership
Board of Directors
Meet Incentiapay’s Board of Directors – A group of knowledgable business executives with a
track record of growing and building businesses.
Team
Stephen Harrison
Chairman
Dean Palmer
Non-Executive
Director
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
and Aumake Ltd.
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.
Charles Romito
Non-Executive
Director
Jeremy Thorpe
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. Charles is currently a Partner with
Corpus Transformation Services in Sydney.
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 20+ 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.
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 a number of 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.
16
The Executive Team
IncentiaPay has an outstanding leadership team with a deep history in business and
management, technology and marketing.
Ani Chakraborty
Chief Executive
Officer
Ben Newling
Chief Financial
Officer
Ani Chakraborty brings more than 20 years of
strategy and transformational experience in
several different sectors such as digital operations,
infrastructure, utilities and resources.
He has served as an Investment Director
at Hastings Funds Management and has a
management consulting background, primarily
with McKinsey & Company.
Ben Newling has more than 18 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.
Ben has a Master of Business Administration
(MBA) focused in Finance and Financial
Management Services from MGSM.
Ryan Rodrigues
Chief Technology
and Operations
Officer
Steve Chant
Chief Partnerships
Officer
Ryan Rodrigues has more than 25 years of
experience across general management and
executive leadership roles, within technology,
government, FMCG, retail, automotive, oil & gas,
utilities and outsourcing.
Steve Chant has over 30 years of experience
in building high performing teams in leisure,
travel, hospitality, tourism, loyalty & rewards. He
has extensive experience with early stage and
emerging entrepreneurial businesses.
His role as CTO/COO is key to driving technology,
product, customer experience and operations
transformation with a clear focus on revenue
and value growth through data-driven
technology uplift.
His role as Chief Partnerships Offer is key to
growing national partnerships that support
Entertainment’s loyalty and rewards
programmes throughout the Australian and
New Zealand markets.
Ryan has a Master of Business Administration (MBA)
focused in Technology and Operations Management
from Auckland University of Technology.
Steve has Bachelor of Business (QUT), Graduate
Diploma in Applied Finance and Investment
(FINSIA).
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17
The Leadership Team
Louise Lee
Chief People
Officer
Saikat Ghosh
Director Strategy¹
Louise Lee has over 18 years of experience
in strategic and operational human resource
management across sport, education, travel and
manufacturing.
Her role as Chief People Officer is key to leading
the Company through transformational change, to
optimise organisational performance and ensure
a people-centred approach. Louise has a focus
on driving strong leadership, engagement, values
alignment and inclusion.
Louise has a Bachelor of Business (Human
Resource Management) from Swinburne University
and a Postgraduate Diploma in Management
(PDM) from Melbourne Business School.
Saikat Ghosh has 24 years of strategic and executive
experience, having founded and run two profitable
start-ups in e-commerce and digital marketing. Prior
to becoming an entrepreneur, he was a management
consultant with Accenture and implemented
strategic projects with industry leading clients. His
business experience spans 3 countries.
His role focuses on delivering results from key
parts of the business and revive Entertainment
as an industry leader. Saikat has an MBA from IIM
Ahmedabad, Certificate in Corporate Strategy from
the University of London and Certificate (Honors) in
Financial Markets from Yale.
1 Saikat is a director in title only and not a Director for statutory
purposes, and hence does not hold any fiduciary responsibly as a
Director as defined by the Corporations Act 2001.
Jake Falkinder
Chief Marketing
Officer
Jake Falkinder has over 20 years of experience
in marketing and digital technology across the
travel, retail and hospitality sectors. He has
been recognised at #15 in the Top 50 People in
E-commerce by Inside Retail.
His role as CMO is key to driving significant
revenue with a clear focus on brand, customer
acquisition and retention.
Jake has a Bachelor of Computer Science from
the University of Queensland and is a member of
the Australian Marketing Institute.
Brent
Trimnell-Ritchard
Chief Enterprise
Solutions Officer
Brent Trimnell-Ritchard is an experienced and
accomplished digital business owner and leader with
over 25 years of experience across digital strategy,
solution and design. Specialising in B2B and B2C,
Enterprise, advertising and media creating successful
digital partnerships working with numerous leading
Australian and international brands.
Brent’s accomplishments include over 20 years as
Founding Owner and Director of Gruden, a digital
Media & Solutions agency, listed on the Australian
Stock Exchange in May 2016 under the name of
The Gruden Group (ASX:GGL)
As Chief Enterprise Solutions Officer, Brent is
tasked with delivering innovative customer-centric
solutions, driving engagement, growth and client
retention for our partners.
18
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.
19
Business Risks
Business Risks
RISK
NATURE OF RISK
There is no certainty that IncentiaPay will remain sufficiently funded.
IncentiaPay recently secured a $22.5 million convertible loan from New
Gold Coast Holdings Limited, an Associate of its largest shareholder
Suzerain Investments Holdings Ltd (Suzerain) to provide it with
sufficient working and growth capital for the short to medium term.
Funding
Macro-economic
uncertainty
due to COVID-19
Success of Investment
Personnel
IncentiaPay continually manages its cash position and regularly
monitors its investments to balance the risk, outlay, and timings.
Throughout FY21 and FY22, the Company saw operating cash inflows
decline due to the wide-ranging impacts of the global pandemic
particularly in the dining and entertainment verticals due to extended
lockdowns and the re-emergence of the Omicron variant.
The Board and Management have implemented a cost
rationalisation strategy and remain vigilant should macro-economic
conditions change.
Management have invested in an above the line marketing
campaign for our Entertainment Membership business ‘tap for fun’.
IncentiaPay’s success in part is predicated on our ability to generate
new customers and cash inflows from marketing activity.
Management and the Board reviews the results of all of our
investments regularly which forms the basis of future investment
decisions.
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.
20
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 management of the development
function and infrastructure of all of its core technology
platforms. This gives greater flexibility to control its technology
delivery roadmap and directly manage the outage risk.
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 keeping an open dialogue with
regulators and financiers.
21
Business Risks
RISK
NATURE OF 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.
Competition
To mitigate this, IncentiaPay invests in its Merchant content
and consumer brands. This ongoing investment assists with
providing us with a competitive advantage.
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.
Third Party Failure
Intellectual Property
Risk
22
22
Directors’
Report
2323
Directors’ Report
Director's Report
The Directors present their report on the
consolidated entity IncentiaPay Ltd and its
controlled entities (IncentiaPay) for the financial
year ended 30 June 2022. The information in the
Operating and 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:
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.
• Stephen Harrison (appointed 15 February 2019
Non-audit services
and re-elected 16 December 2020)
• Dean Palmer (appointed 19 August 2019) and
elected 20 December 2019
• Charles Romito (appointed 28 June 2019 and
re-elected 20 January 2022)
• Jeremy Thorpe (appointed 16 May 2019) and
elected 20 December 2019
Particulars of each Director’s experience and
qualifications are presented 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
Access and 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 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 2022:
Taxation services
Other services
Total
$'000
12
1
13
24
Auditor’s independence declaration
The lead auditor’s independence declaration
for the year ended 30 June 2022 has been
received and can be found on page 40 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 the nearest dollar.
Matters arising after the end of financial year
The Company announced on 25 July 2022 a
significant cost reduction, with more than
$4 million of annualised cost being removed from
the Company throughout the FY23 financial year.
Environmental regulation
The Group is not subject to any significant
environmental regulation under a law of the
Commonwealth or of a State or Territory.
Options1
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 2022. There were
no ordinary shares of the Group issued on the
exercise of options during the year ended 30 June
2022 and up to the date of this report.
Loan funded share plan
As at 30 June 2022, there were 11,585,043
shares issued to Ben Newling as part of Loan
Funded Share (LFS) arrangement approved
by shareholders at the AGM in December
2020. Separately, there were 22,199,567 shares
previously issued to former CEO, Henry Jones,
forfeited under a modified arrangement and
held in trust, with an agreement to repatriate the
shares to the company.
The terms of the current LFS arrangement 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 in section 10 of
the Remuneration Report;
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.
8. Prior to the shares becoming unencumbered,
the executive is required to repay the loan.
1.
In the interests of removing any doubt, no options have been issued by the company at any time. Any reference to options in the
remuneration report and annual financial statements applies to the Loan Funded Share plan that has been accounted for as options due to
the nature of the rules and conditions of the scheme.
25
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
Re-elected as a Director on 16 December 2020
Interest in shares and options
4,754,285
Special responsibilities
Member of the Risk and Audit Committee
Member of the Nominations and Remuneration Committee
Directorships held in other listed entities
during the three years prior to the
current year
MEC Resources Limited
Aumake Limited
Nobleoak Life 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, mergers &
acquisitions, and start-ups.
Jeremy Thorpe - Non-Executive Director
Board appointment
16 May 2019 and elected 20 December 2019
Interest in shares and options
Jeremy Thorpe has an indirect interest in 927,570,550
shares. Jeremy Thorpe’s family trust is a unit holder in
Australian Fintech Plus Pty Ltd ACN 619 156 099 as trustee
of the Australian Fintech Trust, and Jeremy Thorpe is a
consultant 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.
26
Charles Romito - Non-Executive Director
Board appointment
28 June 2019
Re-elected 20 January 2022
Interest in shares and options
Nil
Special responsibilities
Chairman of the Nominations and Renumeration
Committee
Member of the Audit and Risk 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
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. Charles is currently a Partner with
Corpus Transformation Services in Sydney.
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 20+ 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
Board Appointment
15 August 2019 and elected 20 December 2019
Interest in shares and options
Special responsibilities
Dean Palmer has an indirect interest in 927,570,550 shares.
Dean Palmer’s family trust is a unit holder in Australian
Fintech Plus Pty Ltd ACN 619 156 099 as trustee of the
Australian Fintech Trust, and Dean Palmer is a contractor of
a related entity of Suzerain.
Chairman of the Risk and Audit Committee
Member of the Nominations and Renumeration Committee
27
Directors’ Report
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 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.
Ben Newling - Company Secretary
Ben was appointed as the Company Secretary on 11 February 2019. Ben is employed at IncentiaPay as
the Chief Financial 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
12
12
12
12
12
12
12
12
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
This Directors’ report, incorporating the Operating and Financial Review and the Remuneration report is
signed in accordance with a resolution of the Board of Directors.
Stephen Harrison
Chairman
30 September 2022
28
Remuneration
Report
29
29
Remuneration Report
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 June 2022
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
Key Management Personnel
NAME
Henry Jones
Ani Chakraborty
Ben Newling
POSITION
DATES
CEO
CEO
COO
CFO
1 July 2021 till
24 December 2021
Appointed
24 December 2021
1 July 2021 to 1 January 2022
From 1 January 2022
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.
terms of the arrangement). For the 2022 financial
year, the shares would vest where the share price
is greater than $0.10 (tested in September 2022).
For the 2023 financial year, vesting will occur
where the share price is greater $0.15 (tested
in September 2023). Shareholder approval was
granted at the AGM held on 16 December 2020.
Henry Jones, the previous CEO, was granted a
modified allocation of shares upon his departure
with most of the shares forfeited, see section 10
for more detail.
The Board approved a Loan Funded Share Scheme
(LFS) for the previous CEO, Henry Jones and current
CFO, 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, which will
vest over a three-year period ending 31 October
2023. Vesting conditions relate to achieving the
FY21 Board approved budget (which was not met,
resulting in these shares being rolled under the
The Board and shareholder approved an ESS
for senior management and executive directors,
which will result in shares being issued into a trust
controlled by the Company. The 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 10
of this report. No shares were issued under this
scheme during the financial year.
30
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.
(including short-term incentive (STI) and long-
term incentive (LTI) linked to performance).
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 because 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.
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
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 STIs will be paid to KMP for
the financial year ended 30 June 2022 (2021: 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
31
Remuneration Report
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 in the prior year.
The number of rights issued to each participant were 100% discretionary and based on commercial
arrangements and negotiations. Shares under this scheme were either forfeited or awarded to Henry
Jones as compensation upon his departure on 24 December 2021, details related to both executives are
included under section 10 of this report.
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 2022:
Revenue ($’000)
20,620
19,435
42,205
64,572¹
75,809¹
FY22
FY21
FY20
FY19
FY18
Revenue ex Gift Cards
($’000)
Profit/(loss) for the period
before tax ($’000)
12,013
12,110
31,513
37,265
41,158
(15,631)
(8,588)
(20,945)
(27,367)1
(23,197)¹
Dividends paid ($’000)
-
-
-
-
2,666
Share price as of 30 June
$0.007
$0.024
$0.026
$0.045
$0.245
Change in share price
($0.017)
($0.002)
($0.019)
($0.200)
($0.495)
1.
Amounts exclude discontinued operations.
7. Transactions with key management personnel
MOVEMENT IN SHARES
DIRECTORS
Jeremy Thorpe1
Dean Palmer1
Stephen Harrison3
HELD ON
1 JULY 2021
53,323,914
53,323,914
-
OTHER CHANGES2
12,400,911
12,400,911
4,754,285
HELD ON 30
JUNE 2022
65,724,825
65,724,825
4,754,285
1. Ordinary shares are held by Australia Fintech Pty Ltd as trustee for the Australia Fintech Trust. Jeremy Thorpe and Dean Palmer are Directors
of Australia Fintech Pty Ltd and beneficiaries of the Australia Fintech Trust.
2. Other changes represent shares that were purchased or sold during the year, that relates to the entitlement offer on 8 December 2021.
3.
Stephen Harrison acquired the shares, for the provision of consultancy services out of a previous loan funded share scheme held in trust when
they remained unissued at the conclusion of the scheme. Refer to section 8 for further details.
32
32
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
Travel commission6
Purchases of goods or services
Rent3
Technology consultancy4
Customer service5
Communication infrastructure7
2022
$’000
2021
$’000
-
56
3
11
17
252
21
44
92
-
13
-
324
0
Sale of Entertainment memberships to Fair Go Finance Pty Ltd, a related entity of Suzerain.
Enterprise sales to Noble Oak Life Limited, an entity related to Stephen Harrison, the Chairman of the Group.
1.
2.
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.
6.
Travel commission from Leisurecom Group Pty Ltd for Entertainment Travel bookings with accommodation venues previously under
MyBookings.
Communication network costs on charged from Leisurecom Group Pty Ltd for Harrington Street location.
7.
Outstanding balances arising from sales/purchases of goods and services:
Current payables
Leisurecom Group1
2022
$’000
1
1. Customer service and office space provided by a related entity of Suzerain.
Outstanding balances arising from loan agreements:
Borrowings
Interest bearing loan
Additional growth operational facility
Transformational capital facility
New Gold Coast Holdings
2022
$’000
633
184
1,208
6,097
2021
$’000
29
2021
$’000
574
2,800
1,208
-
33
Remuneration Report
Significant loan and capital related transactions between the Group and related parties include the
following:
• Suzerain and NGCH, are related parties to Jeremy Thorpe (Director) and Dean Palmer (Director),
have provided a total of $34 million loan facilities to the Group. During the period, the Group drew
down $6.4 million of the line of credit facility (before interest charges), with $16.4 million remaining
unutilised. See note 16 for additional detail.
• Suzerain opted to convert the remainder of their convertible loan of $3.4 million into 104,740,097
ordinary shares on 23 September 2021.
• Suzerain participated in the rights issue on 8 December 2021, acquiring 162,612,401 shares, which was
announced to the market on 10 November 2021. See note 19 to the annual 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
2022
CASH
SALARY AND
FEES
NON-
MONETARY
BENEFITS
BONUS OTHER
SUPERAN-
NUATION
OTHER
LONG
SERVICE
LEAVE
TERMINATION
BENEFITS
RIGHTS AND
OPTIONS
EQUITY
SETTLED
OTHER
E.G
HYBRIDS
TOTAL
% OF
REMUNER-
ATION
LINKED TO
PERFORMANCE
DIRECTORS5
Stephen Harrison1
158,695
Jeremy Thorpe2
70,263
Charles Romito3
87,960
Dean Palmer2
76,650
EXECUTIVES
Henry Jones5,7
193,827
Ben Newling4,7
260,000
Ani Chakraborty8
208,749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,784
24,676
16,409
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
104,594
-
-
-
162,500 (254,039)9
149,60010
58,807
-
-
-
-
-
-
-
-
-
-
-
263,289
0%
70,263
0%
87,960
0%
76,650
0%
263,672
0%
343,483
17%
225,158
0%
1.
In addition to directors’ fees, Stephen Harrison provided consulting and advisory services which were settled in both cash ($49,195) and the
issue of 4,754,285 shares ($104,594).
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.
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 was employed by IncentiaPay as a permanent full-time employee up until the termination of his employment on 24 December
2021. For details relating to his termination payments provided for under his contract, refer to section 9 of the remuneration report.
6. All Directors are Non-Executive. Directors do not receive performance related compensation and are not provided with retirement benefits,
7.
apart from statutory superannuation where applicable.
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 vested 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. Henry Jones was issued an amended allocation upon his termination
on 24 December 2021 which constituted all of tranche 2 related shares.
8. Ani Chakraborty 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.
This amount relates to the reversal of the previously recognised share-based payment expense from the cancellation of Tranches 1,3 and 5.
9.
10. This amount relates to the fair value adjustments against the issue of tranche 2 shares to Henry Jones under an amended allocation
arrangement. See section 10 below.
34
34
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE BASED
PAYMENTS
2021
CASH
SALARY AND
FEES
NON-
MONETARY
BENEFITS
BONUS OTHER
SUPERAN-
NUATION
OTHER
LONG
SERVICE
LEAVE
TERMINATION
BENEFITS
RIGHTS AND
OPTIONS
EQUITY
SETTLED
OTHER
E.G
HYBRIDS
TOTAL
% OF
REMUNER-
ATION
LINKED TO
PERFORMANCE
DIRECTORS5
Stephen
Harrison1
93,075
Jeremy Thorpe1
67,707
Charles Romito2
125,910
Dean Palmer1
61,320
EXECUTIVES
Henry Jones4,6
257,800
Ben Newling3,6
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%
1.
Directors’ fees were paid to an associated entity of Jeremy Thorpe and Dean Palmer and a related party of IncentiaPay Ltd.
2. Directors’ fees were paid to an associated entity of Charles Romito and a related party of IncentiaPay Ltd.
3. 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.
4. 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.
5. 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.
6. 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
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
Ani Chakraborty
Chief Executive Officer
Agreement commenced
24 December 2021
Term of engagement
Until 30 June 2023
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
•
15,000,000 loan funded shares subject to agreement related to vesting
conditions and approval by the Board. As of 30 June 2022, a loan funded
share agreement has not been finalised and consequently vesting conditions
have not been agreed.
35
Remuneration Report
NAME
Title
Ben Newling
Chief Financial Officer (from 1 January 2022)
Chief Operations Officer (Until 1 January 2022)
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.
10. Share based compensation
As of 30 June 2022 there were 11,585,043 (2021: 38,771,277) options issued to key management per-
sonnel as part of Loan Funded Share (LFS) arrangement approved by shareholders at the AGM in
December 2020.
The terms of the current LFS arrangement, which only apply to Ben Newling, as Henry Jones’s
allocation was modified upon his termination, 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
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.
36
36
Movement in loan funded shares
HELD ON
1 JULY 2021
FORFEITED/
EXPIRED/
CANCELLED
ISSUED
HELD ON 30
JUNE 2022
VESTED AND
EXERCISABLE
AS OF 30 JUNE
20223
Henry Jones1
27,186,234
(22,199,567)
(4,986,667)
-
-
Ben Newling2
11,585,043
-
-
11,585,043
1,522,679
1.
Henry Jones forfeited Tranche 1 share allocation that had already vested at the time of his termination, amounting to 3,573,220 shares.
Tranche 2 share allocation of 4,986,667 shares, was transferred and formally issued under the provisions of a modified allocation agreement,
approved by the Board. The remaining shares, being tranches 3, 4 and the remaining shares in Tranche 5 amounting to 18,626,347 shares,
were cancelled.
2. No additional share options have vested during the period ending 30 June 2022. Tranche 2 share allocation amounting to 2,125,000 shares
rolled into Tranche 3 due to the budget for 2021 not being achieved (as specified in the terms of the loan funded shares). The expiration of
Tranche 2 is dependent on the achievement of the price hurdle for Tranche 3, which will be measured at the end of September 2022.
3.
These options held as of 30 June 2022, they have vested and are exercisable on 31 October 2023.
Movements in the share based payment reserve
BEN NEWLING
$’000
HENRY JONES
$’000
Balance as at 1 July 2020
Amortised during the period
Balance as at 30 June 2021
Balance as at 1 July 2021
Amortised during the period
Forfeited during the period
Issued under modified allocation
Balance as at 30 June 2022
-
108
108
108
59
-
-
167
-
254
254
254
142
(227)
(169)
-
For additional information see note 20 to the annual financial statements.
TOTAL
$’000
-
362
362
362
201
(227)
(169)
167
37
Remuneration Report
Details of options issued to key management personnel as part of compensation during the financial
year ending 30 June 2022, and their terms, as at the same date:
GRANT
DATE
TRANCHE
NO. OF
OPTIONS
ISSUED
VALUE
$
VESTED &
EXERCISABLE
AT 30 JUNE
2022
FAIR
VALUE
OPTIONS
$
VESTING
CONDITIONS
VESTING
DATE4
Ben
Newling
9 Oct
2020
9 Oct
2020
9 Oct
2020
9 Oct
2020
9 Oct
2020
1
2
3
4
5
1,125,000
22,386
1,125,0005
22,386
Grant date
2,125,000
-
2,125,000
63,761
2,125,000
41,171
-1
-2
-3
-
22,957
10,965
4,085,043
69,346
397,679
51,947
Budget
FY 2021
Share price
hurdle
of $0.10
Share price
hurdle
of $0.15
Proportion of
the Suzerain
convertible
loan converted
into shares and
proportion of
shares vested
in tranches 1
to 4.
9 Oct
2020
30 Jun
2021
30 Sep
2022
30 Sep
2023
31 Oct
2023
Total
Shares
11,585,043
196,664
1,522,679
108,255
1.
Shares have been carried over to Tranche 3 as vesting condition not satisfied under the terms of the loan funded share arrangement.
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.
The price hurdle test for tranche 2 and 3 shares will be performed on 30 September 2022. Tranche 2 shares amounting to 2,125,000 and a
proportional allocation of tranche 5 shares of 2,532,727 is at risk of expiry on 30 September 2022.
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.
38
Auditor's
Independence
Declaration
39
Auditor's Independence Declaration
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 2022 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
PAR_NAM_01
PAR_DAT_01 PAR_CIT_01
KPM_INI_01
P
R_SIG_01
KPMG
Jeffrey Frazer
Partner
Gold Coast
30 September 2022
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
40
Financial
Statements
41
41
Financial Statements
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
2022
$’000
2021
$’000
2
3
3
3
3
3
3
3
4(a)
20,620
(10,151)
(3,615)
(12,596)
(1,171)
(247)
(919)
(2,654)
(973)
(2,270)
33
(1,688)
(15,631)
-
(15,631)
19,435
(8,931)
-
(9,450)
(3,344)
(132)
(794)
(1,078)
(1,071)
(1,628)
101
(1,696)
(8,588)
186
(8,402)
(15,631)
(8,402)
- Items that may be reclassified subsequently to profit or loss
Loss rising from translating foreign controlled entities from continuing
operations
20
(49)
(6)
Total comprehensive loss for the period
(15,680)
(8,408)
Loss per share
Basic loss per share (cents)
Total
Diluted loss per share (cents)
Total
5(a)
5(a)
(1.4)
(1.4)
(1.4)
(1.4)
(1.1)
(1.1)
(1.1)
(1.1)
The accompanying notes form part of these financial statements.
42
Incentiapay Ltd and Controlled EntitiesConsolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2022
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
CONSOLIDATED GROUP
NOTE
2022
$’000
2021
$’000
6
8
9
10
8
11
12
13
14
15
16
4(d)
17
18
15
16
17
18
19
20
978
1,226
200
1,503
3,907
102
22
503
12,322
12,949
16,856
4,623
910
2,025
-
3,163
829
11,550
310
6,125
78
124
6,637
18,187
(1,331)
132,143
489
(133,963)
(1,331)
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
122,984
733
(118,559)
5,158
The accompanying notes form part of these financial statements.
43
Financial Statements
Incentiapay Ltd and Controlled EntitiesConsolidated statement of financial position as at 30 June 2022
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
19
19
20
Total transactions with owners and
other transfers
116,026
(110,157)
377
-
-
-
7,000
(42)
-
6,958
(8,402)
-
(8,402)
-
-
-
-
-
(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
ORDINARY
SHARE
CAPITAL
ACCUMULATED
LOSSES
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE BASED
PAYMENTS
RESERVE
TOTAL
NOTE
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2021
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
Employee share-based payments
Movement during the period
Total transactions with owners and
other transfers
19
19
20
20
122,984
(118,559)
-
-
-
9,326
(167)
-
--
9,159
(15,631)
-
(15,631)
-
-
227
--
227
371
-
(49)
(49)
-
-
-
--
-
362
5,158
-
-
-
-
-
(227)
32
(15,631)
(49)
(15,680)
9,326
(167)
-
32
(195)
9,191
Balance at 30 June 2022
132,143
(133,963)
322
167
(1,331)
44
Incentiapay Ltd and Controlled EntitiesConsolidated statement of changes in equity for the year ended 30 June 2022
CONSOLIDATED GROUP
NOTE
2022
$’000
2021
$’000
Cashflows from operating activities
Receipts from customers
Payments to suppliers and employees
Government assistance received
Interest paid
Interest received
20,868
(33,763)
676
(13)
30
Net cash used in continuing operations
7
(12,202)
Cashflows from investing activities
Purchase of property, plant and equipment
Purchase of intangibles
Proceeds from security deposit
Net cash used in from investing activities
Cashflows from financing activities
Proceeds from issue of shares, net of costs
19
Proceeds from borrowings
Payment of lease liabilities
Interest paid
Net cash from financing activities
Net 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
Cash and cash equivalents at the end of the financial period
in continuing operations
6
The accompanying notes form part of these financial statements.
(53)
(800)
279
(574)
5,433
6,408
(958)
(288)
10,595
(2,181)
3,228
(69)
978
19,503
(27,544)
2,696
-
10
(5,335)
(53)
(2,854)
-
(2,907)
531
7,326
(1,661)
(214)
5,982
(2,260)
5,307
181
3,228
45
Financial Statements
Incentiapay Ltd and Controlled EntitiesConsolidated statement of cash flows for the year ended 30 June 2022
Note 1
Summary of significant accounting policies .......................................................................................... 47
Note 2
Revenue ...................................................................................................................................................................52
Note 3
Expenses ................................................................................................................................................................ 55
Note 4
Income tax ..............................................................................................................................................................57
Note 5
Dividends, earnings per share and franking credit ............................................................................. 59
Note 6
Cash and cash equivalents .............................................................................................................................60
Note 7
Cash flow information ....................................................................................................................................... 61
Note 8
Trade and other receivables .......................................................................................................................... 63
Note 9
Inventories ............................................................................................................................................................. 66
Note 10 Other assets .......................................................................................................................................................... 66
Note 11 Right-of-use assets ............................................................................................................................................ 67
Note 12 Property, plant and equipment .................................................................................................................... 70
Note 13
Intangible assets ..................................................................................................................................................73
Note 14 Trade and other payables ............................................................................................................................... 80
Note 15 Leases ....................................................................................................................................................................... 81
Note 16 Borrowings ............................................................................................................................................................ 82
Note 17 Deferred revenue ................................................................................................................................................ 85
Note 18 Provisions............................................................................................................................................................... 86
Note 19
Issued capital ....................................................................................................................................................... 88
Note 20 Reserves .................................................................................................................................................................90
Note 21 Key management personnel compensation ........................................................................................... 94
Note 22 Auditor’s remuneration .................................................................................................................................... 94
Note 23
Interests in subsidiaries and business combinations .......................................................................... 95
Note 24 Parent company information......................................................................................................................... 96
Note 25 Segment information ........................................................................................................................................ 98
Note 26 Capital commitments ....................................................................................................................................... 99
Note 27 Contingent liabilities and contingent assets .......................................................................................... 99
Note 28 Financial risk management .......................................................................................................................... 100
Note 29 Related party transactions ........................................................................................................................... 106
Note 30 Joint arrangements ..........................................................................................................................................108
Note 31 Events after the reporting period ..............................................................................................................108
4646
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022 Note 1 | Summary of Significant Accounting Policies
Basis of preparation
These general-purpose financial statements for the year ended 30 June 2022 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 2022.
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 updates and enhancements associated with its technology
platforms with efforts focused on the implementation of the open source Google owned Flutter
framework, for both the Entertainment app and Frequent Value Enterprise customised apps. Multiple
corporate Enterprise customers have now been transitioned to white-labelled versions of the app and
for some of the larger customers, fully customised versions have been released. In addition, the Group
has developed the first new B2B2C platform called Seamless Rewards, that offers Card Linked Offer
(CLO)-compatible Merchant content services provided via channel partners and Loyalty program
operators. At the same time the Group has focused on returning our core Entertainment B2C and
Frequent Values B2B businesses to profitability through the management of renewals and reactivations,
improved and targeted marketing campaigns and enhancements such as new payment options.
On 30 June 2022 the Group had cash on hand of $1.0 million, net liabilities of $1.3 million and a net
current asset deficiency of $7.6 million. During the year ended 30 June 2022, the Group incurred a
net loss before tax from continuing operations of $15.6 million and incurred net cash outflows from
operating activities of $12.2 million.
The Directors have prepared cash flow forecasts for the period from 1 July 2022 to 30 September 2023
that support the ability of the Group to continue as a going concern. Most notable aspects of the cash
flow forecasts include:
• Deliver the most reputed Card Linked Offer (CLO) ready content services to CLO-based
Loyalty Programs with contribution to profit being delivered in the second half of FY23 through
agreements with Verrency, PayWith and EML.
• Targeted management of reactivations and renewals using enhanced capability made possible
using an industry leading marketing analytics platform.
• Re-position Entertainment as the pre-eminent fundraising solution for Fundraisers in Australia and
New Zealand and address Member satisfaction app ratings.
47
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
• Partnering with M&C Saatchi on our first B2C advertising and marketing campaign, with an
investment in an above the line marketing acquisition strategy, which together with the re-
activations and renewals programs is anticipated to result in an uplift in sales.
• With the migration of all B2B Enterprise customers to our Flutter backed app, there will be a push
to increase our audience base with a focus on new corporate partners.
• Delivery of significant cost reductions covering both payroll resources and project-based
contracting staff aimed at delivering annualised cost savings of more than $4 million.
• Transitioning from platform development and build phase to a phase that is characterised by
ongoing maintenance and feature enhancements.
• Expenditure associated with Entertainment Membership distribution will be managed through
alternative cost-effective models utilising affiliate marketing partners, as well as aligning
fundraiser commission to the source and nature of the of the transaction and acknowledging the
role of the updated marketing strategy and the efforts of fundraisers.
•
Inflationary pressures associated with the Group’s expenditure will be largely experienced around
resourcing which will be managed through the discretionary nature of increases where possible.
The expenditure profile associated with the business model is predominantly discretionary and
can be flexed as required. Inflation has been assumed to be 3% over the near and medium terms.
• The ability of the Group to enter flexible repayment terms related to the debt facilities with
Suzerain and its related entities, see note 16 for additional information.
The funding of ongoing operations of the Group is dependent upon the Group continuing to access the
Suzerain and related parties financing facilities, the success of the revenue growth strategies, the success
of the CLO business venture and/or the Group reducing expenditure in-line with existing strategies and
current cash and funding resources. As of 30 June 2022, the Group had undrawn financing facilities from
Suzerain and related parties totalling $16.4 million. See note 16 for further information. This undrawn
amount has reduced to $12.9 million 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,
there is a material uncertainty as to whether the Group will be able 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)
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.
4848
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
(b)
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 preliminary 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.
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.
(c)
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.
(d) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial period.
49
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
(e)
Rounding of amounts
The parent entity has applied the relief available to it under ASIC Instrument 2016 / 191. Accordingly,
amounts in the preliminary consolidated financial statements and Directors’ report have been rounded
off to the nearest $1,000.
(f)
New standards, interpretations and amendments adopted by the Group
Certain new accounting standards and interpretations have been published that are not mandatory
for 30 June 2022 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.
(g) 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.
(h)
Economic outlook impacts on the Group’s estimates and judgements
Given the recent Entertainment sales trends and economic variables such as cost of living, inflation and
interest rates, 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 the Group’s trend in reported revenue and recent changes to key economic
variables, management have considered and/or performed the following:
• 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 economic related impacts.
• Reviewed public forecasts and experience from previous downturns.
• Considered the impact of recent economic variables on the Group’s financial statement disclosures.
• Engaged a key Marketing partner in developing and assessing the likely success and impact of an
above line advertising campaign.
5050
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022 • Reviewed industry-based forecasts and commentary related to the hospitality, travel and leisure
industries as to the likely increase and growth in travel and hospitality sectors over the next 3 to 5 years.
• Considered the view that given the increase in inflation the Entertainment Membership is
designed to provide the ability for consumers to utilise hospitality dining venues with discounts
and value options during this time.
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.
Number of CGU’s
Indefinite and finite life intangible assets are tested at a cash generating unit (CGU) level, which is
the smallest level that generates cash inflows that are largely independent from other cash inflows of
other assets of the Group. In this case, the CGU’s of the Group are considered to be the Entertainment
Business and the new Credit Linked Offer (CLO) business. This determination of CGU’s represents a
change from prior periods where there was one CGU assessed for the Group. This change was made
through a re-assessment of the separation of core operating assets and revenues test under accounting
standards. Due to events and circumstances that have arisen during the financial year, there is a core
change to separation of the Entertainment and Frequent Value’s customer and Merchant databases,
technology platforms and revenue contracting with respect to the new CLO business. This has resulted
in management assessing the new CLO business to be in a separate CGU.
Goodwill and indefinite life brands are allocated to CGU’s, or groups of CGU’s, expected to benefit
from synergies arising from the acquisition giving rise to the goodwill and brands. Management have
assessed that the goodwill ($10 million) and brands ($3 million) of the Group are fully allocated to the
Entertainment Business CGU.
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 for each CGU 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.
Management have undertaken their assessment on the recoverable amount of each CGU which has
resulted in impairment of goodwill amounting to $2.4 million. This impairment pertains to goodwill
within the Entertainment Business CGU.
Further details on the key estimates used in the impairment evaluation in respect of goodwill or other
intangibles for the year ended 30 June 2022 can be found in note 13.
51
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Software under development and available for use
Costs relating to Technology Transformation “TTPs” and Card Linked Offer “CLO” Projects were
capitalised during the year ($0.8 million), and “ready to use” TTPs ($0.6 million) were allocated to
Technology & Software when they were in a condition for use as per the expectations of management.
Management reviewed existing TTPs and impaired certain assets which became redundant due to group
investing in and developing newer technology. This resulted in impairment amounting to $1.2 million.
Ready to use TTP assets were amortised in accordance with the Company accounting policies and
resulted in an amortisation charge of $0.7 million for the year.
The Card Linked Offer platform is accounted for as Work in Progress at 30 June 2022 as a result
of development work and significant pilot testing continuing to be undertaken until approximately
September 2023.
Further details on software under development and available for use can be found in note 13.
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:
Identify the contract(s) with a customer;
Identify the performance obligations in the contract(s);
•
•
• 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.
The Entertainment Membership is a digital product 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 Membership type.
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 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.
5252
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Type of services
Nature and timing of satisfaction of performance obligations and revenue recognition policies
Fee income –
Paid advertising
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.
Fee income –
Travel booking
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.
Membership
subscriptions
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.
Enterprise sales
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.
53
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022 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.
In the current reporting period, Government assistance relates to JobSaver payments received during
the first half of the year, in addition to an amount relating to COVID-19 business grants. The comparative
amount relates to Cash flow assistance boost.
Fee income – Paid advertising
Fee income – Travel booking
Membership subscriptions
Enterprise sales
Gift card sales
CONSOLIDATED GROUP
2022
$’000
2021
$’000
729
32
7,812
2,610
8,607
600
66
8,216
3,039
7,325
Revenue from contracts with customers
19,790
19,246
Profit on sale of assets1
Government assistance2
Other income3
Interest received
-
676
124
30
67
112
-
10
Total revenue and other income
20,620
19,435
1.
Sales of certain office equipment in Entertainment Publication New Zealand and the digital platform for Entertainment Digital.
2. During the reporting period, the Government assistance received relates mainly to the JobSaver program. For more details, please refer to the
policy section of the revenue note.
3. Other income consists predominantly of the outgoings component of the sublease for the previous Sydney Head Quarters and Harrington Street.
Contract balances
Trade receivables
(Included in ‘Trade and other receivables’)
Contract liabilities
NOTE
8
17
2022
$’000
2021
$’000
735
3,241
640
4,558
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.
5454
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Note 3 | Expenses
Loss before income tax from continuing operations includes the following significant expenses:
CONSOLIDATED GROUP
No NOTE
2022
$’000
2021
$’000
Direct expenses of providing services
Amortisation of deferred commission
Enterprise book printing
Gift cards
Other
Total
Bad debts written off
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
55
Financial Statements
10
8
16
15
12
13
11
13
13
1,516
7
8,371
257
10,151
(33)
(33)
12,596
-
12,596
247
247
763
91
65
919
359
676
136
1,171
2,434
1,181
3,615
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
-
-
-
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Direct expenses of providing services
Direct expenses are predominantly made up of sales commission paid to fundraiser partners and gift
card expenses. 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 2022 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.
Employee expenses
The increase in employee expenses is predominantly due to:
• Termination entitlements paid to various departing employees including the former CEO in the
first half of the year.
•
Increased spend on project-based contracting staff to accelerate the development of the group’s
core business technology platforms.
• Restructure costs at year end as part of the group’s focus on returning to operating cash break-even.
• Employee expenses in the prior year include all costs associated with human resources and were
offset by JobKeeper payments earned of $2.3 million as part of the COVID-19 government
assistance package.
• The voluntary reduction in salaries from all staff between 10% and 40% was also not a feature
in this reporting period, whereas in the corresponding period that helped reduce our employee
expenses further.
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.
The reduced depreciation expense in FY22 for Plant & Equipment can be ascribed to our office leases
for Entertainment Publications ending in July 2021 and as such all leasehold improvements have been
fully depreciated at 31 July 2021.
The reduced amortisation expense in FY22 for Intangibles is a direct result of “legacy” capitalised web
development being fully amortised in FY21 and therefor seeing reduced amortisation in FY22.
5656
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
The reduced depreciation expense in FY22 for Right of use assets is because of our office leases for
Entertainment Publications ending in July 2021 and the derecognition of the Harrington Street office in
June 2021 which ultimately resulted in less depreciation.
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.
Finance costs on borrowings
The increase in finance costs on borrowings is because of additional interest & admin fees on the new &
increased New Gold Coast Holdings Limited loan facility.
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.
57
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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 taxable losses again for FY23.
• Whilst assessable income is forecast from FY24 onwards, it is not sufficiently large enough to
generate taxable income that will fully utilise the carry forward tax losses (Per 30 June 2021 Income
Tax Return, $51,428,701) 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 2022.
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.
CONSOLIDATED GROUP
NOTE
2022
$’000
2021
$’000
a) The components of income tax (expense)/income comprise:
Current tax
Deferred tax
Income tax benefit/(expense)
-
-
-
186
-
186
b) Numerical reconciliation of income tax expense to prima
facie tax payable
Loss from continuing operations before income tax expense
(15,631)
(8,588)
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% (2021: 30%)
(4,689)
(2,577)
Add/(less) tax effect of:
Permanent differences
Temporary differences
Unrecognised tax losses
Unders/(overs) from prior periods
Income tax (benefit)/expense
1,069
(2,050)
5,670
-
-
2,502
(3,467)
3,542
(186)
(186)
5858
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
c) Deferred tax
The movement analysis for deferred tax assets and liabilities has not been presented due to the
derecognition of deferred tax balances resulting in no current or comparative amounts on the
Statement of Financial Position.
The Group has estimated unutilised tax losses of $57.4 million. Additionally there are other deductible
temporary differences resulting in a net potential deferred tax asset position for the Group of approximately
$1.5 million, calculated using the prevailing rate of Australia corporation tax of 30% for the Group.
After considering the above, the Group previously determined 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 is moving into a recovery phase related to its B2C business
and launching its Client Linked Offers (CLO) business. In addition the Group restructured in July 2022
in accordance with the capital management plan and cost reduction strategy to return the Company
to cash break even. 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
Note 5 | Dividends, earnings per share and franking credit
CONSOLIDATED GROUP
2022
$’000
2021
$’000
-
-
CONSOLIDATED GROUP
2022
$’000
2021
$’000
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
6,493
-
6,493
6,493
-
6,493
59
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
The Directors have advised that they do not intend to declare dividends for the 2022 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 $6.5 million (2021: $6.5 million) franking credits.
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
CONSOLIDATED GROUP
2022
$’000
2021
$’000
(15,631)
(8,402)
-
-
(15,631)
(8,402)
Weighted average number of ordinary shares outstanding during the year used in
calculating basic EPS1
1,088,536,622
746,647,173
Weighted average of dilutive convertible notes and equity instruments outstanding
-
-
Weighted average number of ordinary shares outstanding during the year used in
calculating diluted EPS
1,088,536,622
746,647,173
1. Of the 38,771,277 ordinary shares issued on 9 October 2020 at a price of $0.03 each under the loan funded shares plan, 33,784,610 are still in
escrow and as such 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.
CONSOLIDATED GROUP
2022
$’000
2021
$’000
Cash at bank and on hand
TOTAL CASH AND CASH EQUIVALENTS
RECONCILIATION OF CASH
Cash at the end of the financial year as shown in the statement of cash flows is
reconciled to items in the statement of financial position as follows
Cash and cash equivalents
TOTAL CASH AND CASH EQUIVALENTS
978
978
978
978
3,228
3,228
3,228
3,228
6060
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Note 7 | Cash flow information
CONSOLIDATED GROUP
2022
$’000
2021
$’000
RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOW
FROM OPERATIONS
Loss after income tax
Cash flows excluded from profit attributable to operating activities
Non-cash flows in loss
Amortisation-intangibles
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 trade payables and accruals
Increase/(decrease) in deferred income
Increase/(decrease) in income taxes payable
Increase/(decrease) in provisions
(15,631)
167
676
359
136
3,615
(195)
919
240
466
(45)
(1,371)
(1,317)
-
(221)
(8,402)
-
1,428
569
1,347
-
454
794
417
333
(21)
(285)
(2,011)
(186)
228
CASH FLOW FROM OPERATING ACTIVITIES
(12,202)
(5,335)
61
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
CASHFLOW
LOAN
NEW
GOLD COAST
HOLDINGS
LOAN
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
$’000
BALANCE AS AT
30 JUNE 2020
Drawn down
Rent concessions
Repayment or
amortised
Interest paid
Interest expenses
Line fees paid
Line fees
Loan converted
to equity
BALANCE AS AT
30 JUNE 2021
Balance as
1 July 2021
Drawn down
Repayment or
amortised
Admin fees
Interest paid
Interest expenses
Line fees paid
Line fees
Loan converted
to equity
BALANCE AS AT
30 JUNE 2022
517
-
-
-
-
54
-
-
-
571
571
-
-
-
-
62
-
-
-
2,691
6,099
-
-
-
267
-
120
(6,377)
3,889
-
(50)
(1,661)
(166)
166
-
-
-
-
1,199
-
-
(48)
55
(20)
22
-
2,800
2,178
1,208
2,800
2,178
1,208
728
-
-
-
61
-
29
(3,434)
-
(958)
-
(91)
91
-
-
-
-
-
-
(157)
157
(24)
24
-
-
28
-
-
-
-
-
-
-
28
28
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,097
7,326
(50)
(1,661)
(214)
542
(20)
142
(6,377)
6,785
6,785
5,680
6,408
-
73
(16)
326
-
34
-
(958)
73
(264)
697
(24)
87
(3,434)
633
184
1,220
1,208
28
6,097
9,370
6262
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022 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
2022
$’000
2021
$’000
735
(70)
665
420
141
1,226
102
102
640
(140)
500
427
73
1,000
523
523
Movement in the provision for loss allowance of receivables is as follows:
OPENING
BALANCE
01 JULY 2021
LOSS ALLOWANCE
ADJUSTMENT
FOR YEAR
AMOUNTS
WRITTEN OFF
CLOSING
BALANCE
30 JUNE 2022
$’000
$’000
$’000
$’000
Current trade receivables
TOTAL
(140)
(140)
33
33
37
37
(70)
(70)
OPENING
BALANCE
01 JULY 2020
LOSS ALLOWANCE
ADJUSTMENT
FOR YEAR
AMOUNTS
WRITTEN
OFF
CLOSING
BALANCE
30 JUNE 2021
$’000
$’000
$’000
$’000
Current trade receivables
TOTAL
(241)
(241)
101
101
-
-
(140)
(140)
63
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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. As a result of recent economic
variables such as inflation and interest rates, 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 2022 was determined as follows for
trade receivables:
REPORT CATEGORY
Current
Past due 1-30
Past due 31-60
Past due 61-90
Past due over 90
Greater than over
90 days overdue
DAYS
0-30
31-60
61-90
91-120
121-150
Greater
than 150
ADJUSTED
LOSS RATE
RECEIVABLES
BALANCE AS AT
30 JUNE 2022
LOSS
ALLOWANCE AS AT
30 JUNE 2022
%
$’000
$’000
3
7
9
100
100
100
Total
405
210
83
1
1
35
735
12
14
7
1
1
35
70
The expected credit loss allowance as at 30 June 2021 was determined as follows for trade receivables:
REPORT CATEGORY
Current
Past due 1-30
Past due 31-60
Past due 61-90
Past due over 90
Greater than over
90 days overdue
DAYS
0-30
31-60
61-90
91-120
121-150
Greater
than 150
ADJUSTED
LOSS RATE
RECEIVABLES
BALANCE AS AT
30 JUNE 2021
LOSS
ALLOWANCE AS AT
30 JUNE 2021
%
7
24
51
100
100
100
Total
$’000
$’000
393
148
43
-
-
56
640
27
35
22
-
-
56
140
6464
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Credit risk
The Group has a sublease rent receivable of $0.5 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
2022
$’000
2021
$’000
735
(70)
665
394
196
75
-
-
665
640
(140)
500
366
113
21
-
-
500
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:
CONSOLIDATED GROUP
2022
$’000
2021
$’000
629
36
665
473
27
500
Australia
New Zealand
Total
65
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Note 9 | Inventories
Accounting policy
Inventories represent gift cards. These assets are valued at the lower of cost and net realisable value.
CONSOLIDATED GROUP
2022
$’000
2021
$’000
200
200
155
155
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 the Harrington Street premises and also
the credit card facility. Prepayments are the right to receive future goods or services within the next 12
months.
CURRENT
Short-term investments2
Prepayments
Deferred commission1
TOTAL OTHER ASSETS
CONSOLIDATED GROUP
2022
$’000
2021
$’000
576
423
504
1,503
855
220
893
1,968
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.
2.
Short-term investments are all security deposits held with banks.
6666
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
30 JUNE 2021
Balance as at 1 July 2020
Commission deferred
Amortisation
BALANCE AS AT 30 JUNE 2021
30 JUNE 2022
Balance as at 1 July 2021
Commission deferred
Amortisation
BALANCE AS AT 30 JUNE 2022
Note 11 | Right-of-use assets
Accounting policy
DEFERRED
COMMISSION
$’000
996
1,352
(1,455)
893
893
1,127
(1,516)
504
The Group leases offices and equipment. The majority have expired in financial year 2022 except for the
Harrington Street office, which is currently subleased for the reminder of the lease term, which ends in
financial year 2024.
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. An extension
option (or periods after termination options) is 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
option to renew, as such, an extension option is 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.
67
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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 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
CONSOLIDATED GROUP
2022
$’000
2021
$’000
1,805
(1,805)
-
270
(248)
22
22
1,805
(1,720)
85
270
(197)
73
158
Movements in carrying amounts
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 2020
Exchange difference
Depreciation charge for the year
Derecognition
BALANCE AS AT 30 JUNE 2021
Balance as at 1 July 2021
Exchange difference
Depreciation charge for the year
BALANCE AS AT 30 JUNE 2022
LAND AND
BUILDINGS
EQUIPMENT
$’000
$’000
TOTAL
$’000
2,558
(68)
(1,216)
(1,189)1
85
85
-
(85)
-
223
38
(131)
(57)2
73
73
-
(51)
22
2,781
(30)
(1,347)
(1,246)
158
158
-
(136)
22
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.
6868
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
Amounts recognised in statement of cash flows
Interest on lease liabilities
Principal element of lease payments
Total cash flow for leases
Leases as lessor
CONSOLIDATED GROUP
2022
$’000
2021
$’000
247
91
-
-
132
166
167
18
CONSOLIDATED GROUP
2022
$’000
2021
$’000
91
958
1,049
166
1,661
1,827
During the previous financial 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
term of the lease. 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
$17,322 interest income relating to subleasing during the reporting period ending 30 June 2022.
(2021:$334)
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.
69
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
2022
$’000
2021
$’000
463
116
-
579
(57)
522
443
461
120
1,024
(74)
950
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.
7070
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
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.
71
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
CONSOLIDATED GROUP
2022
$’000
2021
$’000
Plant and equipment
At cost
Accumulated depreciation
Total
Leasehold improvements
At cost
Accumulated depreciation
Total
TOTAL PROPERTY, PLANT AND EQUIPMENT
Movements in carrying amounts
922
(770)
152
1,926
(1,575)
351
503
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 2020
Additions
Depreciation expense
BALANCE AS AT 30 JUNE 2021
Balance as at 1 July 2021
Additions
Disposals
Depreciation expense
BALANCE AS AT 30 JUNE 2022
PLANT AND
EQUIPMENT
LEASEHOLD
IMPROVEMENTS
$’000
$’000
TOTAL
$’000
242
53
(90)
205
205
53
(3)
(103)
152
1,085
-
(479)
606
606
-
-
(255)
351
874
(669)
205
2,090
(1,484)
606
811
1,327
53
(569)
811
811
53
(3)
(358)
503
7272
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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:
the consideration transferred;
•
• any non-controlling interest (determined under either the full goodwill or proportionate interest
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.
73
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
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. 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.
Impairment testing is performed at least annually for goodwill, intangible assets with indefinite lives and
intangible assets not yet available for use.
7474
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
CONSOLIDATED GROUP
2022
$’000
2021
$’000
31,199
(23,542)
7,657
9,203
(8,289)
914
751
-
751
3,000
-
3,000
-
-
-
12,322
31,199
(21,108)
10,091
10,200
(8,386)
1,814
908
-
908
3,000
-
3,000
752
(752)
-
15,813
CONSOLIDATED GROUP
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
75
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
GOODWILL
TECHNOLOGY
AND SOFTWARE
SOFTWARE
UNDER
DEVELOPMENT
BRAND NAME &
INTERNATIONAL
RIGHTS
TOTAL
$’000
$’000
$’000
$’000
$’000
10,091
-
-
-
10,091
10,091
-
-
-
(2,434)4
7,657
1,196
-
2,046
(1,428)
-
1,814
1,814
-
647
(676)
(871)1
914
100
3,000
14,387
2,854
(2,046)
-
-
908
908
800
(647)
-
(310)1
7513
-
-
-
-
2,854
-
(1,428)
-
3,000
15,813
3,000
15,813
-
-
-
-
800
-
(676)
(3,615)
3,000
12,322
CONSOLIDATED
GROUP
Balance as at
1 July 2020
Additions-internally
developed
Transfers2
Amortisation charge
Impairment
BALANCE AS AT 30
JUNE 2021
Balance as
at 1 July 2021
Additions-internally
developed
Transfers2
Amortisation charge
Impairment
BALANCE AS AT 30
JUNE 2022
1.
2.
3.
During the reporting period, the Group terminated the partnership with a key technology platform provider and has moved to an alternative
open-source platform, as such the related work in software under development was impaired, $310k. The group also reviewed existing
technology and impaired certain assets which became redundant amounting to $871k, due to investment in newer technology solutions.
Technology Transformation Projects 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.
The remaining $751k in Software under development relates to the groups Card Linked Offer rewards platform which is expected to be
transferredto Technology and Software in FY23.
4. Goodwill was impaired following the value in use calculation performed as at 30 June 2022. Additional information is included in the latter
paragraphs of note 13 below.
7676
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Assessment of cash-generating units (CGU’s)
Indefinite and finite life intangible assets are tested at a cash generating unit (CGU) level, which is the
smallest level that generates cash inflows that are largely independent from other cash inflows of other
assets of the Group. Where it is not possible to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the CGU to which the asset belongs. Identification of
CGU’s (comprising the Group's Entertainment and Frequent Values businesses) involves judgement. In
this case, the CGU’s of the Group are considered to be the Entertainment Business and the new Credit
Linked Offer (CLO) business. This determination of CGU’s represents a change from prior periods
where there was one CGU assessed for the Group. This change was made through a re-assessment of
the separation of core operating assets and revenues test under accounting standards. Due to events
and circumstances that have arisen during the financial year, there is a core change to separation of
the Entertainment and Frequent Value’s customer and Merchant databases, technology platforms and
revenue contracting with respect to the new CLO business. This has resulted in management assessing
the new CLO business to be in a separate CGU for the 2022 financial year. The CLO business was
previously included in the Entertainment Business CGU for the 2021 financial year.
Current market conditions brought on by factors such as economic activity, inflation, cost of living
and interest rates, as well as the continued downward trend related to revenue and operating profit,
has triggered an assessment whether the carrying value of the Groups’ goodwill and other non-
current assets associated with the Group’s “core products” in the Entertainment Business CGU, may
be impaired. These product lines are at higher risk of impairment due to reliance on an improvement
in consumer sentiment evidenced through increased spending on hospitality and leisure activities,
Merchants honouring offers, inflation and cost of living kept under control, and the success of the new
brand campaign. The Card Linked Offer business’s underlying core assets are currently in the final
stages of testing and are classified under work in progress.
The recoverable amount of the Entertainment Business CGU is determined based on a value-in-use
calculation. This has been performed using a discounted cash flow model forecast based on financial
budgets approved by the Board covering a 5-year period from 2023 through to 2027, followed by a
terminal year calculation using growth rates determined by management.
Allocation of goodwill and indefinite life assets to CGU’s
Goodwill and indefinite life brands are allocated to CGU’s, or groups of CGU’s, expected to benefit from
synergies arising from the acquisition giving rise to the goodwill and brands.
A summary of the goodwill and brands allocated to each CGU for the period ended 30 June 2022, is
presented below:
Goodwill
Brands and international rights
BALANCE AS AT 30 JUNE 2022
ENTERTAINMENT
BUSINESS CGU
CARD LINKED
OFFERS CGU
$’000
$’000
7,6571
3,0001
10,657
-
-
-
TOTAL
$’000
7,657
3,000
10,657
1. Management have assessed that the goodwill ($10 million) and brands ($3 million) of the Group are fully allocated to the Entertainment
Business CGU which is within the Australian operating segment. The basis for this allocation stems from the fact that Goodwill was acquired
in a previous business acquisition as part of the Entertainment Business CGU and the brands asset is linked to the Entertainment Membership
when the company operated the Membership as a physical book prior to transforming to a digital Membership. The Entertainment brand has
continued and will continue to be used for all current and new digital platforms.
77
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Impairment losses and recoverable amounts
During the 2022 financial year, impairment losses totalling $3,615,796 have been recognised in respect
of the following CGU’s. Included in this impairment loss total, is a reduction in the value of Goodwill
of $2,434,425, due to a value in use calculation, which is detailed below, and an amount of $1,181,371
associated with the impairment of technology and software assets within this CGU. The recoverable
amounts of each of these CGU’s for which an impairment was recognised as part of the value in use
calculation, are presented below:
Carrying Value
Recoverable amount
IMPAIRMENT CHARGE AT 30 JUNE 20221,2
ENTERTAINMENT
BUSINESS CGU
CARD LINKED
OFFERS CGU
$’000
$’000
7,823
5,389
2,434
751
751
-
TOTAL
$’000
8,574
6,139
2,434
1.
Goodwill was impaired following the value in use calculation performed as at 30 June 2022. The impairment amounts to $2,434,425 has been
recorded against goodwill and presented as an impairment charge in the profit and loss.
2. During the reporting period, the Group terminated the partnership with a key technology platform provider and has moved to an alternative
open-source platform, as such the related work in software under development was impaired by $309,625. The group also reviewed existing
technology and impaired certain assets which became redundant, amounting to $871,746, due to investment in newer technology solutions.
Combined, these impairments, along with the above, totals $3,615,796
Key assumptions used for calculating recoverable amounts of the Entertainment Business CGU
The Company has over the last three years been on a product, business model and technology
transformation designed specifically to modernise and digitise the products and associated platform
technologies, this ensuring the long-term sustainability of the Company. These changes are near
completion and have established the foundation on which to grow the customer base and ultimately
revenue. As part of the journey the Company has strategically delivered multiple reorganisation
structures thereby reducing the cost base and bringing it in line with the new operating model and
ultimately increase operating margins. The outlooks and budgets have been determined using this as a
measure to grow revenue and increased profitability.
Cash flows used in the value-in-use calculations are based on forecasts produced by management
which have been approved by the Board. The growth rates are based on a proposed strategic
repositioning of the core operations of the business focusing on returning the business to cash flow
break even with a focus on short term growth and significant investment in the brand via marketing
expenditures. Forecasts for 2023 consider the increased level of sales from the significant investment
in the brand and marketing campaign, the focus on B2B Frequent Value app roll out, reduced costs
from the restructure and cost out program, and an uplift program linked to the fundraiser channel.
The Directors consider these forecasts to reflect the best estimates of revenue based on facts and
circumstances available as at 30 June 2022.
7878
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
The following assumptions were used in the value-in-use calculations:
Long term growth rate (terminal value) 1
Post tax discount rate2
Revenue growth rates – year 1
Revenue growth rates – year 2
Revenue growth rates – year 3 to 5
ENTERTAINMENT
BUSINESS CGU
ENTERTAINMENT
BUSINESS CGU
2022
2021
2%
14%
18%3
29%3
5%4
2%
13%
3-10%5
1.
Based on long-term expectations consistent with forecast included in industry reports.
2. Reflect specific risks relating to the CGU.
3. Revenue growth rates are the most appropriate driver for the key inputs into the impairment model. The key assumptions for the 2023 and
2024 years includes:
· For the 2023 and 2024 financial years, the cash flows assume growth from investment in above the line marketing, the first of its kind for the
Group. Investment is included in the discounted cash flow for both 2023 and 2024 to the extent of $2 million per year and assumes a return
of $1.50 for each dollar invested per year. The forecast growth in revenue is dependent on the success of the brand investment campaign
resulting in this forecast return on brand spend.
· Renewal and reactivation rates applied to Memberships that have expired. The cash flows assume a growth in reactivations of 54% between
2023 and 2024.
· The white labelling of the completed Frequent Values app for all remaining Enterprise customers and using the completed app to expand to
new customers.
Operational efficiencies are also included in the cash flows. These reflect the cost savings associated with the restructure announced to market and
implemented in July 2022, resulting in removing $4 million annualised from fixed expenses. These cost reductions have been made possible through
the completion of the technology transformation and re-platforming and will form the basis of some of the revenue
4.
5.
This reflects the expected growth rate associated with the travel, leisure and hospitality industries over the medium term.
For 30 June 2021, the CGU includes both the Entertainment Business and the CLO Business. The combination 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. As outlined above, the revenues from this new business are attributed to the CLO CGU and therefore are not
included in the 30 June 2022 model.
Following the impairment to the Entertainment Business CGU, the recoverable amount equals the
carrying amount. As a result, any adverse changes to key assumptions would drive further impairment.
The following table outlines the sensitivity scenarios of a decrease in renewal rates, decrease in the
return of the brand investment campaign and an increase in the discount rate, that would trigger
impairment:
SENSITIVITY SCENARIO FOR KEY ASSUMPTIONS
CHANGE
ADDITIONAL IMPAIRMENT
Long term growth rate (terminal value)
Post tax discount rate
Renewal rate reduced by 10% in 2023 on a monthly basis
Return on brand investment in 2023 and 2024 reduced from
$1.50 to $1.00 per dollar of investment.
Fixed Operating Expenditure
0.5% decrease in the long-
term growth from 2% to 1.5%
1% increase in the discount
rate from 14% to 15%
10% decrease each month
in 2023
Reduce return on
$4 million brand spend through
2023 and 2024
10% increase in fixed costs in
2023 and 2024.
$’000
338
1,070
5,295
11,660
2,121
79
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
TOTAL CURRENT UNSECURED LIABILITIES
CONSOLIDATED GROUP
2022
$’000
2021
$’000
2,110
2,513
4,623
2,903
3,078
5,981
8080
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
CONSOLIDATED GROUP
2022
$’000
2021
$’000
910
910
310
310
1,220
1,055
1,055
1,123
1,123
2,178
LEASE
LIABILITIES
$’000
3,889
166
(1,827)
(50)
2,178
91
(1,049)
1,220
CURRENT
Lease liabilities
TOTAL CURRENT LEASE LIABILITIES
NON-CURRENT
Lease liabilities
TOTAL NON-CURRENT LEASE LIABILITIES
TOTAL LEASE LIABILITIES
CONSOLIDATED GROUP
Balance as at 1 July 2020
Interest charges
Repayments (Including interest)
Rent concessions or deferred rents
BALANCE AS AT 30 JUNE 2021
Interest charges
Repayments (Including interest)
BALANCE AS AT 30 JUNE 2022
81
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
New Gold Coast Holdings facility
NZ Business cashflow loan
TOTAL NON-CURRENT BORROWINGS
TOTAL BORROWINGS
CONSOLIDATED GROUP
2022
$’000
2021
$’000
1,208
184
633
2,025
6,097
28
6,125
8,150
1,208
2,800
571
4,579
-
28
28
4,607
8282
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
INTEREST
BEARING LOAN
ADDITIONAL
GROWTH
OPERATIONAL
FACILITY
TRANSFORM-
ATIONAL
CAPITAL FACILITY
NEW
GOLD COAST
HOLDINGS
LOAN FACILITY
NZ BUSINESS
CASHFLOW
LOAN
$’000
$’000
Facility limit
Unused facility
500
-
-
-
$’000
1,200
-
$’000
22,5002
16,403
$’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
9.7 per month
2 per month
The line fees have
been replaced by a
fixed monthly admin
fee.
N/A
Admin fees
N/A
N/A
N/A
36.5 per month
N/A
Maturity date
30/09/2020
31/12/2021
11/02/2022
31/12/2024
19/07/2025
Security
Security over
all the Group’s
present and
future property
Security over
all the Group’s
present and
future property
Second ranking
security over all the
Group’s present and
future property
Second ranking
security over all the
Group’s present and
future property
Unsecured
Drawn down as at
1 July 2021
Drawn down
Interest expenses
Line fees
Admin fees
Interest repaid
Line fees repaid
Admin fees repaid
Loan converted
to equity
Drawn down as at
30 JUNE 2022
571
-
62
-
-
-
-
-
-
2,800
1,208
728
61
29
-
-
-
-
(3,434) 3
-
157
24
-
(157)
(24)
-
-
-
5,680
326
34
73
(16)
-
-
-
28
-
-
-
-
-
-
-
-
6334
184
1,2085
6,097
28
1.
2.
3.
4.
5.
3% per annum, no interest charge on the loan if full repayment is made on or before 17 July 2022.
The loan facility increased from $5 million to $22.5 million on 23 May 2022 upon gaining shareholder approval at the EGM.
See note 19, Issued Capital, for more details.
The facility limit has been exceeded due to additional interest being charged while the group renegotiates the repayment terms of this facility.
The facility limit has been exceeded due to monthly interest payments being made after the end of the month.
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.
83
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Accordingly, $19.3 million including accrued interest on the convertible loan was converted to equity
with the issuance of 410,643,766 ordinary shares (4.7cent per share) in the Company. $0.5 million 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 $0.63 million (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 currently
being finalised and is expected to be repaid in the coming weeks using funds from the NGCH facility.
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 opted to convert the remaining amount of $3.4 million 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.
The final line fees of $184k have been repaid on 15 July 2022 to extinguish this loan facility.
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 2022 this loan facility has been fully
drawn down.
The Company finalised the renegotiation of the repayment date for the Transformational Capital facility
loan with Skybound Fidelis Investment limited as trustee for the Skybound Fidelis Credit Fund in
September 2022. The date was changed from 11 February 2022 to 31 December 2024.
New Gold Coast Holdings Limited Loan Facility
New Gold Coast Holdings Limited (NGC)’s, a related party of Suzerain, provided a $5 million Loan
facility that was approved on 3 June 2021. The funds have been predominantly 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. During the AGM on 20 January 2022, the
resolutions were passed to enter a second ranking security deed (ranking behind Suzerain). During
the EGM on 23 May 2022, IncentiaPay Ltd gained shareholder approval to enter a convertible loan
deed with New Gold Coast Holdings Limited which extended the total facility to $22.5 million and also
deferring the repayment date to 31 December 2024. As at 30 June 2022 an amount of $6.09 million was
utilised, with a further $16.4 million available.
NZ Business Cashflow Loan
The Group applied for and was granted a one-off loan provided by the New Zealand government in July
2020 to support New Zealand business during the Pandemic. The loan was interest free for the first two
years but will start attracting interest at 3% per annum as of 20 July 2022. The loan needs to be repaid
by 19 July 2025.
8484
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022 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
YEAR ENDED 30 JUNE 2021
Balance as at 1 July 2020
Revenue deferred
Revenue recognised
BALANCE AS AT 30 JUNE 2021
YEAR ENDED 30 JUNE 2022
Balance as at 1 July 2021
Revenue deferred
Revenue recognised
BALANCE AS AT 30 JUNE 2022
CONSOLIDATED GROUP
2022
$’000
2021
$’000
3,163
3,163
78
78
3,241
4,526
4,526
32
32
4,558
DEFERRED
REVENUE
$’000
6,569
9,248
(11,259)
4,558
4,558
9,047
(10,364)
3,241
The contract liabilities primarily relate to cash receipts from Membership sales, for which revenue is
recognised over time. The reduction in the above is mainly due to the continued impact of the COVID-19
pandemic which caused lockdowns in Sydney & Melbourne in the first half of the financial year and the
Omicron variant that caused headwinds for Membership sales in the 2nd half of the financial year.
85
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
8686
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
ANALYSIS OF TOTAL PROVISIONS
Current
Make good provision
Employee benefits
Total current provisions
Non-current
Make good provision1
Employee benefits
Total non-current provisions
TOTAL PROVISIONS
1.
The lease concludes in October 2023.
BALANCE AS AT 30 JUNE 2021
Balance as at 1 July 2021
Released provisions1
BALANCE AS AT 30 JUNE 2022
2022
$’000
2021
$’000
-
829
829
78
46
124
953
63
979
1,042
73
59
132
1,174
MAKE GOOD
PROVISION
$’000
136
136
(58)
78
1. Make good provision for the Entertainment Publications offices were released as majority of the leases ended in July 2021 and no claims for
make good were received from the landlord. The provision currently reflects the net present value of expected make good obligations at the
remaining properties.
87
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Note 19 | Issued capital
Ordinary shares - fully paid on issue
1,231,279,015
867,002,904
132,143
122,984
CONSOLIDATED GROUP
2022
SHARES
2021
SHARES
2022
$’000
2021
$’000
INP has no limit to its authorised share
capital.
Movements in ordinary share capital
DATE
NUMBER OF
SHARES
ISSUE PRICE
$
Ordinary shares at beginning of the year
655,940,612
Issues during the year:
BALANCE AS AT 30 JUNE 2021
Ordinary shares at beginning of the year
Issues during the year:
9 Oct 2020
19 Oct 2020
2 February 2021
Less, costs of
issues
23 Sep 20211
8 Dec 20212
17 Dec 20213
19 Jan 20224
3 Feb 20225
18 Oct 20196
17 Jan 20227
Less, costs of
issues
3,066,667
0.03
0.03
0.03
-
20,451,096
187,544,529
-
867,002,904
867,002,904
104,740,097
0.03
189,186,349
45,817,543
19,545,455
4,986,667
0.02
0.02
0.02
0.03
0.02
0.02
$’000
116,026
92
531
6,377
(42)
122,984
122,984
3,448
4,162
1,008
431
150
22
105
-
-
(167)
BALANCE AS AT 30 JUNE 2022
1,231,279,015
132,143
1. On 23 September 2021, Suzerain, the Group’s largest shareholder and a related party, opted to convert $3,448,486, representing the remainder
of their convertible loan into 104,740,097 ordinary shares at $0.033 per share.
2. On 8 December 2021, pursuant to the announcement on 10 November 2021, ordinary shares were issued under an entitlement offer at $0.022
per share to existing shareholders. Suzerain, as the Group’s largest shareholder and a related party, participated in this rights issue.
3. On 17 December 2021, pursuant to the announcement on 10 November 2021, ordinary shares were issued under the Top-up facility. The shortfall
was issued to third parties at $0.022 per share.
4. On 19 January 2022, the group issued 19,545,455 ordinary shares as an oversubscription of the recent Top-Up facility which was announced to
the market on 17 December 2021.
5. On 3 February 2022, 4,986,667 ordinary shares were issued to the former Chief Executive Officer, Henry Jones, as per the terms in his Deed of
Release. For more detail, please refer to Note 20 under share-based payments - Loan funded shares.
6. On 18 October 2019, 960,000 ordinary shares were issued to employees upon winding up of the company ESOP. These shares were previously
part of the 2018 LFS held in trust for the CEO & COO/CFO and incorrectly allocated at no value in the Issued Capital note of the June 2018
annual report. This entry serves as a correction.
7. On 17 January 2022, 4,754,285 ordinary shares were issued to the group’s chairman, Stephen Harrison, as remuneration for consultancy and
advisory services. These shares were previously part of the 2018 LFS held in trust for the CEO & COO/CFO and incorrectly allocated at no value
in the Issued Capital note of the June 2018 annual report. This entry serves as a correction.
8888
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
Employee and Executive Share Based Schemes
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 during the previous reporting period ending 30 June 21. No
further shares were issued under this arrangement in the current reporting period ending 30 June 2022.
The Board also implemented a Loan Funded Share Scheme being a three-year long-term incentive plan
for the former CEO and current CFO, which will vest over a three-year period. Vesting conditions relate
to achieving the FY21 Board approved budget, and for the FY22 and FY23 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. The former CEO has since left
the group and his entitlements under the LFS scheme has been modified and settled. No further LFS
arrangements have been entered into.
Additionally, the Board implemented an Employee Share Scheme for senior management and executive
directors, which 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 years
ended June 2021 or June 2022.
89
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022 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 in substance option and share
based payments were measured using a Monte Carlo simulation model.
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 2020
Amortised during the period1
Movement during the period
BALANCE AS AT 30 JUNE 2021
Balance as at 1 July 2021
Amortised during the period1
Forfeited during the period2
Movement during the period2
BALANCE AS AT 30 JUNE 2022
CONSOLIDATED GROUP
SHARE BASED
PAYMENTS
RESERVE
FOREIGN CURRENCY
TRANSLATION
RESERVE
$’000
$’000
TOTAL
$’000
-
362
-
362
362
201
(227)
(169)
167
377
-
(6)
371
371
-
-
(49)
322
377
362
(6)
733
733
201
(227)
(218)
489
1.
During financial year ending June 2021, 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.
2. Henry Jones departed as CEO on 24 December 2021, all tranches, except tranche 2, related to the Loan Funded Share Scheme were forfeited
and are under the control of Group. Under the terms of an agreement, Tranche 2 shares were awarded to Henry Jones as part of a modification
to the original loan funded deed from the 2021 financial year and will be allocated in February 2022. The modification has been fair valued
through the profit and loss as at 30 June 2022.
9090
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Share based payments - Loan funded shares
There were 38,771,277 options issued to key management personnel as part of Loan Funded Share
(LFS) arrangements approved by shareholders at the AGM in December 2020. Following the departure
of Henry Jones in December 2021, the scheme applies only to Ben Newling, whereby 11,585,043 options
are on issue at 30 June 2022. The terms of the 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;
2. 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,
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;
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.
Under the settlement terms agreed between the Company and the former CEO, Henry Jones, Tranches
1, 3, 4 & 5 of the Executive Loan Shares (being 22,199,567 Executive Loan Shares) would be delivered to
the Company (or its nominee) in full and final discharge of Tranches 1, 3, 4 & 5 of the Executive Loan.
The Company would in turn deem that Tranche 2 of the Executive Loan Shares (being 4,986,667
unvested Executive Loan Shares) will vest with the Employee. The Company would forgive Tranche 2 of
the Executive Loan (being for the sum of $149,600) so that no amounts are owing by the Employee to
the Company under Tranche 2 of the Executive Loan.
Under the applicable accounting standards, the LFS shares are accounted for as options, which give rise
to share based payments.
91
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
During the 2022 financial year, changes were accounted for through the share-based payments reserve
due to the continued amortisation for Ben Newling and the adjustments for the departure of Henry
Jones and the associated modified allocation.
KMP
Henry Jones1
Ben Newling
HELD ON
1 JULY 2021
FORFEITED
GRANTED AS
COMPENSATION
HELD ON
30 JUNE 2022
27,186,234
(22,199,567)
(4,986,667)
-
11,585,043
-
-
11,585,043
Total
38,771,277
(22,199,567)
(4,986,667)
11,585,043
VESTED AND
EXERCISABLE AS OF
30 JUNE 2022
-
1,522,679
1,522,679
1.
Henry Jones forfeited Tranche 1 share allocation that had already vested at the time of his termination, amounting to 3,573,220 shares. Tranche
2 share allocation of 4,986,667 shares, was transferred and formally issued under the provisions of a modified allocation agreement, approved
by the Board. The remaining shares, being tranches 3, 4 and the remaining shares in Tranche 5 amounting to 18,626,347 shares, were cancelled.
Details of options issued to Ben Newling and their terms as at 30 June 2022 are set out below:
Ben Newling
TRANCHE
NO. OF
OPTIONS
ISSUED VALUE
$
NO. VESTED
AND
EXERCISABLE
30 JUNE 2022
FAIR VALUE
OF OPTIONS
$
1
2
3
4
5
1,125,000
22,386
1,125,000
22,386
2,125,000
2,125,000
2,125,000
-1
63,761
41,171
-1
-2
-3
-
22,957
10,965
4,085,043
69,346
397,679
51,947
Total Shares
11,585,043
196,664
1,522,679
108,255
1.
Shares have been carried over to Tranche 3 as vesting condition not satisfied.
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.
The price hurdle test for tranche 2 and 3 shares will be performed on 30 September 2022. Tranche 2 shares amounting to 2,125,000 and a
proportional allocation of tranche 5 shares of 2,532,727 is at risk of expiry on 30 September 2022.
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.
9292
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
The fair value of the loan funded shares issued on 9 October 2020 has been determined using a Monte
Carlo simulation model which includes the following inputs:
TRANCHE 1
TRANCHE 2
TRANCHE 3
TRANCHE 4
TRANCHE 5
Grant date
Vesting date
Maturity date
9-Oct-20
9-Oct-20
9-Oct-20
9-Oct-20
9-Oct-20
9-Oct-20
30-Jun-21
30-Sept-21
30-Sept-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
Risk free rate/G Bond
rate
0%
114%
0.138
0.029
0%
114%
0.138
0.029
0%
114%
0.138
0.029
0%
114%
0.138
Vesting condition
Grant date
Budget FY 2021
Share price hurdle
of $0.10
Share price hurdle
of $0.15
0.029
0%
114%
0.138
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.
Henry Jones had a modification of options during the year for tranche 2 which had to get re fair valued.
Below were the revaluation inputs:
TRANCHE 2 - ORIGINAL
VALUATION
TRANCHE 2 - REVALUED
AT SETTLEMENT DATE
Grant date
Vesting date
Maturity date
Share price at grant date
Dividend yield
Volatility
Risk free rate/G Bond rate
9-Oct-20
30-Jun-21
31-Oct-23
0.029
0%
114%
0.138
9-Oct-20
30-Jun-21
29-Oct-21
0.029
0%
124%
0.472%
Vesting condition
Budget FY 2021
Deemed vested per deed
of release and free shares
given
93
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Note 21 | Key Management Personnel compensation
The total remuneration paid to KMP of the Group during the year was as follows:
Short-term employee benefits
Post-employment benefits
Termination payment benefits
Share based payments1
TOTAL KMP COMPENSATION
CONSOLIDATED GROUP
2022
$’000
2021
$’000
1,056
53
163
59
1,331
826
40
-
362
1,228
1.
Shared based payments for the current reporting period is a combination of shares issued to the Group’s chairman for consulting services of
$105k (Refer to note 19) , the reversal of previously recognised share-based payment expenses relating to the former CEO of ($254k), shares
issued to the former CEO as part of his deed of agreement on his departure of $150k, and movement in the fair value of the loan funded shares
for the Group’s CFO, Ben Newling, of $58k.
Note 22 | Auditor’s remuneration
Auditing or reviewing the financial statements
Taxation services - compliance
Other services
TOTAL
CONSOLIDATED GROUP
2022
$’000
2021
$’000
255
12
1
268
257
12
2
271
9494
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
Entertainment Seamless Rewards Pty Ltd2
OWNERSHIP INTEREST
HELD BY THE GROUP
PRINCIPAL PLACE
OF BUSINESS
2022
%
2021
%
Australia
New Zealand
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
0
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.
2.
The entity has been set up as the vehicle through which to operate the Group’s new card linked business.
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.
95
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2022
$’000
2021
$’000
(8,315)1
(8,315)1
(6,726)
(6,726)
1,568
24,918
26,486
3,675
8,370
12,045
132,143
150
(117,852)1
14,441
1,562
21,779
23,341
8,522
1,255
9,777
122,983
345
(109,764)1
13,564
1.
The movement between accumulated losses from 2022 & 2021 do not tie back to the total loss as shown in the Profit and loss. This relates to
the $227k forfeited options for the former CEO, Henry Jones. See note 20 for further details.
Details of the contingent assets and liabilities of the Group are contained in note 27. Details of the
contractual commitments are contained in note 26.
Deed of cross guarantee
IncentiaPay Limited, Entertainment Publications of Australia Pty Ltd, Entertainment Digital Pty Ltd and
Entertainment Seamless Rewards 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.
9696
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Set out below is a consolidated balance sheet as of 30 June 2022 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
2022
$’000
2021
$’000
610
1,185
161
1,413
3,369
102
503
22
12,322
12,949
16,318
4,212
910
2,023
2,700
805
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
10,650
15,825
1,801
310
6,096
68
123
8,398
19,048
(2,730)
132,141
489
1,352
1,072
28
32
59
2,543
18,368
4,135
122,983
687
(135,360)
(119,535)
(2,730)
4,135
See note 25 for the Consolidated Statement of Profit or Loss for the year ended 30 June 2022 of the parties to the Deed of Cross Guarantee. All entities
incorporated in Australia are the parties of Deed of Cross Guarantee.
97
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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 2022
Revenue
AUSTRALIA
$’000
NEW
ZEALAND
$’000
TOTAL
$’000
Revenue from Contracts with customers
18,037
1,753
19,790
Other Income
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
123
676
30
1
-
-
124
676
30
18,866
1,754
20,620
(9,661)
(12,216)
(1,128)
(3,615)
(919)
(7,831)
(35,370)
(16,504)
(490)
(380)
(43)
-
-
32
(881)
873
(10,151)
(12,596)
(1,171)
(3,615)
(919)
(7,799)
(36,251)
(15,631)
Segment total assets
16,319
537
16,856
Segment total non-current assets
12,949
-
12,949
Segment total liabilities
17,251
936
18,187
9898
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
Major customers
17,017
1,481
18,498
The Group has no major customers with all customers contributing small balances to revenues.
Note 26 | Capital commitments
Capital Commitments
The group has a $250K capital commitment whereby it will purchase all of the underlying source code
in the Seamless Rewards platform.
Note 27 | Contingent liabilities and contingent assets
Security deposit
The parent entity has given the following guarantees as at 30 June 2022:
• Lease of the Sydney office space, $0.5 million.
• Guarantee for credit cards facility, $0.1 million.
99
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
CONSOLIDATED GROUP
2022
$’000
2021
$’000
978
1,328
576
2,882
4,623
1,220
8,150
13,993
3,228
1,523
855
5,606
5,981
2,178
4,607
12,766
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.
100100
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
CONTRACTUAL CASH FLOWS
WITHIN 1 YEAR
1-5 YEARS
> 5 YEARS
TOTAL
2022
CARRYING
VALUE
2021
CARRYING
VALUE
$’000
$’000
2022
$’000
2021
2022
2021
2022
2021
2022
2021
$’000
$’000
$’000
$’000 $’000
$’000
$’000
MATURITY
ANALYSIS
Financial
assets
Cash
Trade debtors
Other current
assets
Financial
liabilities
Trade
and other
payables
Lease
liabilities
978
1,328
576
3,228
978
3,228
-
1,523
1,226
1,035
102
488
855
576
855
-
-
-
-
-
-
-
-
-
-
978
3,228
1,328
1,523
576
855
(4,623)
(5,981)
(1,261)
(2,316)
(11,314)
(4,744)
-
-
-
(4,623)
(5,981)
(4,623)
(5,981)
(1,220)
(2,178)
(950)
(1,055)
(311)
(1,261)
Borrowings
(8,150)
(4,607)
(3,552)
(4,716)
(7,762)
(28)
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.
FAIR VALUE
30 JUNE 2022
ASSETS AND
LIABILITIES
AT CARRYING
VALUE
ASSETS AND
LIABILITIES
NOT AT FAIR
VALUE
ASSETS AND
LIABILITIES
AT FAIR
VALUE
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
Financial assets
Cash
Trade debtors
Other receivables
Other current assets
Financial liabilities
Trade and other
payables
Lease liabilities
978
665
663
576
978
665
663
576
(4,623)
(4,623)
(1,220)
(1,220)
Borrowings
(8,150)
(8,150)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
978
665
663
576
(4,623)
(1,220)
(8,150)
101
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
30 JUNE 2021
$’000
Financial assets
Cash
Trade debtors
Other receivables
Other current assets
Financial liabilities
Trade and other
payables
Lease liabilities
FAIR VALUE
ASSETS AND
LIABILITIES
AT CARRYING
VALUE
ASSETS AND
LIABILITIES
NOT AT FAIR
VALUE
ASSETS AND
LIABILITIES
AT FAIR
VALUE
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3,228
500
1,023
855
3,228
500
1,023
855
(5,981)
(5,981)
(2,178)
(2,178)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,228
500
1,023
855
(5,981)
(2,178)
(4,607)
Borrowings
(4,607)
(4,607)
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.
102102
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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. $16 million 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.
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.
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 $8.1 million disclosed in the 2022 borrowings time band is $3.5 million, of which $1.5
million is interest, which is ‘within 1 year’. Two of these loans are past maturity date and their repayment
terms are currently being renegotiated. See note 16 for more details. Management monitors rolling
forecasts of the Group’s liquidity reserve and cash and cash equivalents on the basis of expected
cash flows.
103
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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.
• Renegotiating maturity dates of key funding lines of credit to ensure liquidity is managed within
acceptable and planned thresholds.
i. Financing arrangements
New Gold Coast Holdings Limited, an associate of Suzerain has provided the Group with an additional
$17.5 million loan, thereby extending the facility to $22.5 million. This has been approved at the EGM held
on 23 May 2022 and is available at year end. The funds will be used to enhance the Group’s technology
capabilities. Earlier in the year, during the AGM on 20 January 2022, the resolutions were passed to enter
into a second ranking security deed (ranking behind Suzerain). See note 16 for more details.
ii. Maturities of financial liabilities
Interest bearing loan
As at 30 June 2022, the interest bearing loan with Suzerain matured on 30 September 2020. Updated
repayment terms are currently being finalised and the facility is expected to be repaid in the coming
weeks using funds from the NGCH facility. See note 16.
Additional growth operational facility
As at 30 June 2022, the additional growth capital facility with Suzerain matured on 31 December 2021
and has been fully repaid on 15 July 2022. See note 16.
Transformational capital facility
As at 30 June 2022, the Transformational capital facility with Skybound matured on 11 February 2022.
The Company is currently busy renegotiating the repayment date and it is expected to be deferred to
December 2024. See note 16.
New Gold Coast Holdings Limited Loan facility
As at 30 June 2022, the loan facility with New Gold Coast Holdings Limited will mature on 31 December
2024. See note 16.
104104
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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 2022 as $1.8 million 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
2022
NZD
$’000
46
(179)
2021
NZD
$’000
31
(180)
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 2022
+/- 0.5% in foreign exchange rates
Year ended 30 June 2021
+/- 0.5% in foreign exchange rates
d. Interest rate risk
PROFIT
$’000
EQUITY
$’000
21
13
70
51
The interest rate relating to the borrowings with Suzerain is capitalised at a fixed rate of 10% per annum
and is expected to be repaid in the coming weeks.
Interest relating to the borrowings with Skybound is paid monthly at a fixed rate of 12.5% and repayable
by 31 December 2024.
105
Financial Statements
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
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
Travel commission7
Purchases of services
Rent3
Customer service4
Consulting fees8
Technology Consultancy5
Communication Infrastructure6
CONSOLIDATED GROUP
2022
$’000
2021
$’000
-
56
3
11
252
154
17
21
44
92
-
13
324
-
-
-
1.
2.
Sale of Entertainment Memberships to Fair Go Finance, a related entity of Suzerain.
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.
6. Communication network costs on charged from Leisurecom Group Pty Ltd for Harrington Street location
7.
Travel commission from Leisurecom Group Pty Ltd for Entertainment Travel bookings with accommodation venues previously under
MyBookings
8. Consulting services provided by Stephen Harrison settled in both cash and the issue of shares. See note 19 for details associated with the issue
of shares and the remuneration report for additional details.
106106
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Outstanding balances arising from sales/purchases of goods and services:
Current payables
Leisurecom Group Pty Ltd1
1 Customer service and office space provided by a related entity of Suzerain.
Outstanding balances arising from loan agreements:
Borrowings
Interest bearing loan
Additional growth operational facility
Transformational capital facility
New Gold Coast Holdings Limited
CONSOLIDATED GROUP
2022
$’000
2021
$’000
1
29
CONSOLIDATED GROUP
2022
$’000
2021
$’000
633
184
1,208
6,097
574
2,800
1,208
-
Transactions between the Company and controlled entities include loans, management fees and
interest, which are eliminated on consolidation. Significant loan and capital related transactions
between the Group and related parties include the following:
• Suzerain, Skybound and NGCH, related parties to Jeremy Thorpe (Director) and Dean Palmer
(Director), have provided a total of $34 million loan facilities to the Group. During the period, the
Group drew down $6.4 million of the line of credit facility. See note 16 for additional detail.
• Suzerain opted to convert the remainder of their convertible loan of $3.4 million into 104,740,097
ordinary shares on 23 September 2021.
• Suzerain participated in the rights issue on 8 December 2021, acquiring 162,612,401 shares,
which was announced to the market on 10 November 2021. See note 19 to the annual financial
statements for additional detail.
107
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Note 30 | Joint arrangements
During the year ended 30 June 2022, the Group entered a joint arrangement with Spineka Group
Pty Ltd and Junovate Pty Ltd to set up and operate an online wine marketplace, jointly and equally
controlled by the three participants, primarily via a contractual arrangement. Consequently, the Group
has classified this joint arrangement as a “joint operation”. The joint operation is currently in set-up and
initiation phase and is yet to be launched.
In a joint operation, the Group has rights to the assets, and obligations for the liabilities relating to the
arrangement. In relation to the Group’s interest in the joint operation, the Group recognises: its share of
assets and liabilities; commission revenue from successful transactions the sale of its share of the output
and its share in any revenue generated from the sale of the output by the joint operation; and its share
of expenses. All such amounts are measured in accordance with the terms of the arrangement, which is
usually in proportion to the Group’s interest in the joint operation. Each participant has an equal share
of the joint operation.
Assets held in the joint operation subject to restrictions are as follows:
Current Assets
Prepayments2
Total1
2022
$’000
2021
$’000
120
120
-
-
1.
2.
The Group does not have the right to sell individual assets used in the joint operation without the unanimous consent of the other participants.
The assets in the joint operation are also restricted to the extent that they are only available to be used by the joint operation itself and not by
other operations of the group.
Prepayments include payments to Junovate Pty Ltd and Spineka Group Pty Ltd for services, to be settled from future profit distributions under
the provisions of the joint arrangement.
IncentiaPay has funded $0.5 million during the current reporting period ending 30 June 2022.
Note 31 | Events after the reporting period
The Group announced on 25 July 2022 a significant restructure and cost reduction program, with over
$4 million of annualised resource related costs being removed.
The Company finalised the renegotiation of the repayment date for the Transformational Capital facility
loan with Skybound Fidelis Investment limited as trustee for the Skybound Fidelis Credit Fund in
September 2022. The date was changed from 11 Feb 2022 to 31 Dec 2024.
108108
Incentiapay Ltd and Controlled EntitiesNotes to the financial statements for the year ending 30 June 2022
Directors’
Declaration
109
109
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 41 to 108, 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 2022 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 Financial 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
110
Independent
Auditor's Report
111
111
Independent Auditor’s Report
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
2022 and of its financial performance
for the year ended on that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2022;
• 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; and
• Directors’ Declaration.
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
112
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
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;
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.
2
113
Independent Auditor’s Report
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; and
Software assets.
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 ($12.322 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
73% of total assets).
We focused on the significant forward-looking
assumptions the Group applied in its value-in-use
model, including:
•
forecast cash flows – the Group incurred a loss
during the year largely as a result of its revenues
continuing to be impacted while demand for its
products and services recovers from market
conditions experienced due to Covid-19 (most
notably in membership subscriptions). These
conditions increase the possibility of goodwill
and other intangible assets being impaired, plus
the risk of inaccurate forecasts or a significantly
wider range of possible outcomes for us to
consider. We focused on the expected rate of
recovery for the Group, and what the Group
considers as its future business model, when
assessing the feasibility of the Group’s forecast
cashflows.
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
increased risk of
impairment. This drives
additional audit effort specific to their feasibility
and consistency of application to the Group’s
strategy; and
•
Working with our valuation specialists, our
procedures included:
• We assessed the Group’s determination of its
CGUs in light of its future business model and
consistency with the assumptions used in cash
flow forecasts and 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
continued
in membership
subscriptions as a result of Covid-19, as well as
downturn
3
114
of
following
completion
the change in anticipated cash flow cycles for
what the Group considers its future business
model
its
transformation program. We assessed key
assumptions such as the expected rate of
recovery
for consistency with the Board
approved plan and strategy and our knowledge
of the business, industry and recent actual 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
impacts a slower rate of
recovery 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
and
and
industry
considered differences
the Group’s
operations. We used our knowledge of the
its past and current performance,
Group,
business
industry
customers,
experience to assist with this;
expectations
for
trends
and
and
• 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.
4
• discount rate – this is complicated in nature and
varies according
the conditions and
to
environment the specific Cash Generating Unit
(CGU) is subject to from time to time, 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.
intangible assets
The Group’s model used to perform its annual testing
of goodwill and other
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 its consistent application.
The Group changed the composition of its CGUs
necessitating our consideration of the Group’s
determination of CGUs, based on the smallest group
of assets to generate largely independent cash
inflows.
In addition to the above, the Group recorded an
impairment charge of $3.615 million against
goodwill and intangible assets within the
Entertainment Business CGU increasing the
sensitivity of the model to small changes. This
further increased our audit effort in this key audit
area.
115
Independent Auditor’s Report
Software assets ($1.665 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 accounting for the
Group’s software assets during the year, given the
extent and nature of judgements and estimates
involved in the identification and allocation of costs
capitalised. Software assets include technology and
software assets of $0.914 million and software under
development assets of $0.751 million as outlined in
note 13. These assets relate to the Group’s
technology transformation projects which have
resulted in $800k of additions capitalised during the
financial year and $647k of transfers to completed
projects during the financial year.
these projects given
We focused on the Group’s process for calculating
the amount of internally generated costs to be
capitalised under
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
Technology
and
Transformation Projects; and
appropriate
• Determining when 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.
In addition to the above, the Group recognised
$1.181 million of impairment during the financial
year for software assets which became redundant
due to investment in newer technology solutions.
Given the rapid changes in technology and market
innovations, there remains a risk that additional
impairment indicators exist for software assets. We
therefore focused on the existence of additional
indicators, particularly for expected changes in the
Our procedures included:
• Assessing the appropriateness of the Group’s
accounting policies for the recognition and
measurement of software assets 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 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 against internally approved timesheets to
challenge the Group on its estimates of time
allocated to development tasks as opposed to
other operational tasks which would not meet
the capitalisation criteria; and
the
overall
Group,
projects
challenging
• Testing the allocation of capitalised costs into
the
by
different
assumptions applied by the Group to underlying
work programs. We also used our knowledge of
the
technology
transformation project plan, agreements and
invoicing patterns from key suppliers, and our
industry experience. For the projects 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 projects which remain under
development at year end and expected to be
available
future periods, we
in
challenged the Group’s assessment of 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.
for use
5
116
manner in which the Group’s software assets could
be used.
Additionally, we assessed the factors considered by
the Group regarding impairment of software assets
and whether any additional 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 software assets 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.
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.
6
117
Independent Auditor’s Report
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.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
IncentiaPay Limited for the year ended 30
June 2022, complies with Section 300A of
the Corporations Act 2001.
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 29 to 38 of the Directors’ report for the year ended
30 June 2022.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Jeffrey Frazer
Partner
Gold Coast
30 September 2022
7
118
ASX Additional
Information
119
119
ASX Additional Information
ASX Additional Information
As at 29 August 2022
Distribution of equitable securities
Analysis of the number of equitable security holders by size of holding:
RANGE
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
TOTAL
TOTAL HOLDERS
SECURITIES
% ISSUED CAPITAL
134
189
87
484
217
1,110
26,785
559,856
695,505
18,774,435
1,245,007,044
1,265,063,625
0.00
0.04
0.05
1.48
98.41
100
*Including Loan Funded Shares in escrow.
Unmarketable parcels
The number of security investors holding less than a marketable parcel of 38,461 securities
($0.013 on 29/08/2022) is 708 and they hold 8,009,910 securities.
Substantial holders
RANK NAME
CURRENT BALANCE % ISSUED CAPITAL
1
2
Suzerain Investments Holdings Limited
861,845,725
68.13
Australia Fintech Plus Pty Ltd
65,724,825
5.20
120
Top 20 Holders of fully paid ordinary shares
The names of the twenty largest security holders of quoted equity securities are listed below:
RANK
NAME
26 AUG 2022
%IC
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
SUZERAIN INVESTMENTS HOLDINGS LTD
861,845,725
68.13
AUSTRALIAN FINTECH PLUS PTY LTD
BNP PARIBAS NOMS PTY LTD
MR HENRY MICHAEL HOY JONES
AFRICAN KLIP PTY LTD
65,724,825
41,597,364
27,186,234
12,809,091
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
12,703,730
IT’S TAKEN PTY LTD
BEN NEWLING
CITICORP NOMINEES PTY LIMITED
12,444,444
11,585,043
10,266,635
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
8,661,983
YOUTH TRAVEL PTY LTD
MR DEVEN HARRISON
EVEREST MB PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR DAVID RICHARD PALMER
8,644,117
7,684,167
7,518,000
7,400,546
6,506,132
MR BRIAN ROBERT HALL & MRS LEIGH ANNE HALL
6,500,000
5.20
3.29
2.15
1.01
1.00
0.98
0.92
0.81
0.68
0.68
0.61
0.59
0.58
0.51
0.51
MR LAWRENCE ALLAN PAPPIN
6,363,636
0.50
MR BILAL AHMAD
NETWEALTH INVESTMENTS LIMITED
6,000,000
5,323,509
4,754,285
0.47
0.42
0.38
20
STEPHEN HARRISON
121
ASX Additional Information
Convertible Loan Security
The Company has one convertible loan security on issue that is unquoted and currently held by New
Gold Coast Holdings Limited, an associate of the Company’s majority shareholder, Suzerain Investments
Holdings Limited. There are no voting rights attached to the convertible loan security. For further
information regarding the terms of the convertible loan security, please refer to the Appendix 3B,
Appendix 3G and s708A(12C)(e) Cleansing Notice lodged by the Company to ASX on 23 May 2022.
Voting rights
The Company has 1,265,063,625 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 33,784,610 shares in voluntary escrow until 21 October 2023
On market by back
There is currently no on-market share buy back
122
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
Auditor
Legal advisers
Bankers
Link Market Services
ACN 083 214 537
Level 12, 680 George Street
Sydney NSW 2000
+61 2 8280 7100
KPMG
Level 31, Tower Three, International Towers Sydney
300 Barangaroo Avenue, Sydney, NSW 2000
Sundaraj & Ker
Level 36, Australia Square
264 George Street
Sydney NSW 2000
Commonwealth Bank of Australia
Level 3, 240 Queen Street
Brisbane QLD 4000
Stock exchange listing
IncentiaPay Limited shares are listed on the Australian
Securities Exchange (ASX code: INP)
Website
www.incentiapay.com
The Company’s Corporate Governance Statement, which was approved by the Board at the same time as
the Annual Report, sets out the corporate governance practices that were in operation during the financial
period and identifies and explains any ASX Corporate Governance Principles and Recommendations that
have not been followed. The Corporate Governance Statement for the year ended 30 June 2022 can be
found on the Company’s website at https://www.incentiapay.com/governance/.
123
Corporate Directory
Level 6, Suite 7, 3 Spring Street
Sydney NSW 2000 Australia
Email: info@incentiapay.com
Phone: (02) 8256 5300
www.incentiapay.com