Annual Report
•
FOR THE YEAR ENDED 30 JUNE 2023
2023
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
29-year history providing one of the
largest portfolios of lifestyle offers
and content in the market.
New Zealand, with headquarters in Sydney
There are over
50 Entertainment employees
working across Australia and
New Zealand, with
headquarters in Sydney.
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.
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.
Members
A choice of Memberships provide access to
thousands of 2-for-1 and up to 50% off offers
from over 6,700 business partners in dining,
travel, activities, and retail across over 13,000
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.
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.
Seamless Rewards
A unique B2B2C Personalised Card Linked
Offers (PCLO) platform enabling CLO-ready
content services to CLO based loyalty
programs. Entertainment technology provides
seamless integration for the cash back
programs across merchants offers, card issuers,
and payment networks.
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1. Chairman’s Introduction
2. CEO’s Review
3. Financial Review
4. The Leadership Team
5. Business Risks
6. Directors’ Report
7. Remuneration Report
8. Auditor’s Independence Declaration
9. Financial Statements
10. Directors’ Declaration
11. Independent Auditor’s Report
12. ASX Additional Information
13. Corporate Directory
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Chairman’s
Introduction
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Dear Shareholders,
On behalf of the Board of Directors of IncentiaPay, I am pleased to present to you the 2023 Annual Report.
The past financial year has seen IncentiaPay make strong progress in the following key areas:
• overarching business transformation to align the Company with its key objectives;
•
•
rebuild the technology platform for our two core businesses; and
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 rewards, benefit and engagement.
Continuing our strong history of supporting the community, we made contributions of in excess of $1.25m to charities and not-
for-profit organisations during FY23. This is something that we are very proud of and remains a core value of our business now
and into the future.
Our new business, a B2B2C platform called Seamless Rewards, offers Card Linked Offers (CLO). Our CLO platform allows
merchant content services to be provided via channel partners and enterprise loyalty program operators such as banks. 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. In this new business,
we have developed a strong relationship with one of the world’s largest payment networks to provide cashback operations as
a service. This is a transformational opportunity for our business to build an asset base on their card linked programs to reach
the largest audiences in the Australian market.
At the same time, we have focused 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 stronger fundraiser
engagement.
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Broadly, our strategy to deliver value and growth is as follows:
Build our audience asset through increasing end-users of our Entertainment and Frequent Values Programs
Strengthen our network asset including our invaluable fundraiser, merchant and corporate client networks
•
•
• Grow transaction linked revenues through building a strong offer base in our client’s (one of the world’s largest payment
networks) platform and through travel, leisure and online retail offers to our audience base.
During the year, we implemented significant cost reductions that delivered annualised cost savings of ~ $5.0 million. In addition
to that, we have reduced our property footprint (and therefore costs), restructured the Board and reviewed other external
expenses to optimise our cost base. This significant cost reduction combined with maintaining revenue (albeit with a small
decline) resulted in our underlying EBITDA improving by $3.89 million to ($6.1million) in FY23 from ($9.9 million) in FY22.
We continue to be strongly supported by our majority shareholder, Suzerain Investment Holdings Limited and its associates. In
April 2023, IncentiaPay negotiated a deferment of interest payment and a reduction of the Loan Administration fee which
materially improved our overall cashflows. In May 2023, Suzerain reiterated its commitment to the business by announcing its
intention to convert their debt to equity if the share price went above 2.2 cents per share on a 7-day volume weighted
average price basis.
The leadership team has been stable in FY23 other than the departure of Ben Newling, CFO and Company Secretary in
February 2023. We wish Ben well. The Company welcomed Kunal Kapoor, an accomplished finance professional in the
capacity of Senior Financial Controller to lead the finance function.
We had a restructuring of the Board in April and May 2023 to support Jeremy Thorpe’s retirement and Stephen Harrison’s
transition. As part of that process, our CEO Ani Chakraborty was appointed as Managing Director. I would like to acknowledge
the major contributions made by Jeremy and Stephen to the company over the last 4 years.
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.
Finally, I would like to thank my colleagues on the Board for their contributions and guidance.
Dean Palmer
Chairman
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CEO’s
Review
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Review
Dear Shareholders,
I am delighted to be presenting my second Annual Report as Chief Executive Officer of IncentiaPay.
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.
As the Chair alluded to, our business and growth strategic plan has five key pillars:
1. Entertainment Digital Membership: Focus on growing our core B2C revenue
2. StaffPerks: Employee Rewards and engagement solution building on Entertainment offer set
3. Frequent Values: Growing our active audience in our B2B Enterprise business
4. Seamless Rewards: Build scale for our new transaction-linked Seamless Rewards Card Linked Offer (CLO)-
based business
5. Revenue growth with operating leverage: Deliver business growth priorities maintaining 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.
Frequent Values: Position our B2B Frequent Values solution as the pre-eminent ‘Show and Save’ Enterprise
Loyalty program in Australia and New Zealand.
Seamless Rewards: Deliver the most reputed CLO-ready content services to all CLO- based Loyalty
Programs via our new B2B2C Seamless Rewards business.
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Operational Review
Delivery on promised cost savings
During the year, we delivered significant cost reductions to accelerate our path to operating cash break-even and
position the Company for long- term growth, which culminated in a $5.0 million cost reduction in FY23. In addition to
the realised cost savings, we have also implemented some additional items such as property footprint optimisation
that we will reduce our operating costs further in FY24 by delivering an efficient core ready for revenue growth with
high operating leverage.
Progress on Technology Roadmap
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 has
achieved the following:
1. Fully re-platformed Entertainment and Frequent Values App
2. Fully revamped Entertainment website
3. Reduction of legacy tech components
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, improved Fundraiser engagement and
augmentation of offers.
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. In addition, several new features such as push notification, in app messaging, content card has been
implemented that has improved our Merchant’s and Member’s abilities to interact with each other.
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 IncentiaPay’s B2B app was also completed during FY23 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 have been migrated to the new app throughout FY23 providing
significantly improved user interface and improved functionality. Remaining B2B customers will be migrated to the new
App in FY24.
Programs that have migrated to the new App have shown significant improvement in member usage and
engagement.
Seamless Rewards
During FY23, we established steady transaction volumes with card linked program networks (~120 – 150 transactions a
week).
A major achievement of the business in FY23 was to develop a strong relationship with a large Payment Network for whom
IncentiaPay will provide Merchant operations as a service for their cashback programs. Foundations have been set in place
in FY23 for this relationship. It will further be boosted in FY24 as the program ramps up.
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Senior leadership team changes
We enjoyed a stable senior leadership team in FY23 except for one change.
On 6 February 2023, we also appointed Kunal Kapoor as Senior Financial Controller to replace outgoing Chief
Financial Officer, Ben Newling, who resigned from the company effective 28 February 2023.
Mr Kapoor is an accomplished finance professional with more than 20 years of experience in financial management
and corporate finance. His skills will help us in delivering the next phase of growth.
Financial Performance
FY23 revenues totaled $17.2 million, down 16% on the previous corresponding period, due to decrease in the membership
subscription sales and the gift card sales which was impacted by the inflationary pressures being faced by the members
in FY23.
Despite lower revenues, underlying EBITDA1 improved by $3.89 million to ($6.1 million) in FY23 from ($9.9 million) in FY22,
driven by significant reduction in the employee and technology costs.
Cash Position
As of 30 June 2023, cash reserves totaled $1.82 million. In addition, the Company had an undrawn remaining cash facility
available of $6.0 million.
Outlook
IncentiaPay enters FY24 in a strong position with an optimised cost base, a better product set, stable Executive
team and a well-defined strategic plan. IncentiaPay now also has cornerstone corporate clients who can have a
transformational impact on our business.
Our focus on FY24 will continue to be to focus on the core – build our B2C member base and grow B2B
audience base and grow transaction linked revenues. To grow transaction linked revenues, in addition to
bringing better travel, leisure and online offers to our audience base, our principal focus will be to ramp up our
Merchant operations base with our major Payment network client.
In closing, I’d like to thank our member base, Fundraiser groups, Merchant partners and Enterprise clients for their
continued support.
I’d also like to thank you, our shareholders, for your faith in the longer-term potential of this Company.
Finally, a big thank you to the team at IncentiaPay for all their hard work and dedication.
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.
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Financial
Review
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Financial Review
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Gross revenue for FY23 was $17.2 million, underlying EBITDA for FY23 was a loss of $6.1 million, and negative operating
cash flow was $6.9 million. Following impairment charge of $ 11.6 million, Net loss after tax (NLAT) from ordinary
activities was $20.4 million. Australian revenue accounted for $16.0 million, or 93.2 per cent (FY22: $18.9 million, 91.5 per
cent), while New Zealand revenue accounted for $1.2 million, or 6.8 per cent (FY22: $1.8 million, 8.5 per cent).
Gross Revenue
Overall gross revenue for FY23 was $17.2 million compared to $20.6 million in FY22. This included, $6.2 million, or 35.9 per
cent from Membership sales (FY22: $7.8 million), $1.9 million, or 11.3 per cent from Enterprise client sales (FY22: $2.6
million), $8.0 million, or 46.7per cent from gift card sales (FY22: $8.6 million), and $0.9 million, or 5.1 per cent from fee
income and paid advertising (FY22: $0.7 million). Company commenced Card Linked Offers (CLO) platform in
October’22 with revenues of $0.03 million (FY22:NIL) for the transaction fees and another $0.02 million for the Merchant
management fees (FY22:NIL).
Although Business to Consumer (B2C) revenue, being the Membership Subscriptions, declined by 20.7% (overall
decrease is amplified by the recognition of revenue, which under accounting standards is earned over the period of
the membership, membership cash receipts are lower by 12.2% over the last year), it showed signs of recovery during
the end of H2 with volumes increasing by 110% over the same period last year driven by tactical sales promotions.
The June quarter of FY23 saw around five times the level of Membership volume sold compared to the March quarter
of FY23, which points to the success of a renewal program of incentives and promotions.
The Enterprise business revenues declined 25.5% over last year as the company was investing heavily in the re-
platforming of the Frequent Values App which was completed in H1. Post re-platforming, the Company was able to launch
customized apps for the majority of its clients and went live with one of the largest media houses in the country in H2. The
number of subscribers in the Enterprise business almost doubled from December 2022 to June2023.
Gift card sales decreased 6.5% per cent.
Paid Advertising saw an 18.4% per cent increase year-on-year predominantly due to paid advertising and the re-
engagement of the travel industry.
Net loss after tax and impairments
Reported net loss after tax (NLAT) from ordinary activities in FY 2023 was $20.4 million compared to a net loss after tax from
ordinary activities in FY 2022 of $15.6 million. The net loss was materially impacted by to a once-off impairment charge of
$11.6 million.
Restructuring costs
As part of the Company’s focus on achieving operating cash break-even, the company undertook a significant cost
rationalisation program during FY23, which delivered total operational costs savings of $5.0 million in FY23 ($3.6 million
in payroll costs, $1.1 million in IT related costs, and $0.3 million in marketing costs).
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Debt management
During the second half of FY23, IncentiaPay was able to negotiate and secure the following favorable amendments to
its following debt facilities:
A. $22.5 million loan facility with New Gold Coast Holdings (NGCH):
1. Deferment of interest payments from 1 February 2023 to 31 December 2024,
2. No interest will be charged on the interest accrued.
3. Reduction in the administration fee from $36,667 per month to $27,500 per month till 31 December 2024.
B.
$0.5 million loan facility with Suzerain:
1. Deferment of loan repayment date to 31 December 2024.
2. Interest will accrue with full amount to be payable by 31 December 2024.
3. No interest will be charged on the interest accrued with effect from 1 July 2023.
Dividends
No dividend has been declared in relation to the FY23 results. The Board of Directors of IncentiaPay do not expect to
declare any dividends in FY24.
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The Leadership
Team
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Board of Directors
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Meet IncentiaPay’s Board of Directors – A group of knowledgeable business executives with a
track record of growing and building businesses.
strategy consultancy McKinsey & Company and a
including as a COO and General Operating Partner in
a Venture and Growth Equity fund. He has 20+ years
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.
.
He has served as an Investment Director at Hastings
Funds Management and has a management
consulting background, primarily
Ani joined the Board as the Managing Director from
1 Jun 2023. Ani is a Non-Executive Director of LARES,
private operator of Land and Chattel Mortgage
Registry of the Philippines.
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The Executive Team
IncentiaPay has an outstanding leadership team with a deep history in business and
management, technology and marketing.
He has served as an Investment Director
at Hastings Funds Management and has a
management consulting background, primarily
Kunal Kapoor brings in more than 20 years of
Industry experience in Corporate Finance and
Financial Control having worked across Australia,
Asia, and Middle East in different industries like IT,
Hospitality and Real Estate.
His role as Senior Financial Controller is key to
driving revenue and optimal cost control, along
with finding opportunities for M&A and capital
raising for the business.
Kunal is a member of CPA (Australia) and CFA
Institute.
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.
travel, hospitality, tourism, loyalty & rewards. He
has extensive experience with early stage and
emerging entrepreneurial businesses.
and value growth through data-driven
technology uplift.
Ryan has a Master of Business Administration (MBA)
focused in Technology and Operations Management
from Auckland University of Technology.
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Louise Lee has over 18 years of experience
in strategic and operational human resource
management across sport, education, travel and
manufacturing.
the Company through transformational change, to
a people-centred approach. Louise has a focus
on driving strong leadership, engagement, values
alignment and inclusion.
Resource Management) from Swinburne University
and a Postgraduate Diploma in Management
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.
Ahmedabad, Certificate in Corporate Strategy from
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.
accomplished digital business owner and leader with
Enterprise, advertising and media creating successful
revenue with a clear focus on brand, customer
Jake has a Bachelor of Computer Science from
the University of Queensland and is a member of
the Australian Marketing Institute.
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)
tasked with delivering innovative customer-centric
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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.
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Business Risks
RISK
NATURE OF RISK
Funding
Macro-economic
uncertainty
due to inflation
Success of Investment
Personnel
There is no certainty that IncentiaPay will remain sufficiently funded.
IncentiaPay has $6.0 million funding available out of $22.5 million
convertible loan facility from New Gold Coast Holdings Limited, an
Associate of its largest shareholder Suzerain Investments Holdings Ltd
(Suzerain) to provide it with sufficient working capital for the short to
medium term.
IncentiaPay continually manages its cash position and regularly
monitors its investments to balance the risk, outlay, and timings.
During FY23, the Company saw operating cash inflows decline due to the
wide-ranging impacts of the global inflationary pressures resulting into
lower purchasing power for the subscribers.
The Board and Management have implemented a cost rationalisation
strategy and remain vigilant should macro-economic conditions
change.
Management have invested in the Seamless Rewards platform.
IncentiaPay’s success in part is predicated on our ability to generate new
customers and cash inflows from the above platform.
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.
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.
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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.
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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
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Directors’
Report
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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 2023. 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:
•
•
•
•
•
Stephen Harrison until 31 May 2023 (appointed 15 February 2019 and re-elected 16 December 2020)
Dean Palmer (appointed 19 August 2019 and re-elected 30 November 2022)
Charles Romito (appointed 28 June 2019 and re-elected 20 January 2022)
Jeremy Thorpe until 21 April 2023 (appointed 16 May 2019, re-elected 30 November 2022 and resigned 21 April 2023)
Ani Chakraborty (appointed 31 May 2023)
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 favor 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 willful breach of duty in
relation to the Company.
The insurance is in accordance with section 199B of the Corporations Act 2001 (Cth). In accordance with the terms of
the policy, the policy prohibits disclosure of its terms, including the amount of the premium.
Proceedings on behalf of company
No person has applied to the court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of those proceedings.
Non-audit services
The Board of Directors, pursuant to advice from the Audit and Risk Committee, is satisfied that the provision of non-
audit services during the year is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the
external auditor’s independence for the following reasons:
• All non-audit services are reviewed and approved by the Audit and Risk Committee prior to commencement to ensure
•
they do not adversely affect the integrity and objectivity of the auditor; and
The nature of the services provided does not compromise the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and
Ethical Standards Board.
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The following fees were paid or payable to KPMG for non-audit services provided during the year ended 30 June
2023:
Taxation services
Other services
Total
$'000
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Auditor’s independence declaration
The lead auditor’s independence declaration for the year ended 30 June 2023 has been received and can be found on
page 39 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 Group has successfully re-negotiated the repayment of the Suzerain Interest Bearing loan until 31 December 2024.
Environmental regulation
The Group is not subject to any significant environmental regulation under a law of the Commonwealth or of a State or
Territory.
Options
There were no options over ordinary shares granted to or vested by directors or other key management personnel as part of
compensation during the year ended 30 June 2023. There were no ordinary shares of the Group issued on the exercise of
options during the year ended 30 June 2023 and up to the date of this report.
Loan funded share plan
As at 30 June 2023, all the remaining shares under the Loan Funded Share (LFS) arrangement approved by
shareholders at the AGM in December 2020 were forfeited on the resignation of ex CFO, Ben Newling on 28 February
2023.
INFORMATION RELATING TO DIRECTORS AND COMPANY SECRETARY
Dean Palmer - Chairman
Board Appointment
15 August 2019 and re-elected 30 November 2022. Appointed as
Chairman 31 May 2023.
Interest in shares and options
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 Director &
CEO of a related entity of Suzerain.
Special responsibilities
Chairman of the Risk and Audit Committee
Member of the Nominations and Renumeration Committee
Directorships held in other listed
entities during the three years prior
to the current year
Nil
Qualifications
Experience
Bachelor of Laws (LLB) Bachelor of Commerce Member of
Chartered Accountants Australia & New Zealand
Chartered accountant with more than 25 years of
experience. Founder and CEO of Skybound Fidelis Investment
Limited - a specialist finance, commercial credit, and
property fund manager. Has held numerous senior executive
roles both in Australia and the UK and is currently Managing
Director of Skybound Capital in Australia.
25
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
Ani Chakraborty - Managing Director
Board appointment
31 May 2023
Interest in shares and options
Nil
Special responsibilities
Directorships held in other listed
entities during the three years
prior to the current year
Qualifications
CEO
Nil
Bachelor of Technology
(Electrical Engineering), MBA
(Finance and Operations)
26
Experience
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.
Company Secretary
Sean Coleman is a Principal at Sundaraj & Ker and was appointed as the Company Secretary with effect from 1 March
2023 replacing Ben Newling who was Company Secretary from 11 February 2019 till 28 February 2023.
Mr. Coleman is a corporate lawyer with over a decade of experience specialising in public and private mergers &
acquisitions, cross-border transactions, capital raisings and funds management. He also advises on general security law
matters including ASX Listing Rules compliance and corporate governance.
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
12
12
1
11
10
NUMBER
ATTENDED
12
12
1
11
9
NUMBER
ELIGIBLE
TO
ATTEND
2
2
-
1
1
NUMBER
ATTENDED
2
2
-
1
1
NUMBER
ELIGIBLE
TO
ATTEND
2
2
-
1
1
NUMBER
ATTENDED
2
2
-
1
1
Dean Palmer
Charles Romito
Ani Chakraborty
Stephen
Harrison
Jeremy Thorpe
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.
Dean Palmer
Chairman
4 September 2023
27
Remuneration
Report
28
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 a n d E x e c u t i v e Directors during the year ended 30 June 2023
NAME
POSITION
DATES
Stephen Harrison
Non-Executive Chairman
1 July 2022 to 31 May 2023
Dean Palmer
Non-Executive Chairman
31 May 2023 to 30 June 2023
Jeremy Thorpe
Charles Romito
Ani Chakraborty
Key Management Personnel
Non-Executive Director
1 July 2022 to 31 May 2023
Non-Executive Director
1 July 2022 to 21 April 2023
Non-Executive Director
Full Financial Year
Executive Managing
Director
31 May 2023 to 30 June 2023
NAME
POSITION
DATES
Ani Chakraborty1
Ben Newling
CEO
CFO
Full Financial Year
1 July 2022 to 28 February 2023
1 Ani Chakraborty assumed the responsibilities of CFO from 1 March 2023 until present date.
2. Remuneration policy
The remuneration policy of IncentiaPay has been designed to attract the most qualified and
experienced KMP and align objectives with those of the business and shareholders. All executives receive a base
salary which is based upon factors such as the length of service, experience, and skills, as well as superannuation as
required by law. Executives may sacrifice part of their salary to increase payments towards superannuation.
The Board approved a Loan Funded Share Scheme (LFS) for the previous CEO and CFO, Henry Jones and Ben Newling on 23
July 2020, and an Employee Share Scheme (ESS) for other senior executives.
The Board and shareholder approved LFS is a three-year long-term incentive plan, which would 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 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 and the vesting condition was
not met). For the 2023 financial year, shares would vest where the share price is greater than $0.15 (to be 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 his
shares forfeited in FY2023. With Ben Newling’s departure in FY2023, shares under his LFS have lapsed/forfeited.
As at 30 June 2023, there are no remaining LFS on issue, see section 10 for more detail.
The Board and shareholders 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 and detailed under section 10 of this report.
No shares were issued under this scheme during the financial year. The ESS is no longer effective as all
associated employees who were party to this arrangement have left the Group in both the current and prior
reporting periods. A new LTI plan is currently being developed by the Remuneration Committee and
Management to replace the ESS.
29
The Board’s policy is to review remuneration for KMP annually, based on market practice, duties, and
accountability. All remuneration paid to Directors and Executives is valued at the cost to the Company and
expensed in accordance with Australian Accounting Standards. Independent advice is proactively sought
when required, particularly around the employment arrangements of new KMP including long-term incentive
plans.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to
approval at the AGM. The maximum amount currently approved by shareholders is $500,000 per annum.
3. Remuneration Committee and executive compensation
The Remuneration Committee has the responsibility for providing advice in relation to the remuneration packages of senior
executives, non-executive, and executive directors. The Committee is also responsible for the design and oversight of any
share option schemes, performance incentive packages, superannuation entitlements, and retirement and termination
entitlements.
The Remuneration Committee reviews the compensation package for senior executives on an annual basis and makes
recommendations to the Board for approval. Compensation packages are reviewed and determined based on current
market rates and benchmarked against comparable roles and companies of a similar size. The Committee is chaired by
Dr Charles Romito.
4. Remuneration objectives and principles
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the
Company’s operations.
The Company’s remuneration strategy is structured to:
• ensure employee remuneration is fair and reasonable;
• attract and retain high caliber executives;
• align performance with shareholder value; and,
• be easily understood by all stakeholders.
5. Remuneration framework
The Executive Remuneration Framework is characterised by Fixed Remuneration (base salary, superannuation plus
other fixed benefits) and Variable/Performance Related Remuneration (including short-term incentive (STI) and long-
term incentive (LTI) linked to performance).
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.
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 proposed LTI is under discussion by the Remuneration Committee 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 on an
annual basis, 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 that the current economic variables such as rising cost of living and inflationary
pressure experienced by our members is having on business performance, the Board has determined that no STIs
will be paid to KMP for the financial year ended 30 June 2023 (2022: nil).
Long-term incentives (LTI)
Earlier approved LTI’s were linked to the achievement of operational targets, and share price performance, and were
provided to certain KMP as part of their remuneration package, at the discretion of the Board. Shareholders, at the
AGM in December 2020, approved an Employee Incentive Share Scheme and a Loan Funded Share Plan, both of which
include vesting arrangements on the achievement of the Board approved 2021 budget and share price hurdles and
conversion of current loans into shares.
30
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 Loan Funded Share
Plan and Employee Incentive Share Scheme. With Ben Newling’s departure from the company, all remaining options
under Loan Funded Share Plan have been forfeited.
The Remuneration Committee and Management are currently in the process of developing a new LTI plan for all KMP.
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 2023:
Revenue ($’000)
17,249
20,620
19 ,4 35
42,20 5
64,572¹
FY23
FY22
FY21
FY20
FY19
Revenue ex Gift Cards
($’000)
Profit/(loss) for the period
before tax ($’000)
9,198
(20,390)
12,013
12,110
31,513
37,265
(15,631)
(8,588)
(20,945)
(27,367)1
Dividends paid ($’000)
-
-
-
-
-
Share price as of 30 June
$0.007
$0.007
$0.024
$0.026
$0.045
Change in share price
($0.000)
($0.017)
($0.002)
($0.019)
($0.200)
1 Amounts exclude discontinued operations.
7. Transactions with key management personnel
MOVEMENT IN SHARES
DIRECTORS
Jeremy Thorpe & Dean Palmer1
65,724,825
-
65,724,825
HELD ON
1 JULY 2022
OTHER CHANGES
HELD ON 30
JUNE 2023
Stephen Harrison2
1 Ordinary shares are held by Australia Fintech Plus Pty Ltd as trustee for the Australia Fintech Trust. Jeremy Thorpe and Dean Palmer are Directors
4,754,285
N/A
-
of Australia Fintech Plus Pty Ltd and beneficiaries of the Australia Fintech Trust.
2 Stephen Harrison has resigned as non-executive director and Chair of the Company with effect from 31 May 2023.
DIRECTORS
Jeremy Thorpe and Dean Palmer1
53,323,914
12,400,911
65,724,825
HELD ON
1 JULY 2021
OTHER CHANGES2
HELD ON 30
JUNE 2022
Stephen Harrison3
1. Ordinary shares are held by Australia Fintech Plus Pty Ltd as trustee for the Australia Fintech Trust. Jeremy Thorpe and Dean Palmer are
4,754,285
4,754,285
-
2.
3.
Directors of Australia Fintech Plus Pty Ltd and beneficiaries of the Australia Fintech Trust.
Other changes represent shares that were purchased or sold during the year, that relates to the entitlement offer on 8 December 2021.
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.
31
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 commission3
Charging of Salary4
Purchases of goods or services
Rent5
Technology consultancy6
Customer service7
Communication infrastructure8
3
61
6
93
7
-
17
1
-
56
3
-
11
17
252
21
1.
2.
3.
4.
5.
6.
7.
8.
Sale of Entertainment memberships to Leisurecom Group, a controlled entity of Suzerain.
Enterprise sales to Noble Oak Life Limited, an entity related to Stephen Harrison, the ex-Chairman, until he left the group on 31 May 2023.
Travel commission from Leisurecom Group Pty Ltd, a controlled entity of Suzerain, for Entertainment Travel bookings with
accommodation venues previously under MyBookings.
Recharge of salary expenses to Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
Gold Coast office space provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
Technology consultancy services with Fintech Services (AUST) Pty Ltd, a related party due to common directors Dean Palmer and Jeremy
Thorpe.
Customer service provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
Communication network costs on charged from Leisurecom Group Pty Ltd for Harrington Street location.
Outstanding balances arising from sales/purchases of goods and services:
Current payables
Leisurecom Group1
7
1. Customer service and office space provided by a related entity of Suzerain.
Current receivables
Leisurecom Group2
10
2. Membership, Commission, and Salary charging provided to a related entity of Suzerain.
Outstanding balances arising from loan agreements:
Borrowings1
Interest bearing loan
Additional growth operational facility
Transformational capital facility
New Gold Coast Holdings facility
1 All loans are related parties to the group’s chairman, Dean Palmer.
699
-
1,208
17,233
1
-
633
184
1,208
6,097
32
Significant loan and capital related transactions between the Group and related parties are outlined below:
NGCH, Suzerain and Skybound, related parties to Dean Palmer (Chairman), have provided a total of $24.2
million loan facilities to the Group. During the period, the Group drew down $10.5 million of the line of credit
facility (before interest charges), with $6.0 million remaining unutilised at 30 June 2023.
Interest bearing loan
Balance at 30 June 2023: $699K.
Interest charged during period: $66K.
Interest paid during period: -
Terms and conditions: 10% per annum charged monthly.
Repayment date: 31/12/20241
Security: Security over all the Group’s present and future property.
1 Updated repayment terms have been agreed post 30 June 2023 seeing a deferment in repayment of the
loan until 31 December 2024.
Additional growth operational facility
Balance at 30 June 2023: $ nil
Interest charged during period: $ nil.
Interest paid during period: $ nil.
Terms and conditions: 10% per annum charged monthly.
Repayment date: 31/12/2021
Security: Security over all the Group’s present and future property.
The final line fees of $184k as shown in FY2022 have been repaid on 15 July 2022 to extinguish this loan facility.
Transformational capital facility
Balance at 30 June 2023: $1,208K.
Interest charged during period: $150K.
Interest paid during period: $150K.
Terms and conditions: 12.5% per annum charged monthly.
Repayment date: 31/12/2024
Security: Second ranking security over all the Group’s present and future property.
During September 2022 the group renegotiated the repayment date to 31 December 2024.
New Gold Coast Holdings Limited Facility
Balance at 30 June 2023: $17,233K.
Interest charged during period: $1,493K.
Interest paid during period: $783K.
Terms and conditions: 12.5% per annum charged monthly.
Repayment date: 31/12/2024
Security: Second ranking security over all the Group’s present and future property.
Interest payments on the Loan have been deferred until 31 December 2024 and the monthly administration fee has
also been reduced from $36.5k to $27.5k per month.
33
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
2023
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
DIRECTORS3
Dean Palmer1
80,262
Stephen Harrison7
100,375
Jeremy Thorpe1
63,875
Charles Romito2
80,0000
EXECUTIVES
Ani Chakraborty4 325,000
Ben Newling5
201,520
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,600
-
550 25,292
-
343
17,558
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(167,062)6
-
-
-
-
-
-
-
-
-
-
-
80,262
0%
100,375
0%
63,875
0%
87,600
0%
350,842
0%
52,359
0%
1.
2.
3.
4.
5.
6.
7.
Directors’ fees were paid to an associated entity of Jeremy Thorpe and Dean Palmer and a related party of IncentiaPay Ltd.
Directors’ fees were paid to an associated entity of Charles Romito.
All Directors except Ani Chakraborty are Non-Executive. Directors do not receive performance related compensation and are not provided with
retirement benefits, apart from statutory superannuation where applicable.
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.
Ben Newling was employed by IncentiaPay as a permanent full-time employee up until the termination of his employment on 28 February 2023.
This amount relates to the reversal of the previously recognised share-based payment expense under the Loan Funded Share Scheme that has
either expired, lapsed, or been forfeited during the current financial year, refer to section 10 of the remuneration report.
Stephen Harrison has resigned as non-executive director and Chair of the Company with effect from 31 May 2023.
2022
SHORT-TERM
BENEFITS
POST
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE BASED
PAYMENTS
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
DIRECTORS6
Stephen Harrison1
158,695
Jeremy Thorpe2
70,263
Charles Romito3
80,360
Dean Palmer2
76,650
EXECUTIVES
Henry Jones5,7
193,827
Ben Newling4,7
260,000
Ani Chakraborty8
208,749
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,600
-
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.
2.
3.
4.
5.
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).
Directors’ fees were paid to an associated entity of Jeremy Thorpe and Dean Palmer and a related party of IncentiaPay Ltd.
Directors’ fees were paid to an associated entity of Charles Romito and a related party of IncentiaPay Ltd.
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.
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.
34
6.
7.
8.
9.
10.
All Directors are Non-Executive. Directors do not receive performance related compensation and are not provided with retirement benefits,
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.
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.
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.
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
Permanent Full time
Details
Termination of employment
•
•
By either party on giving 6 m o n t h s ’ 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
• Discretionary benefits of 15,000,000 loan funded shares subject to
agreement related to vesting conditions and approval by the Board. As of
30 June 2023, these discretionary benefits were not agreed and there is no
present expectation that they will be approved or received.
NAME
Title
Ben Newling
Chief Financial Officer (from 1 January 2022 until 28 February 2023)
Chief Operations Officer (until 1 January 2022)
Agreement commenced
30 August 2019
Term of engagement
Already resigned
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 of which 5,382,791 shares lapsed at 31 December
2022 and the remaining 6,202,252 shares were forfeited upon departure from the
group on 28 February 2023.
10. Share based compensation
The Board approved a Loan Funded Share Scheme (LFS) for the previous CEO, Henry Jones and previous CFO, Ben
Newling, on 23 July 2020.
35
The terms of the current LFS arrangements, which only apply to Ben Newling as Henry Jones’s allocation was
modified upon his termination, 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, 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.
Henry Jones’ employment with the Company ended on 24 December 2021 at which point 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. Total shares issued to Henry Jones were 4,986,667.
Ben Newling’s employment with the Company ended on 28 February 2023 at which point he forfeited the remaining
Loan Funded Shares (including those previously vested and exercisable).
Movement in loan funded shares
HELD ON
1 JULY 2022
FORFEITED/
EXPIRED/
CANCELLED
ISSUED
HELD ON 30
JUNE 2023
VESTED AND
EXERCISABLE
AS OF 30 JUNE
2023
Ben Newling1
11,585,043
(11,585,043)
-
-
-
1 At 31 December 2022, 5,382,791 share options lapsed and the remaining 6,202,252 share options were forfeited upon resignation and
departure from the company at the end of February 2023.
HELD ON
1 JULY 2021
FORFEITED/
EXPIRED/
CANCELLED
ISSUED
HELD ON 30
JUNE 2022
VESTED AND
EXERCISABLE
AS OF 30 JUNE
2022
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
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.
36
Movements in the share based payment reserve
Balance as at 1 July 2021
Amortised during the period1
Forfeited during the period2
Movement during the period2
BALANCE AS AT 30 JUNE 2022
Balance as at 1 July 2022
Amortised during the period1
Lapsed during the period3
Forfeited during the period3
BALANCE AS AT 30 JUNE 20234
Share based payments reserve
Henry Jones
$’000
254
142
(227)
(169)
-
-
-
-
-
-
Ben
Newling
$’000
108
59
-
-
167
167
21
(83)
(105)
-
Total
$’000
362
201
(227)
(169)
167
167
21
(83)
(105)
-
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 the 24th of 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 were allocated in February 2022. The modification has been fair valued through the profit and
loss as at 30 June 2022.
3 During current reporting period 5,382,791 of Ben Newling’s share options lapsed and the remaining 6,202,252 share options were forfeited upon his
resignation in February 2023.
GRANT
DATE
TRANCHE
NO. OF
OPTIONS
ISSUED
VALUE
$
VESTED AND
EXERCISABLE
AT 30 JUNE
2023
FAIR
VALUE
OPTIONS
$
VESTING
CONDITION
VESTING
DATE
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
2,125,000
-
2,125,000
63,761
2,125,000
41,171
4,085,043
69,346
-
-
-
-
-
22,386
Grant date
9 Oct 2020
-
Budget FY 2021
22,957
10,965
51,947
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.
30 Jun
2021
30 Sep
2022
30 Sep
2023
31 Oct
2023
Total
Shares
11,585,043
196,664
-1
108,255
1 All vested and exercisable share options have been forfeited upon Ben Newling’s resignation from the company.
For additional information see note 20 to the annual financial statements.
37
Auditor's
Independence
Declaration
38
Lead Auditor’s Independence
Declaration under
Section 307C of the Corporations
Act 2001
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 2023 there have been:
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.
KPMG
Jeffrey Frazer
Partner
4 September 2023
39
Financial
Statements
40
4
Consolidated statement of profit or loss and other
comprehensive income for the year ended 30 June 2023
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
2
3
3
3
3
3
3
3
3
3
4(a)
2023
$’000
17,249
(9,352)
(11,605)
(9,027)
(539)
(399)
(2,211)
(285)
(1,292)
(1,219)
(46)
(1,664)
(20,390)
-
(20,390)
2022
$’000
20,620
(10,151)
(3,615)
(12,596)
(1,171)
(247)
(919)
(2,654)
(973)
(2,270)
33
(1,688)
(15,631)
-
(15,631)
(20,390)
(15,631)
- Items that may be reclassified subsequently to
profit or loss
Gain/(loss) rising from translating foreign controlled
entities from continuing operations
20
24
Total comprehensive loss for the period
(20,366)
Loss per share
Basic loss per share (cents)
Total
Diluted loss per share (cents)
Total
The accompanying notes form part of these financial statements.
5(b)
5(b)
(1.7)
(1.7)
(1.7)
(1.7)
(49)
(15,680)
(1.4)
(1.4)
(1.4)
(1.4)
41
INCENTIAPAY LIMITED AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Trade and other receivables
Right-of-use assets
Property plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Tax Liabilities
Deferred revenue
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Borrowings
Deferred revenue
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
The accompanying notes form part of these financial statements
Consolidated Group
Note
6
8
9
10
8
11
12
13
14
15
16
4(d)
17
18
15
16
17
18
19
20
2023
$’000
1,825
622
71
1,146
3,664
-
-
42
974
1,016
4,680
2,601
310
708
-
3,334
517
7,470
-
18,451
489
51
18,991
26,461
(21,781)
132,143
346
(154,270)
(21,781)
2022
$’000
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)
42
INCENTIAPAY LIMITED AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Ordinary
share capital
Accumulated
losses
Note
$’000
$’000
122,984
(118,559)
Foreign currency
translation
reserve
Share based
payments
reserve
$’000
371
$’000
362
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
-
-
-
9,326
(167)
-
-
9,159
(15,631)
-
-
(15,631)
(49)
(49)
-
-
227
-
227
-
-
-
-
-
19
19
20
Balance at 30 June 2022
132,143
(133,963)
322
-
-
-
-
-
(227)
32
(195)
167
Total
$’000
5,158
(15,631)
(49)
(15,680)
9,326
(167)
-
32
9,191
(1,331)
Ordinary
share capital
Accumulated
losses
Foreign currency
translation
reserve
Share based
payments
reserve
Total
Note
$’000
$’000
$’000
$’000
$’000
132,143
(133,963)
322
167
(1,331)
Balance at 1 July 2022
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
-
-
-
-
-
-
-
-
(20,390)
-
(20,390)
-
-
83
-
83
-
24
24
-
-
-
-
-
19
19
20
Balance at 30 June 2023
132,143
(154,270)
346
-
-
-
-
-
(83)
(84)
(167)
-
(20,390)
24
(20,366)
-
-
-
(84)
(84)
(21,781)
43
INCENTIAPAY LIMITED AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Cashflows from operating activities
Receipts from customers
Payments to suppliers and employees
Government assistance received
Interest paid
Interest received
Consolidated Group
Note
2023
$’000
19,209
(26,110)
-
(44)
43
2022
$’000
20,868
(33,763)
676
(13)
30
Net cash used in continuing operations
7
(6,902)
(12,202)
Cashflows from investing activities
Purchase of property, plant and equipment
Purchase of intangibles
Proceeds from security deposit
Net cash used in investing activities
Cashflows from financing activities
Proceeds from issue of shares, net of costs
Proceeds from borrowings
Payment of lease liabilities
12
13
10
19
16
15
(3)
(311)
131
(183)
-
10,500
(910)
Borrowing costs
15 & 16
(1,649)
Net cash from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of financial
period
Effects of movements in exchange rates on cash and
cash equivalents held
7,941
856
978
(9)
Cash and cash equivalents at the end of the financial
period in continuing operations
6
1,825
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
44
Note 1 | Summary of Significant Accounting Policies
Basis of preparation
These general-purpose financial statements for the year ended 30 June 2023 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 4 September 2023.
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.
On 30 June 2023 the Group had cash on hand of $1.82 million, net liabilities of $21.7 million and a net current asset deficiency of $3.8 million.
During the year ended 30 June 2023, the Group incurred a net loss before tax from continuing operations of $20.3 million and incurred net
cash outflows from operating activities of $6.9 million. Net cash outflows in this year had reduced significantly compared to the previous
year.
The Directors have prepared cash flow forecasts for the period from 1 July 2023 to 30 September 2024 that support the ability of the Group
to continue as a going concern.
The ongoing operations of the Group is critically 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 maintaining the projected cost base.
As of 30 June 2023, the Group had undrawn financing facilities from Suzerain and related parties totalling $6.0 million. See note 16 for further
information. This undrawn amount has reduced to $5.6 million at the date of the approval of this annual financial report. The Group may
require further financial support from Suzerain and related parties in addition to the existing facilities.
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, which is highly sensitive to assumptions made in respect of revenue performance, maintain a low cost base,
and receive further financial support from Suzerain and its related parties beyond what has already been agreed, 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.
(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.
45
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;
• Income and expenses are translated at average exchange rates for the period; and
• Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in
other comprehensive income and included in the foreign currency translation reserve in the Statement of Financial Position. The cumulative
amount of these differences is reclassified into profit or loss in the period in which the 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
The Group has consistently applied its accounting policies to all periods presented in these consolidated financial statements.
(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)
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.
(g)
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.
46
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.
•
• Considered the impact of recent economic variables on the Group’s financial statement disclosures.
•
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. Please refer to note 15
for more details on leases.
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 Seamless Rewards business. This determination of CGU’s represents an assessment
of the separation of core operating assets and revenue test under accounting standards. No change in the assessment of the number of
CGU’s has occurred during the financial year.
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. The group recognised total impairment of $11.6 million during the year
which included the goodwill and the brand under Entertainment Business CGU. Please refer note 3 and 13.
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 $11.6
million. This impairment pertains to all of the intangibles within the Entertainment Business CGU as outlined in note 13, and a portion of
property, plant and equipment as outlined in note 12.
Further details on the key estimates used in the impairment evaluation in respect of goodwill or other intangibles for the year ended 30
June 2023 can be found in note 13.
Software under development and available for use
Additional costs relating to the Card Linked Offer “CLO” rewards platform project were capitalised during the first half of the year ($0.3m)
and the platform has been transferred to “ready to use” Technology & Software when it was in a condition for use as per the expectations
of management. The CLO platform is now being used in the Seamless Rewards business.
As mentioned above, the Entertainment Business CGU saw an impairment of its Ready to use Technology & Software for the year ended
30 June 2023 of $0.7m.
47
Ready to use Technology & Software assets (which solely comprised of the CLO rewards platform) were amortised in accordance with
the company accounting policies and resulted in an amortisation charge of $0.288 million for the year ended 30 June 2023. Management
assessed a useful life of 9 years was appropriate with reference to the nature and use of the CLO rewards platform.
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 subscription period. The subscription period commences when the membership is activated and expires after a
period of between 3 to 24 months, depending on the
applicable period of the membership type. Sometimes promotions could see memberships with special subscription periods.
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.
Type of services
Nature and timing of satisfaction of performance obligations and revenue recognition
policies
Fee income – Paid advertising
Fee income – Travel booking
Membership subscriptions
Enterprise sales
Seamless Rewards - Success
Fee
Revenue from Entertainment Publications marketing and merchant support fees through
the placement of advertisements and the distribution of offers and promotions on behalf
of businesses to members is recognised at point in time when the advertisement or offer
is placed, distributed and invoiced. Revenue from the successful promotion of merchant
offers is recognised when the transaction occurs which evidences the take up of the
promotion.
Revenue from commission receivable for bookings are recognised at point in time when
the bookings are made, and it is paid for. Members have access to a range of discounts
and deals from hotels, airlines and car rental companies through the Group’s platform
through which the Group acts as an agent on behalf of the hotels, airlines and car rental
companies.
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. Revenue earned
through Gift with purchase promotions is treated slightly different. The group calculates
the stand alone value of the gift and recognises that portion upfront and the remaining
stand alone value of the memberships sold during this promotion is recognised over the
life of the membership.
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 and revenue is recognised over the term of the contract.
Under the Seamless Rewards program, the Seamless Rewards business receives
transaction-linked revenue each time a cardholder transacts using a linked card at a
Seamless Rewards merchant and that revenue earned is recognised in full as the
performance obligation has been met.
48
Type of services
Nature and timing of satisfaction of performance obligations and revenue recognition
policies
Merchant Management Services
Gift card sales
Seamless Rewards earns revenue from managing partners’ existing merchants and also
onboarding new merchants on their behalf. In order to ensure that the revenue is
recognised over time, in a manner that depicts the entity’s performance against the
targets and obligations, management has decided to recognise revenue on a straight-
line basis as the services are performed on an ongoing basis during the term of contract
period.
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.
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.
Government assistance received in FY2022 relates to JobSaver payments received during the first half of the year, in addition to an amount
relating to COVID-19 business grants. Nothing has been received during the FY2023.
Consolidated Group
Fee income – Paid advertising
Fee income – Travel booking
Membership subscriptions
Enterprise sales
Gift card sales
Seamless Rewards Success Fee
Merchant Management Services
2023
$’000
863
24
6,191
1,945
8,051
28
26
2022
$’000
729
32
7,812
2,610
8,607
-
-
Revenue from contracts with customers
17,128
19,790
Government assistance1
Other income2
Interest received
-
78
43
676
124
30
Total revenue and other income
17,249
20,620
1 The Government assistance received in FY22 relates mainly to the JobSaver program. For more details, please refer to the policy section of the revenue note.
2 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
2023
$’000
368
3,823
2022
$’000
735
3,241
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.
49
Note 3 | Expenses
Loss before income tax from continuing operations includes the following significant expenses:
Consolidated Group
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
Total
Building occupancy expense
Variable lease expense
Total
Marketing expenses
Marketing expenses
Total
Website and Communication
Website and communication
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
Leasehold Improvements
Goodwill
Brand name & international rights
Intangible assets
Total
No Note
2023
$’000
10
8
16
15
12
13
11
12
13
13
13
1,049
9
7,811
483
9,352
46
46
9,027
9,027
399
399
1,292
1,292
1,219
1,219
2,127
40
44
2,211
229
288
22
539
234
7,657
3,000
714
11,605
2022
$’000
1,516
7
8,371
257
10,151
(33)
(33)
12,596
12,596
247
247
973
973
2,270
2,270
763
91
65
919
359
676
136
1,171
-
2,434
-
1,181
3,615
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 represent 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 with instantaneous transfer to the buyer members. Unsold gift cards
at balance date 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.
50
Employee expenses
The main reason for the reduction in employee expenses is the significant cost rationalisation initiatives implemented by
the company, previously announced to the ASX on 25 July 2022, which included a reduction of resources – both payroll
and project-based contracting staff with an aim at delivering annualised cost savings of more than $4 million from the
FY22 base.
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 FY2023 for Plant & Equipment can be ascribed to the impairment at 31 December 2022 of
Leasehold assets.
The reduced amortisation expense in FY2023 for Intangibles is a direct result of impairments raised against Entertainment’s Software
Intangibles at the end of FY2022 and also further impairments at 31 December 2022.
The reduced depreciation expense in FY2023 for Right of use assets is due to the conclusion of Office & Equipment leases for
Entertainment Publications during FY2022 and also the conclusion of an Equipment lease in IncentiaPay FY2023.
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. The increase is due to increased payments for the Sydney Spring Street office in FY2023. The Sydney
office has been relocated and will see reduced rent payments in FY2024.
Marketing expenses
Marketing expenses generally relate to costs incurred by the company to execute its marketing strategy which includes expenses such
as media cost for paid advertising on the internet, marketing software utilised to help achieve the marketing strategy and outsourcing
aspects of the process to specialised online marketing agencies.
The increase in FY2023 is mainly due to increased marketing spend to drive sales & member acquisitions.
Website and communication expenses
Website and communication costs generally relate to costs incurred by the company to host our technology & software in a safe and
secure environment.
The decrease in FY2023 expenditure is mainly due to reduced hosting costs as part of IT realignment and also the retirement of old
legacy platforms which in turn then resulted in less monthly platform fees being paid to third parties.
Finance costs on borrowings
The increase in finance costs on borrowings is due to more interest & admin fees on the New Gold Coast Holdings Limited loan facility.
New Gold Coast Holdings Limited agreed to a deferral of interest payments on the facility until 31 December 2024. More details can be
seen in note 16.
Note 4 | Income tax
Accounting policy
The income tax expense for the year comprises current income tax expense and deferred tax expense.
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities are measured at the
amounts expected to be paid to the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year.
Current and deferred income tax expense is charged outside profit or loss when the tax relates to items that are recognised outside profit
or loss.
51
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..
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future
taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
In the current circumstances, the Group do not believe that sufficient taxable profit will be available in the short term to utilise the carry
forward tax losses.
The Group has considered the following factors:
•
There is a history of tax losses being incurred over the past few years.
• Management is forecasting further taxable losses again for FY2024.
• Whilst assessable income is forecast in future periods, it is not sufficiently large enough to generate taxable income that will fully
•
utilise the carry forward tax losses (Per 30 June 2022 Income Tax Return, $71,134,359) 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 2023.
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
2023
$’000
a) The components of income tax (expense)/income comprise:
Current tax
Deferred tax
Income tax benefit/(expense)
b) Numerical reconciliation of income tax expense to prima facie
tax payable
-
-
-
2022
$’000
-
-
-
Loss from continuing operations before income tax expense
(20,390)
(15,631)
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% (2022: 30%)
Add/(less) tax effect of:
Permanent differences
Temporary differences
Unrecognised tax losses
Unders/(overs) from prior periods
Income tax (benefit)/expense
(6,117)
(4,689)
3,316
(29)
2,830
-
-
1,069
(2,050)
5,670
-
-
52
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;
•
• no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.
the Group continues to comply with the conditions for deductibility imposed by tax legislation; and
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 $74m. Additionally there are other deductible temporary differences resulting in a net
potential deferred tax asset position for the Group of approximately $0.5m, 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 not be recognised as it is uncertain
whether future taxable profits in the foreseeable future will be sufficient to utilise the losses. Current projections indicate a return to
profitability in the longer term however given the levels of uncertainty with respect to economic recovery, and growth in the Group’s
profitability, 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
a) Franking account
Balance of franking account at year end adjusted for franking credits arising
from:
Payments of income tax
FRANKING CREDITS AVAILABLE FOR SUBSEQUENT FINANCIAL YEAR
Consolidated Group
2023
$’000
-
2022
$’000
-
Consolidated Group
2023
$’000
6,493
-
6,493
2022
$’000
6,493
-
6,493
The Directors have advised that they do not intend to declare dividends for the 2023 financial year. The ability to utilise the franking
credits is dependent upon the ability to declare dividends. In accordance with the tax consolidation legislation, Incentiapay Limited as
the head entity in the tax consolidated group has also assumed the benefit of $6.5m (2022: $6.5m) franking credits.
b) Reconciliation of earnings to profit or loss
Loss for the period from continuing operations
EARNINGS USED TO CALCULATE BASIC EPS
Weighted average number of ordinary shares outstanding during the year
used in calculating basic EPS1
Weighted average of dilutive convertible notes and equity instruments
outstanding2
Weighted average number of ordinary shares outstanding during the year
used in calculating diluted EPS
Consolidated Group
2023
$’000
(20,390)
(20,390)
2022
$’000
(15,631)
(15,631)
1,231,279,015
1,088,536,622
-
-
1,231,279,015
1,088,536,622
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.
2 There is a convertible loan deed in place with New Gold Coast Holdings Limited which is not included as anti-dilutive.
53
Note 6 | Cash and cash equivalents
Accounting policy
Cash and cash equivalents include cash on hand, deposits available on demand with banks and other short-term highly liquid investments
with original maturities of three months or less. Bank overdrafts, if any, are reported within short-term borrowings in current liabilities in the
Statement of Financial Position.
Cash at bank and on hand
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
Note 7 | Cash flow information
Consolidated Group
2023
$’000
1,825
1,825
1,825
1,825
2022
$’000
978
978
978
978
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 and Leasehold Improvements in
continuing operations
Share based payment expense
Net interest included within Financing Activities
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
CASH FLOW USED IN OPERATING ACTIVITIES
Consolidated Group
2023
$’000
2022
$’000
(20,390)
(15,631)
-
288
229
22
11,605
(167)
2,211
668
357
129
(2,051)
582
-
(385)
(6,902)
167
676
359
136
3,615
(195)
919
240
466
(45)
(1,371)
(1,317)
-
(221)
(12,202)
54
Reconciliation of liabilities arising from cash flows from financing activities
Interest
bearing
loan
Additional
growth
operational
facility
Lease
liabilities
Transformational
Capital Facility
$’000
$’000
$’000
BALANCE AS
AT 30 JUNE
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
Balance as 1
July 2022
Drawn down
Repayment or
amortised
Admin fees
paid
Admin fees
Interest paid
Interest
expenses
Line fees paid
Line fees
Loan repaid
BALANCE AS
AT 30 JUNE
2023
571
2,800
-
-
-
-
62
-
-
-
633
633
-
-
-
-
-
66
-
-
-
699
728
-
-
-
61
-
29
(3,434)
184
184
-
-
-
-
-
-
(184)
-
-
-
Note 8 | Trade and other receivables
Accounting policy
2,178
-
(958)
-
(91)
91
-
-
-
1,220
1,220
-
(910)
-
-
(40)
40
-
-
-
310
$’000
1,208
-
-
-
(157)
157
(24)
24
-
1,208
1,208
-
-
-
-
(150)
150
(24)
24
-
1,208
NZ Business
Cashflow
Loan
New Gold
Coast
Holdings
Loan
Total
$’000
$’000
$’000
28
-
6,785
6,408
(958)
73
(264)
697
(24)
87
(3,434)
5,680
-
73
(16)
326
-
34
-
6,097
9,370
6,097
9,370
10,500
10,500
-
(468)
394
(783)
1,493
-
-
-
(910)
(468)
394
(973)
1,749
(208)
24
(9)
17,233
19,469
-
-
-
-
-
-
-
-
28
28
-
-
-
-
-
-
-
-
(9)
19
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 55 recognized at fair value, less any provision for loss allowance.
55
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
1Sublease Sydney office rent receivable. See note 11 for details.
Movement in the provision for loss allowance of receivables is as follows:
Consolidated Group
2023
$’000
368
(116)
252
102
268
622
-
-
2022
$’000
735
(70)
665
420
141
1,226
102
102
Current trade receivables
TOTAL
Opening
balance
1/07/2022
Loss
allowance adjustment
for year
$’000
(70)
(70)
$’000
(46)
(46)
Amounts
written
off
$’000
-
-
Closing
balance
30/06/2023
$’000
(116)
(116)
Opening
balance
1/07/2021
Loss
allowance adjustment
for year
Amounts
written
off
Closing
balance
30/06/2022
Current trade receivables
TOTAL
$’000
(140)
(140)
$’000
33
33
$’000
37
37
$’000
(70)
(70)
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 56 recognized. 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 cost of living, 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 2023 was determined as follows for trade receivables:
56
Report category
Days
Adjusted loss rate
Receivables balance
as at 30 June 2023
Loss allowance
at 30 June 2023
Current
Past due 1-30
Past due 31-60
Past due 61-90
Past due over 90
Greater than over
90 days overdue
0-30
31-60
61-90
91-120
121-150
Greater
than 150
%
9
5
21
100
100
100
Total
$’000
145
93
40
28
31
31
368
$’000
13
5
8
28
31
31
116
The expected credit loss allowance as at 30 June 2022 was determined as follows for trade receivables:
Report category
Days
Adjusted loss rate
Receivables balance
as at 30 June 2022
Loss allowance
at 30 June 2022
%
$’000
$’000
Current
Past due 1-30
Past due 31-60
Past due 61-90
Past due over 90
Greater than over
90 days overdue
0-30
31-60
61-90
91-120
121-150
Greater
than 150
3
7
9
100
100
100
Total
405
210
83
1
1
35
735
12
14
7
1
1
35
70
Credit risk
The Group has a sublease rent receivable of $0.1 million for the Sydney office. The sub lessee has provided a bank guarantee of $0.2 million
as 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
Consolidated Group
2023
$’000
368
(116)
252
132
88
32
-
-
252
2022
$’000
735
(70)
665
394
196
75
-
-
665
57
Geographical credit risk
The Group has significant operations in Australia and New Zealand. The Group’s exposure to credit risk for trade and other receivables at
the end of the reporting period in these regions is as follows:
Australia
New Zealand
Total
Note 9 | Inventories
Accounting policy
Consolidated Group
2023
$’000
209
43
252
2022
$’000
629
36
665
Inventories represent gift cards. These assets are valued at the lower of cost and net realisable value.
Gift cards held for sale
TOTAL INVENTORIES
Note 10 | Other assets
Accounting policy
Consolidated Group
2023
$’000
71
71
2022
$’000
200
200
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 investments1
Prepayments
Deferred commission2
TOTAL OTHER ASSETS
Consolidated Group
2023
$’000
445
375
326
1,146
2022
$’000
576
423
504
1,503
1 Short-term investments are all deposits held with banks.
2 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.
58
30 JUNE 2022
Balance as at 1 July 2021
Commission deferred
Amortisation
BALANCE AS AT 30 JUNE 2022
30 JUNE 2023
Balance as at 1 July 2022
Commission deferred
Amortisation
BALANCE AS AT 30 JUNE 2023
Note 11 | Right-of-use assets
Accounting policy
Deferred
commission
$’000
893
1,127
(1,516)
504
504
871
(1,049)
326
The Group leases offices and equipment. The majority have expired in financial year 2022 except one equipment lease that expired in
financial year 2023 and the Harrington Street office which is currently subleased for the remainder of the lease term, which expires in
financial year 2024. The Harrington Street office lease will not be extended.
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.
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.
59
Land and buildings
At cost
Accumulated depreciation
Total
Equipment
At cost
Accumulated depreciation
Total
TOTAL RIGHT-OF-USE ASSETS
Consolidated Group
2023
$’000
1,805
(1,805)
-
270
(270)
-
-
2022
$’000
1,805
(1,805)
-
270
(248)
22
22
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 2021
Depreciation charge for the year
BALANCE AS AT 30 JUNE 2022
Balance as at 1 July 2022
Depreciation charge for the year
BALANCE AS AT 30 JUNE 2023
Amounts recognised in profit and loss
Land and buildings
Equipment
$’000
85
(85)
-
-
-
-
$’000
73
(51)
22
22
(22)
-
Total
$’000
158
(136)
22
22
(22)
-
Consolidated Group
Variable lease expense
Interest on lease liabilities
Amounts recognised in statement of cash flows
Interest on lease liabilities
Principal element of lease payments
Total cash flow for leases
2023
$’000
399
40
2022
$’000
247
91
Consolidated Group
2023
$’000
40
910
950
2022
$’000
91
958
1,049
60
Leases as lessor
During the financial year ending 30 June 2021, 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 $42,215 interest income relating to subleasing during the
reporting period ended 30 June 2023 (2022: $17,322).
As the Group is still responsible for all of the lease payments relating to the head lease, the lease liability is still recognised in lease
liabilities in note 15.
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the
reporting date.
Not later than 1 year
Between 2 and 3 years
Later than 3 years
Total undiscounted lease receivable
Unearned finance income
Net investment in the lease
Note 12 | Property, plant and equipment
Accounting policy
Consolidated Group
2023
$’000
117
-
-
117
(15)
102
2022
$’000
463
116
-
579
(57)
522
Each class of property, plant and equipment is carried at cost or fair value (as indicated) less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying
amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or loss or
as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when
impairment indicators are present.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not more than the recoverable amount from
these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s
employment and subsequent disposal. Where material, the expected net cash flows are discounted to their present values in determining
recoverable amounts. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an
appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other
repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.
Depreciation of plant and equipment
The depreciable amount of all fixed assets including buildings, but excluding freehold land, is depreciated on a straight-line basis over the
asset’s useful life to the consolidated group. Useful life is taken to commence from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements.
61
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.
Plant and equipment
At cost
Accumulated depreciation
Total
Leasehold improvements
At cost
Accumulated depreciation
Total
TOTAL PROPERTY, PLANT AND EQUIPMENT
Movements in carrying amounts
Consolidated Group
2023
$’000
924
(882)
42
1,926
(1,926)
-
42
2022
$’000
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.
Plant and equipment
Leasehold
improvements
Consolidated Group
Balance as at 1 July 2021
Additions
Disposals
Depreciation expense
BALANCE AS AT 30 JUNE 2022
Balance as at 1 July 2022
Additions
Disposals
Impairment
Depreciation expense
BALANCE AS AT 30 JUNE 2023
$’000
205
53
(3)
(103)
152
152
3
(1)
-
(112)
42
$’000
606
-
-
(255)
351
351
-
-
(234)
(117)
-
Total
$’000
811
53
(3)
(358)
503
503
3
(1)
(234)
(229)
42
1 The leasehold assets and make good provision for a lease the Company is subletting has been impaired by $234k due to the lease terminating in October 2023 and
management’s view of the recoverable value of the asset.
62
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.
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 9 years (namely the CLO rewards platform which is the
remaining asset in use). 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.
63
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
TOTAL INTANGIBLES
Consolidated Group
2023
$’000
31,199
(31,199)
-
10,265
(9,291)
974
-
-
-
3,000
(3,000)
-
974
2022
$’000
31,199
(23,542)
7,657
9,203
(8,289)
914
751
-
751
3,000
-
3,000
12,322
Goodwill
Technology
and software
Software under
development
Brand name &
international
rights
Other intangibles
Total
Balance as at 1
July 2021
Additions-internally
developed
Transfers1
Amortisation
charge
Impairment
BALANCE AS AT 30
JUNE 2022
Balance as at 1
July 2022
Additions-internally
developed
Transfers6
Amortisation
charge
Impairment
BALANCE AS AT 30
JUNE 2023
$’000
10,091
-
-
-
(2,434)2
7,657
7,657
-
-
-
$’000
1,814
-
647
(676)
(871)3
914
914
-
1,062
(288)
(7,657) 5
(714) 5
-
974
$’000
908
800
(647)
-
(310)3
7514
751
311
(1,062)
-
-
-
$’000
3,000
-
-
-
-
3,000
3,000
-
-
-
(3,000) 5
-
$’000
-
-
-
-
-
-
-
-
-
-
-
-
$’000
15,813
800
-
(676)
(3,615)
12,322
12,322
311
-
(288)
(11,371)
974
1 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.
2 Goodwill was impaired following the value in use calculation performed as at 30 June 2022.
3 During the previous 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.
4 The remaining $751k in Software under development at 30 June 2022 relates to the groups Card Linked Offer rewards platform which has been transferred to Technology and
Software on 30 September 2022.
5 Following the value in use calculation as at 31 December 2022, all intangible assets in the Entertainment Business CGU have been impaired.
6 On 30 September 2022, the groups Card Linked Offer rewards platform was transferred to Technology and software when it was in a condition for use as per the expectations of
management.
64
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
involves judgement. In this case, the CGU’s of the Group are considered to be the Entertainment Business and the new Seamless Rewards
business.
Current market conditions, brought on by factors such as economic activity, inflation, cost of living and interest rates, as well as the
downward trend related to revenue and operating profit, has triggered an assessment on whether the carrying value of the Group’s
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 a higher risk of impairment due to the reliance on an improvement in consumer sentiment evidence through
increased spending on hospitality and leisure activities, Merchant honouring offers, inflation and cost of living kept under control, and the
success of the Company’s short-term investments i.e. marketing.
The recoverable amount of the Entertainment Business CGU is determined based on a value-in-use calculation, covering a detailed five-
year forecast, followed by an expected cash flow for the unit’s remaining useful life using the growth rates determined by management.
Where appropriate the value of any proposed sale of cash-generating units has been considered and the model includes a sensitivity
analysis allowing for a range of growth rates.
Allocation of goodwill and indefinite life assets to CGU’s
Goodwill and Brand and International Rights in the Entertainment Business CGU has been impaired to $nil, intangible assets in the Seamless
Rewards CGU has been recorded as ‘software assets’.
A summary of the goodwill and brands allocated to each CGU for the period ended 30 June 2023, post impairment charges, is presented
below:
Entertainment
Business CGU
Seamless
Rewards CGU
$’000
-
-
-
$’000
-
-
-
Total
$’000
-
-
-
Goodwill
Brands and international rights
BALANCE AS AT 30 JUNE 2023
Impairment losses and recoverable amounts
During the 2023 financial year, impairment losses totalling $11,371,326 have been recognised in respect of the following CGU’s. 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 of CGU assets1
Recoverable amount1
IMPAIRMENT CHARGE AT 31 December 20222
Entertainment
Business CGU
Seamless
Rewards CGU
$’000
13,680
2,075
11,605
$’000
974
974
-
Total
$’000
14,654
3,049
11,605
1 The carrying value and the recoverable amount of the Entertainment Business CGU assets reflects those as at 31 December 2022 being the date the impairment test was performed.
No material change in the outcome of the impairment test has occurred in the 6 month period to 30 June 2023, and no additional impairment has been recorded.
2 Intangible assets were impaired following the value in use calculation performed as at 31 December 2022. The impairment amounts to $11,371,326 which has been recorded and
presented as an impairment charge in the profit and loss. Additionally, the leasehold assets and make good provision for a lease the Company is subletting has been impaired by
$234,000 due to the lease terminating in October 2023 and management’s view of the recoverable value of the asset. The remaining assets in the Seamless Rewards CGU, as outlined
above, have not been impaired below their individual recoverable values. Subsequent to the impairment charge at 31 December 2022, no additional charge to impairment has
occurred.
Key assumptions used for calculating recoverable amounts of the Entertainment Business CGU
Cash flows used in the value-in-use calculations are based on forecasts produced by management which have been approved by the
Board. Forecasts consider some increased level of sales from the significant investment in performance marketing, reduced costs from
the restructure and cost out program in June 2022, 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 31 December 2022 (being the date
the impairment test was performed).
65
The resulting impairment charge in FY2023 is driven by changes in the underlying assumptions of the forecasts, as compared to FY2022.
The revision in these underlying assumptions primarily includes a reduced level of marketing investment at a reduced rate of return,
which has resulted from facts and circumstances that have arisen during FY2023. The revision in these underlying assumptions have a
pervasive impact throughout the remaining periods of the forecasts.
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
2023
2%
15%
15%3
8%3
5%4
2022
2%
14%
18%
29%
5%
1 Based on long-term expectations consistent with forecast included in industry reports.
2 Reflects 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 year 1 and 2 years includes:
• For year 1, the cash flows assume growth from investment in performance marketing. Investment is included in the discounted cash flow for both year 1 and 2 to the extent of
$1.2 million per year and assumes a return of $1.50 for each dollar invested per year. The forecast growth also includes the business selling bulk memberships to a range of
corporate customers.
• Renewal and reactivation rates applied to memberships that have expired. The cash flows assume a 40% renewal rate and 4,000 re-activated customers per month.
• 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 This reflects the expected growth rate associated with the travel, leisure and hospitality industries over the medium term.
Impairment assessment for the Seamless Rewards CGU
The Company completed the development of its card linked platform called CLO (Card linked offers) in October 2022 and achieved an
important milestone by signing a Master Services Agreement with one of the largest payment networks in April 2023. As part of the
agreement, the company will manage merchant onboarding for the payment network provider on its CLO platform to earn commission
revenue on each card linked transaction. Onboarding of merchants started in June 2023.
The Directors have determined to perform an impairment test as part of their annual indicators of impairment review for the definite life
software asset. This test has been performed based on a value-in-use calculation, covering a detailed nine-year forecast based on the
estimated useful life of the asset.
The year 1 cash flows used in the value-in-use calculations are based on the forecasts which have been approved by the Board. The
growth rates are based on the level of activity targeted driven by the ease of use of the platform and the number of merchants to be
signed for offering card linked cashbacks to the members.
The Directors consider these forecasts to reflect the best estimates of revenue based on the circumstances available as at 30 June 2023,
noting that there is limited trading performance at the date of signing these financial statements.
The following assumptions were used in the value-in-use calculations.
Life of the Asset1
Post tax discount rate2
Revenue growth rates – year 1
Revenue growth rates – year 2
Revenue growth rates – year 3 to 5
Revenue growth rates – year 6 to 9
Costs % to the sales – years 2 to 9.
Seamless
Rewards CGU
Seamless
Rewards CGU
2023
9 years
14%
Forecasted3
51%4
6%-12%5
4.5% p.a.
58%-68%
2022
-
-
-
-
-
-
-
1 Reflects the useful life of the underlying CLO rewards platform asset.
2 Reflects specific risks relating to the underlying asset and the broader CGU for which it belongs.
3 Revenue for the first year assumes $16 million annual value at the merchants POS with average order value of $60 per order. Commission rate has been assumed at 2%.
4 Revenue for the second year assumes $28 million annual value at the merchants POS driven by average order value of $65 per order. Commission rate has been assumed at 2%.
66
5 Based on long-term expectations.
Based on the above assumptions, management have determined that there is no impairment for the Seamless Rewards CGU as at 30
June 2023. Value-in-use is mainly driven by the key revenue assumptions above and to lesser extent by post-tax discount rate. As a result,
any adverse change in these assumptions would decrease the value-in-use. Costs are mostly in fixed nature.
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
Note 15 | Leases
Accounting policy
Consolidated Group
2023
$’000
828
1,773
2,601
2022
$’000
2,110
2,513
4,623
Lease liabilities are measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
• Fixed payment, less any lease incentives receivable.
• Amounts expected to be payable by the lessee under residual value guarantees.
• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and Payments of penalties for
terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the lessee’s incremental borrowing rate of 5.54%, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions.
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The
Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
CURRENT
Lease liabilities
TOTAL CURRENT LEASE LIABILITIES
NON-CURRENT
Lease liabilities
TOTAL NON-CURRENT LEASE LIABILITIES
TOTAL LEASE LIABILITIES
Consolidated Group
2023
$’000
310
310
-
-
310
2022
$’000
910
910
310
310
1,220
67
Consolidated Group
Balance as at 1 July 2021
Interest charges
Repayments (Including interest)
Balance as at 30 June 2022
Interest charges
Repayments (Including interest)
BALANCE AS AT 30 JUNE 2023
Note 16 | Borrowings
Accounting policy
Non-derivative
Lease liabilities
$’000
2,178
91
(1,049)
1,220
40
(950)
310
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
NZ Business cashflow loan
TOTAL CURRENT BORROWINGS
NON-CURRENT
Transformational capital facility
Interest bearing loan
New Gold Coast Holdings facility
NZ Business cashflow loan
TOTAL NON-CURRENT BORROWINGS
TOTAL BORROWINGS
Consolidated Group
2023
$’000
-
-
699
9
708
1,208
-
17,233
10
18,451
19,159
2022
$’000
1,208
184
633
-
2,025
-
-
6,097
28
6,125
8,150
68
Facility limit
Available funds
Interest rate
Line fees
Admin fees
Maturity date
Security
Interest bearing
loan
$’000
500
-
Additional
growth
operational
facility
$’000
-
-
Transformational
capital facility
New Gold Coast
Holdings Loan facility
NZ Business
Cashflow Loan
$’000
1,200
-
$’000
22,5002
6,0715
$’000
28
-
10% per annum
10% per annum
12.5% per annum
12.5% per annum6
3% per annum
N/A
9.7 per month
2 per month
The line fees have
been replaced by a
fixed monthly admin
fee.
N/A
N/A
N/A
N/A
27.5 per month3
N/A
31/12/20244
31/12/2021
31/12/2024
31/12/2024
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
19/07/20251
Unsecured
Opening balance as at
1 July 2022
Drawn down
Interest expenses
Line fees
Admin fees
Interest repaid
Line fees repaid
Admin fees repaid
Loan repaid
633
-
66
-
-
-
-
-
-
Closing balance as at
30 JUNE 2023
699
184
1,2085
-
-
-
-
-
(184)
-
-
-
-
150
24
-
(150)
(24)
-
-
1,208
6,097
10,500
1,4936
-
394
(783) 6
-
(468)
-
17,233
28
-
-
-
-
-
-
-
(9)
19
1 Monthly repayment have commenced that will see this loan fully repaid by July 2025.
2 The loan facility increased from $5m to $22.5m on 23 May 2022 upon gaining shareholder approval at the EGM.
3 A reduction in administration fees has been negotiated down from $36.5k to $27.5k from 1 February 2023 onwards.
4 Updated repayment terms have been agreed post 30 June 2023 seeing a deferment in repayment until 31 December 2024.
5 Available funds is calculated by deducting the total drawn down from the facility total. The opening balance at 1 July 2022 includes amounts previously drawn down
totaling $5.929m. This excludes any capitalised interest which will be repaid 31 December 2024.
6 Interest payments have been deferred until 31 December 2024. For more details see the New Gold Coast Holdings Limited Loan Facility paragraph below.
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.
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. $0.5m of the convertible loan was left in the loan in which Suzerain had the option to
convert up until 30 June 2020. The option lapsed as the loan was not converted at 30 June 2020. The balance remaining on this loan is
$0.70m (Including interest) and will remain as a secured interest-bearing loan until repaid. The Interest-bearing loan originally matured on 30
September 2020. Updated repayment terms have been agreed post 30 June 2023 seeing a deferment in repayment until 31 December
2024.
69
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 $3.4m of their convertible loan into 104,939,367 ordinary shares at 3.29c per share, on
20 September 2021, in accordance with the convertible loan agreement approved by shareholders at the AGM held in December 2020.
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 2023 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 the 20th of January 2022, the resolutions were
passed to enter a second ranking security deed (ranking behind Suzerain). During the EGM on 23rd of 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 $22.5m
and also deferring the repayment date to 31 December 2024.
As at 30 June 2023 an amount of $16.5m capital has been drawn down leaving a further $6m available to the company for future use.
During the current financial year, the company has renegotiated the administration fee associated with this loan down from $36.5k to $27.5k
per month while also negotiating deferral of interest payments from 1 February 2023 onwards until 31 December 2024. No additional interest
will be charged on the interest that has been deferred and it is not capitalised to the loan.
NZ Business Cashflow Loan
The Group applied for and was granted a one-off loan provided by New Zealand government in July 2020 to support New
Zealand business during the Pandemic. Monthly repayments have commenced that will see this loan fully repaid by July
2025.
Note 17 | Deferred revenue
Accounting policy
Deferred revenue constitutes contract liabilities under AASB 15, as it relates to performance obligations to the members of Entertainment
Publications not yet satisfied. See note 2.
CURRENT
Deferred revenue
TOTAL CURRENT DEFERRED REVENUE
Deferred revenue
TOTAL NON-CURRENT DEFERRED REVENUE
TOTAL DEFERRED REVENUE
Consolidated Group
2023
$’000
3,334
3,334
489
489
3,823
2022
$’000
3,163
3,163
78
78
3,241
70
YEAR ENDED 30 JUNE 2022
Balance as at 1 July 2021
Revenue deferred
Revenue recognised
BALANCE AS AT 30 JUNE 2022
YEAR ENDED 30 JUNE 2023
Balance as at 1 July 2022
Revenue deferred
Revenue recognised
BALANCE AS AT 30 JUNE 2023
Deferred revenue
$’000
4,558
9,047
(10,364)
3,241
3,241
8,278
(7,696)
3,823
The contract liabilities primarily relate to cash receipts from membership sales, for which revenue is recognised over time.
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.
71
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 provision1
Employee benefits
Total current provisions
Non-current
Make good provision
Employee benefits
Total non-current provisions
TOTAL PROVISIONS
1The lease concludes in October 2023.
BALANCE AS AT 30 JUNE 2022
Balance as at 1 July 2022
Additional provisions1
BALANCE AS AT 30 JUNE 2023
1 The provision currently reflects the net present value of expected make good obligations at the remaining property.
2023
$’000
84
433
517
-
51
51
568
2022
$’000
-
829
829
78
46
124
953
Make good
provision
$’000
78
78
6
84
72
Note 19 | Issued capital
Ordinary shares - fully paid on issue
1,231,279,015
1,231,279,015
132,143
132,143
Consolidated Group
2023
shares
2022
shares
2023
$’000
2022
$’000
INP has no limit to its authorised share
capital.
Movements in ordinary share capital
Ordinary shares at beginning of the year
Issues during the year:
Date
Number of shares
Issue price $
$’000
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
867,002,904
104,740,097
189,186,349
45,817,543
19,545,455
4,986,667
-
1,231,279,015
1,231,279,015
-
-
0.03
0.02
0.02
0.02
0.03
0.02
0.02
-
-
-
122,984
3,448
4,162
1,008
431
150
22
105
(167)
132,143
132,143
-
-
BALANCE AS AT 30 JUNE 2022
Ordinary shares at beginning of the year
Issues during the year:
-
Less, costs of
issues
BALANCE AS AT 30 JUNE 2023
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 the 10 of 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 the 10 of 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.
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 acknowledged, due to Covid-19, many staff worked reduced hours or were on reduced salaries for a
certain period of time. 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 reporting period ending 30 June 21. No further shares were
issued under this arrangement in the current reporting period ending 30 June 2023.
73
The Board also implemented a Loan Funded Share Scheme being a three-year long-term incentive plan for the former CEO and former
CFO, which will vest over a three-year period. Vesting conditions relate to achieving the FY2021 Board approved budget, and for the FY2022
and FY2023 financial years, will vest where the share price is greater than $0.10 and $0.15, respectively. Shareholder approval was granted
at the AGM held on the 16th of December 2020. Refer to note 20 for further details. The former CEO & former CFO has since left the group
and their entitlements under the LFS scheme has been modified and settled where applicable. 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, June 2022 or June 2023. The
ESS is no longer effective as all associated employees who were party to this arrangement have left the Group in both the current and prior
reporting periods. A new LTI plan is currently being developed by the Remuneration Committee and Management to replace the ESS.
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 2021
Amortised during the period
Forfeited during the period
Movement during the period
BALANCE AS AT 30 JUNE 2022
Balance as at 1 July 2022
Amortised during the period
Lapsed during the period
Forfeited during the period
BALANCE AS AT 30 JUNE 2023
Consolidated Group
Share based
payments reserve
Foreign currency
translation reserve
$’000
362
201
(227)
(169)
167
167
21
(83)
(105)
-
$’000
371
-
-
(49)
322
322
-
-
24
346
Total
$’000
733
201
(227)
(218)
489
489
21
(83)
(81)
346
74
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 and Ben Newling on 28 February
2023, no options are on issue at 30 June 2023. The original terms of the LFS arrangements can be summarised as follows:
1
2
3
4
5
6
7
8
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;
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;
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;
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;
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;
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
Prior to the shares becoming unencumbered, the executive is required to repay the loan.
Under the applicable accounting standards, the LFS shares are accounted for as options, which give rise to share based payments.
In the 2022 financial year, 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.
As at 30 June 2022, there were no remaining LFS on issue with Henry Jones.
During the 2023 financial year, 5,382,791 of Ben Newling’s share options lapsed and the remaining 6,202,252 share options were forfeited
upon his resignation. Prior to his resignation, the LFS continued to be amortised through the share-based payments reserve.
As at 30 June 2023, there were no remaining LFS on issue.
Held on 1 July 2022
Lapsed
Forfeited
Held on 30 June
2023
Vested and exercisable as of
30 June 2023
KMP
Ben Newling
11,585,043
(5,382,791)
(6,202,252)
Total
11,585,043
(5,382,791)
(6,202,252)
-
-
-
-
75
Balance as at 1 July 2021
Amortised during the period1
Forfeited during the period2
Movement during the period2
BALANCE AS AT 30 JUNE 2022
Balance as at 1 July 2021
Amortised during the period
Lapsed during the period3
Forfeited during the period3
BALANCE AS AT 30 JUNE 2023
Share based payments reserve
Henry Jones
$’000
254
142
(227)
(169)
-
-
-
-
-
-
Ben
Newling
$’000
108
59
-
-
167
167
21
(83)
(105)
-
Total
$’000
362
201
(227)
(169)
167
167
21
(83)
(105)
-
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 the 24th of 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
were allocated in February 2022. The modification has been fair valued through the profit and loss as at 30 June 2022.
3 During current reporting period 5,382,791 of Ben Newling’s share options lapsed and the remaining 6,202,252 share options were forfeited upon his resignation in February 2023.
Note 21 | Key Management Personnel compensation
The total remuneration paid to KMP of the Group during the year was as follows:
Consolidated Group
Short-term employee benefits
Post-employment benefits
Termination payment benefits
Share based payments1
TOTAL KMP COMPENSATION
2023
$’000
860
43
-
(167)
736
2022
$’000
1,056
53
163
59
1,331
1 Shared based payments for the current reporting period comes from the reversal of previously recognised share-based payment expenses relating to the former CFO, Ben
Newling, of $167k.
Note 22 | Auditor's remuneration
Auditing or reviewing the financial statements
Taxation services - compliance
Other services
TOTAL
Consolidated Group
2023
$’000
259
14
2
275
2022
$’000
255
12
1
268
76
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
Principal
place of
business
Australia
New Zealand
Australia
Australia
Australia
Ownership interest
held by the Group
2023
%
100
100
100
100
100
2022
%
100
100
100
100
100
1 The Employee share plan trust (“ESP”) was established on 24 April 2020 to provide benefits to current employees, directors and contractors (“the Beneficiaries”). Under the employee shares
scheme, the trustee, Entertainment Trus Co Pty Ltd will purchases the Company’s shares currently held under the previous directors. The shares will be held until the vesting day for the benefit
of the Beneficiaries, in such numbers or proportions that the trustee deem reasonable.
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 preliminary 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.
Note 24 | Parent company information
a) Information relating to IncentiaPay Limited (the Parent Entity):
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Total loss1
TOTAL COMPREHENSIVE INCOME1
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Non-current assets2
TOTAL ASSETS
Liabilities
Current liabilities
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2023
$’000
(34,729)
(34,729)
1,327
8
1,335
1,366
20,341
21,707
2022
$’000
(8,315)
(8,315)
1,568
24,918
26,486
3,675
8,370
12,045
132,143
(17)
(152,498)1
(20,372)
132,143
150
(117,852)1
14,441
1 The movement between accumulated losses from 2023 & 2022 do not tie back to the total loss as shown in the Profit and loss. FY2023 relates to the $83k lapsed options for the former
CFO, Ben Newling. See note 20 for further details.
2 The reduction in Non-current assets are mainly due to the impairment of the Entertainment Publications loan account & investments in subsidiaries.
77
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.
Set out below is a consolidated balance sheet as of 30 June 2023 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
FY2023
$’000
1,601
577
49
1,084
3,311
7,547
42
-
974
8,563
11,874
11,233
310
699
2,864
496
15,602
-
-
18,440
415
51
18,906
34,508
(22,634)
132,141
322
(155,097)
(22,634)
FY2022
$’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
10,650
1,801
310
6,096
68
123
8,398
19,048
(2,730)
132,141
489
(135,360)
(2,730)
See note 25 for the Consolidated Statement of Profit or Loss for the year ended 30 June 2023 of the parties to the Deed of Cross Guarantee.
All entities incorporated in Australia are the parties of Deed of Cross Guarantee.
78
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
two segments, being the Entertainment business and Seamless Rewards business. This has changed from previous reporting periods
where the group only reported on one CGU being the Entertainment Business. The change came into effect when the Seamless
Rewards platform went live and started generating revenue during the current reporting period. Therefore we have enhanced our
segment reporting by including additional information on the performance of individual CGUs to accompany our reporting on
geographical location.
Entertainment
Year Ended
Seamless Rewards2
Year Ended
Total
Year Ended
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
Other expenses
June 23
$’000
17,194
(9,332)
(11,605)
(8,810)
(450)
(399)
(2,211)
(285)
(1,292)
(1,035)
(46)
(1,351)
Segment loss before income tax
(19,622)
June 22
$’000
20,620
(10,151)
(3,616)
(12,596)
(1,171)
(247)
(919)
(2,654)
(973)
(2,270)
33
(1,687)
(15,631)
June 23
$’000
55
(20)
-
(217)
(89)
-
-
-
-
(184)
-
(313)1
(768)
Segment total assets
3,680
16,854
1,000
Segment total non-current assets
42
12,949
974
Segment total liabilities
17,278
18,185
9,183
June
22
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
June 23
June 22
$’000
17,249
$’000
20,620
(9,352)
(10,151)
(11,605)
(3,616)
(9,027)
(12,596)
(539)
(1,171)
(399)
(2,211)
(285)
(1,292)
(1,219)
(46)
(247)
(919)
(2,654)
(973)
(2,270)
33
(1,664)
(1,687)
(20,390)
(15,631)
4,680
16,854
1,016
12,949
26,461
18,185
1 Other expenses in Seamless Rewards consists of fees paid for contracting merchants to participate in the group’s Seamless Rewards program.
2 The Card Linked Offers CGU was first referenced in the June 2022 annual report. However, the group has now decided to rename this CGU to Seamless Rewards going
forward. The group always refers to this new product as Seamless Rewards in all announcements to the market.
79
Geographical location
The profit and loss attributable to external customers is disclosed below based on the country in which the revenue is derived and billed.
Australia
Year Ended
New Zealand
Year Ended
Total
Year Ended
June 23
$’000
June 22
$’000
June 23
$’000
June 22
$’000
June 23
$’000
June 22
$’000
Revenue
Revenue from external customers
15,950
18,037
1,178
1,753
17,128
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 loss before income tax
78
-
43
123
676
30
-
-
-
1
-
-
78
-
43
124
676
30
16,071
18,866
1,178
1,754
17,249
20,620
(9,000)
(8,533)
(539)
(11,605)
(2,230)
(4,828)
(36,735)
(20,664)
(9,661)
(12,216)
(1,128)
(3,615)
(919)
(7,831)
(35,370)
(16,504)
(352)
(494)
-
-
19
(77)
(904)
274
(490)
(380)
(43)
-
-
32
(881)
873
(9,352)
(10,151)
(9,027)
(12,596)
(539)
(1,171)
(11,605)
(3,615)
(2,211)
(4,905)
(919)
(7,799)
(37,639)
(36,251)
(20,390)
(15,631)
Note 26 | Capital commitments
Capital Commitments
The group has no capital commitments as at 30 June 2023.
Note 27 | Contingent liabilities and contingent assets
Security deposit
The parent entity has given the following guarantees as at 30 June 2023:
•
Lease of the Sydney office space, $0.3m.
• Guarantee for credit cards facility, $0.1m.
Note 28 | Financial risk management
Accounting policy
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and from subsidiaries
and leases.
The totals for each category of financial instruments, measured in accordance with AASB 9: Financial Instruments as detailed in the
accounting policies to these financial statements, are as follows:
80
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
Financial risk management policies
Consolidated Group
2023
$’000
1,825
622
445
2,892
2,601
310
19,159
22,070
2022
$’000
978
1,328
576
2,882
4,623
1,220
8,150
13,993
Senior management meet on a regular basis to review currency and interest rate exposure and to evaluate treasury management
strategies where relevant, in the context of the most recent economic conditions and forecasts.
The overall risk management strategy seeks to assist the consolidated Group in meeting its financial targets, while minimising potential
adverse effects on financial performance. Its functions include the review of the use credit risk policies and future cash flow requirements.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted
and include contractual liabilities interest payments and exclude the impact of netting agreements.
CONTRACTUAL CASH FLOWS
Within 1 year
1- 5 years
> 5 years
Total
MATURITY
ANALYSIS
2023
Carrying
value
$’000
2022
Carrying
value
$’000
2023
2022
2023
2022
2023
2022
2023
2022
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
FINANCIAL
ASSETS
Cash
Trade debtors
Other current
assets
FINANCIAL
LIABILITIES
1,825
622
445
978
1,328
576
1,825
622
445
978
1,226
576
Trade and other
payables
(310)
Lease liabilities
(19,159)
Borrowings
(2,601)
(4,623)
(2,601)
(4,623)
(1,220)
(8,150)
(311)
(1,283)1
(950)
(3,552)
(21,785)
102
-
-
(311)
(7,762)
1,825
622
445
978
1,328
576
-
-
-
(2,601)
(4,623)
(311)
(23,068)
(1,261)
(11,314)
1 Post 30 June 2023 the group agreed a loan repayment deferment until 31 December 2024 that will see $770k move into the 1-5 year band in future periods.
81
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.
30 June 2023
Assets and
liabilities at
carrying
value
Assets and
liabilities
not at fair
value
Assets and
liabilities at
fair value
$’000
$’000
Level 1
Level 2
Level 3
$’000
$’000
$’000
Fair value
Financial assets
Cash
Trade debtors
Other receivables
Other current assets
1,825
252
370
445
1,825
252
370
445
Financial liabilities
Trade and other
payables
Lease liabilities
Borrowings
(2,601)
(2,601)
(310)
(19,159)
(310)
(19,159)
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
$’000
$’000
$’000
$’000
$’000
$’000
978
665
663
576
(4,623)
(1,220)
978
665
663
576
(4,623)
(1,220)
(8,150)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2022
$’000
Financial assets
Cash
Trade debtors
Other receivables
Other current assets
Financial liabilities
Trade and other
payables
Lease liabilities
Borrowings
((8,150)
Recognised fair value measurements
Total
$’000
1,825
252
370
445
(2,601)
(310)
(19,159)
Total
$’000
978
665
663
576
(4,623)
(1,220)
(8,150)
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.
82
Valuation techniques used to determine fair values
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
•
indirectly (i.e. derived from prices).
•
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Specific financial risk exposures and management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate
risk and foreign currency risk.
Market risk
a. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by customers of contract obligations that could
lead to a financial loss to the Group.
i. Risk management
Credit risk is managed through the maintenance of systems for the approval, granting and renewal of credit limits, regular monitoring of
exposures against such limits and monitoring of the financial stability of significant customers, ensuring to the extent possible that customers
to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Depending on the division
within the Group, credit terms are generally 14 to 30 days from the invoice date.
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period excluding the value of any
collateral or other security held, is equivalent to the carrying amount and classification of those financial assets (net of any provisions) as
presented in the statement of financial position.
The Group has no significant concentrations of credit risk with any single customer or group of customers. $16m 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 $19.2m disclosed in the 2023 borrowings time band is $1.3m, of which $0.6m is part interest and part administration fees on
loans and the other $0.7m is the loan repayment of the Skybound Interest bearing loan, which is ‘within 1 year’. Post 30 June 2023 the
repayment of the Skybound Interest bearing loan has been deferred until 31 December 2024 which will see the repayment moved into
the ‘within 1-5 years’ band.
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.
83
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. The funds have been used to enhance the Group’s
technology capabilities. During the AGM on the 20th of January 2022, the resolutions were passed to enter into a second ranking security
deed (ranking behind Suzerain). During the current financial year, the company has renegotiated the administration fee associated with
this loan down from $36.5k to $27.5k per month while also negotiating deferral of interest payments from 1 February 2023 onwards until 31
December 2024. At 30 June 2023 there was still $6m available to the company on this facility. See note 16 for more details.
ii. Maturities of financial liabilities
Interest bearing loan
As at 30 June 2023, the interest bearing loan with Suzerain matured on 30 September 2020. Updated repayment terms have been agreed
post 30 June 2023 and the facility will now be repaid on 31 December 2024. See note 16.
Additional growth operational facility
As at 30 June 2023, 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 2023, the Transformational capital facility with Skybound matured on 11 February 2022.
The company has successfully renegotiated the repayment date to 31 December 2024. See note 16.
New Gold Coast Holdings Limited Loan facility
As at 30 June 2023, the loan facility with New Gold Coast Holdings Limited will mature on 31 December 2024. See note 16.
c. Foreign exchange risk
The Group is exposed to foreign currency risk on the sale of memberships and other fee income from foreign entities and on the
translation of its foreign subsidiaries. Senior management has not hedged foreign currency transactions as at 30 June 2023 as $1.2m of
total revenue is in NZD and the foreign currency fluctuation between AUD and NZD is historically insignificant at 0.99% 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 New Zealand dollar, was as follows:
Trade debtors
Trade payables
2023
NZD
$’000
68
(39)
2022
NZD
$’000
46
(179)
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 2023
+/- 0.99% in foreign exchange rates
Year ended 30 June 2022
+/- 0.5% in foreign exchange rates
d. Interest rate risk
Profit
$’000
(5)
21
Equity
$’000
9
70
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 31
December 2024.
Interest relating to the borrowings with Skybound is paid monthly at a fixed rate of 12.5% and repayable by 31 December 2024.
84
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 commission3
Salary recharge4
Purchases of services
Rent5
Customer service6
Consulting fees7
Technology Consultancy8
Communication Infrastructure9
Consolidated Group
2023
$’000
3
61
6
93
7
17
-
-
1
2022
$’000
-
56
3
-
11
252
154
17
21
1 Sale of Entertainment memberships to Leisurecom Group, a related entity of Suzerain.
2 Enterprise sales to NobleOak Life Insurance, an entity related to Stephen Harrison, the Chairman of the Group.
3 Travel commission from Leisurecom Group Pty Ltd for Entertainment Travel bookings with accommodation venues previously under MyBookings
4 Recharge of salary expenses to Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
5 Gold Coast office space provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
6 Customer service provided by Leisurecom Group Pty Ltd, a controlled entity of Suzerain.
7 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.
8 Technology consultancy services with Fintech Services (AUST) Pty Ltd, a related party due to common directors Dean Palmer and Jeremy Thorpe.
9 Communication network costs on charged from Leisurecom Group Pty Ltd for Harrington Street location.
Outstanding balances arising from sales/purchases of goods and services:
Consolidated Group
Current payables
Leisurecom Group Pty Ltd1
Current receivables
Leisurecom Group Pty Ltd2
2023
$’000
7
10
2022
$’000
1
-
1 Office space provided by a related entity of Suzerain.
2 Combination of Membership subscriptions, Travel commission and recharged salary expenses owing by a related entity of Suzerain.
85
Outstanding balances arising from loan agreements:
Borrowings
Interest bearing loan
Additional growth operational facility
Transformational capital facility
New Gold Coast Holdings
Consolidated Group
2023
$’000
699
-
1,208
17,233
2022
$’000
633
184
1,208
6,097
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 NGC, related parties to Jeremy Thorpe (Director) and Dean Palmer (Director), have provided a total of
$34m loan facilities to the Group. During the period, the Group drew down $10.5m 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 the 23rd of
September 2021.
• Suzerain participated in the rights issue on the 8th of December 2021, acquiring 162,612,401 shares, which was announced to the
market on the 10th of November 2021. See note 19 to the annual financial statements for additional detail.
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.
IncentiaPay has funded $0.5m during the reporting period ending 30 June 2022. During the current reporting period the Group decided to
discontinue the Wine Bunch operations as part of strategic realignment. The developed assets remain controlled by the three participants
through a contractual arrangement.
In the event the assets are commercialised, the Group will recognise: 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 will be 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.
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
FY2023
$’000
-
-
FY2022
$’000
120
120
1 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.
2 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.
¶
Note 31 | Events after the reporting period
The Group has successfully re-negotiated the repayment of the Skybound Interest Bearing loan until 31 December 2024.
86
Directors’
Declaration
109
109
87
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 86, are in accordance with
the Corporations Act 2001 and:
Comply with Australian Accounting Standards, which, as stated in the notes to
the financial statements, constitutes compliance with International Financial
Reporting Standards (IFRS); and,
Give a true and fair view of the financial position as at 30 June 2023 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.
Level 8, Suite 8, 65 York Street, Sydney 2000 NSW
www.incentiapay.com
88
Independent
Auditor's Report
89
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 2023 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 2023
• Consolidated statement of profit or loss and other comprehensive
income, Consolidated statement of changes in equity, and
Consolidated statement of cash flows for the year then ended
• Notes including a summary of significant accounting policies
• Directors’ Declaration.
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 these requirements.
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.
90
Material uncertainty related to going concern
We draw attention to Note 1, “Going Concern” in the financial report. The conditions disclosed in Note 1, indicate a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and,
therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amounts
stated in the financial report. Our opinion is not modified in respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of uncertainty regarding
events or conditions casting significant doubt in the Group’s assessment of going concern. This included:
• Analysing the cash flow forecasts by:
o Evaluating the underlying data used to generate the forecasts for consistency with other information tested by us,
and our understanding of the Group’s intentions, and past results and practices.
o Assessing the planned levels of operating cash inflows and outflows, including capital expenditures for feasibility,
timing, 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.
• 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 (who are related parties) to understand the financing options available
to the Group, and assess the level of associated uncertainty with respect to the availability of new and existing facilities,
accommodative repayment terms including the extension of existing maturity dates and the conversion of outstanding
facilities into equity.
• 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 principle matters
giving rise to the material uncertainty.
91
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the
Financial Report of the current period.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have determined the
matter described below to be the Key Audit Matter.
Recoverable amount of cash generating units and impairment of goodwill and intangible assets ($0.974 million)
Refer to Note 1(g) and 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 testing of
goodwill and intangible assets for impairment.
We focused on the significant forward-looking
assumptions the Group applied in its value-in-use
models, including:
•
forecast cash flows – the Group has a history of
operating losses in the Entertainment Business
CGU due to the demand in its existing products
and services not being sufficient to cover
operating costs and is further exposed to
current and expected future market conditions
such as economic activity, inflation, cost of
living and interest rate pressures. Further, the
new Seamless Rewards business was launched
during the year with limited observable
operating history at year end, making forecast
cash flows more challenging to estimate. We
focussed on the key drivers of forecast cash
flows for the Entertainment Business CGU
including renewal and activation rates applied
to memberships and return on marketing
spend, and for the Seamless Rewards CGU
including annual value at the merchants POS
and average order value. These conditions
increase the possibility of goodwill and
intangible assets being impaired, plus the risk of
inaccurate forecasts or a significantly wider
range of possible outcomes for us to consider.
•
forecast growth rates – in addition to the
uncertainties described above, the Group’s
models are 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.
• discount rates – these are complicated in
nature and vary according to the conditions and
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 rates. The Group’s
Working with our valuation specialists, our procedures included:
• We considered the appropriateness of the value-in-use method
applied by the Group to perform its impairment test of goodwill
and intangible assets against the requirements of the
accounting standards.
• We assessed the integrity of the value-in-use models used,
including the accuracy of the underlying calculation formulas.
• We compared the forecast cash flows for year one in the value-
in-use models to Board approved forecasts.
• We considered the sensitivity of the models by varying key
assumptions, such as forecast growth rates and discount rates,
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 models.
• For the Entertainment Business CGU, we:
o challenged the Group’s significant forecast cash flow and
growth assumptions, including renewal and activation rates
applied to memberships and return on marketing spend in
light of observed historical and expected future demand in its
products and services.
o assessed these key assumptions for consistency with the
Group’s strategy, our knowledge of the business, industry,
recent actual cash flows and against publicly available
economic data representing current and expected future
market conditions.
o assessed cash flow forecasts and growth rates based on
our experience regarding the feasibility of these in the
industry/economic environment in which they operate.
o applied increased scepticism to forecasts in the areas
where previous forecasts were not achieved.
• For the Seamless Rewards CGU, we
o challenged the Group’s significant forecast cash flow and
growth assumptions, including annual value at the merchants
POS and average order value renewal, in light of observed
limited historical and expected future demand in its products
92
modelling is highly sensitive to small changes in
discount rates.
intangible assets
The Group’s uses complex models to perform their
testing of goodwill and
for
impairment. The models are
largely manually
developed, use adjusted historical performance as
well as anticipated future growth, 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,
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
their consistent
application.
for assumptions, and
using
In addition to the above, the Group recorded an
impairment charge of $11.4 million against goodwill
and intangible assets as outlined in Note 13 to the
Financial Report. This further increased our audit
effort in this key audit area.
We involved valuation specialists to supplement our
senior audit team members in assessing this key
audit matter.
and services.
o assessed these key assumptions for consistency with the
Group’s strategy, our knowledge of the business, industry and
recent actual cash flows.
o challenged key cash flow drivers being annual value at the
merchants POS and average order value against the Group’s
merchant data recorded to date and to publicly available
economic data representing forecast consumer spending and
expected average order value.
o applied increased scepticism to forecasts in the areas
where previous forecasts were not achieved.
• We compared the growth rates to published studies of industry
trends and expectations and considered differences for the
Group’s operations. We used our knowledge of the Group, its
past and current performance, business and customers, and
industry experience.
• We analysed the Group’s discount rates against publicly
available data of a group of comparable entities adjusted for
risk factors associated with each CGU.
• We re-assessed the Group’s determination of its CGUs in light
of changes in its business, against our understanding of these
changes and the requirements of the accounting standards.
• We compared the Group’s year-end market capitalisation to its
enterprise value, to inform our evaluation of the Group’s
impairment assessment.
• We recalculated the impairment charge against the recorded
amount disclosed.
• We assessed the disclosures 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
93
view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company’s ability to continue as a going concern and whether the use of the going
concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement,
whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 2023, 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 28 to 37 of
the Directors’ report for the year ended 30 June 2023.
Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing
Standards.
KPMG
Jeff Frazer
Partner
Gold Coast
4 September 2023
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ASX Additional
Information
119
119
95
ASX Additional Information
As at 24 August 2023
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
64
28
8
205
177
482
4,669
93,790
66,181
11,634,816
1,219,479,559
1,231,279,015
0.00
0.01
0.01
0.94
99.04
100.00
Unmarketable parcels
The number of security investors holding less than a marketable parcel of 38,461 securities ($0.008 on
24/08/2023) is 222 and they hold 4,970,405 securities.
Substantial holders
RANK
NAME
CURRENT BALANCE
% ISSUED CAPITAL
1
2
Suzerain Investments Holding Limited
861,845,725
Australia Fintech Plus Pty Ltd
65,724,825
70.00
5.34
96
Top 20 Holders of fully paid ordinary shares (as at 23 August 2023)
The names of the twenty largest security holders of quoted equity securities are listed below:
Rank Name
23 Aug 2023
%IC
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SUZERAIN INVESTMENTS HOLDINGS LTD
861,845,725
70.00
AUSTRALIAN FINTECH PLUS PTY LTD
BNP PARIBAS NOMS PTY LTD
IT'S TAKEN PTY LTD
AFRICAN KLIP PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
YOUTH TRAVEL PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR DEVEN HARRISON
EVEREST MB PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR DAVID RICHARD PALMER
MR LAWRENCE ALLAN PAPPIN
SHARESIES NOMINEE LIMITED
MR HENRY MICHAEL HOY JONES
STEPHEN HARRISON
MS WENDY CARTER
CORELLA RESOURCES LTD
MR BRIAN ROBERT HALL & MRS LEIGH ANNE HALL
INVIA CUSTODIAN PTY LIMITED
65,724,825
61,923,364
21,574,973
16,440,091
13,314,671
11,079,417
10,233,249
7,684,167
7,518,000
7,066,143
6,506,132
6,363,636
5,002,470
4,986,667
4,754,285
4,649,854
4,535,484
4,500,000
4,090,909
5.34
5.03
1.75
1.34
1.08
0.90
0.83
0.62
0.61
0.57
0.53
0.52
0.41
0.40
0.39
0.38
0.37
0.37
0.33
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 the voluntary escrow until 21 October 2023.
On market by back
There is currently no on-market share buyback.
97
Corporate
Directory
Directors
Mr Dean Palmer Non-Executive Chairman
Dr Charles Romito Non-Executive Director
Ani Chakraborty Managing Director
Company Secretary
Mr Sean Coleman
Registered Office
Principal place of business
Share registry
Auditor
Legal advisers
Bankers
Level 8, Suite 8, 65 York Street
Sydney NSW 2000
Level 8, Suite 8, 65 York Street
Sydney NSW 2000
Link Market Services
ACN 083 214 537
Level 12, 680 George Street
Sydney NSW 2000
+61 2 8280 7100
KPMG
Level 38, Tower Three, International Towers Sydney
300 Barangaroo Avenue, Sydney, NSW 2000
Sundaraj & Ker
Level 31, 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 2023 can be
found on the Company’s website at https://www.incentiapay.com/governance/.
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Level 8, Suite 8, 65 York
Street
Sydney NSW 2000
Australia Email:
info@incentiapay.com
Phone: (02) 8256 5300
www.incentiapay.com
99