Pembina Pipeline
Annual Report 2019

Plain-text annual report

Annual Report 2019 Pureprofile Limited ABN 37 167 522 901 Contents Our Mission, Vision & Values ....................................................................... Financial Highlights ............................................................................................ Chairman’s Letter ............................................................................................... Meet our Directors ............................................................................................ Directors’ report .................................................................................................. Auditor’s independence declaration ...................................................... Statement of profit or loss & other comprehensive income... Statement of financial position ................................................................. Statement of changes in equity ................................................................ Statement of cash flows ................................................................................. Notes to the financial statements ........................................................... Directors’ declaration ....................................................................................... Independent auditor’s report to the members of Pureprofile Ltd Corporate directory .......................................................................................... Shareholder information ............................................................................... 2 15 16 18 19 20 21 63 64 68 69 WE BELIEVE IN A WORLD WHERE CONSUMERS HAVE ACCESS TO MORE OF WHAT THEY WANT, AND BUSINESSES HAVE THE OPPORTUNITY TO CONNECT WITH MORE OF THE PEOPLE THAT MATTER. General Information The financial statements cover Pureprofile Ltd. as a group consisting of Pureprofile Ltd. and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Pureprofile Ltd.’s functional and presentation currency. Pureprofile Ltd. is a listed public Company limited by shares, incorporated and domiciled in Australia. Its registered and principal business address is: Level 20, 233 Castlereagh Street, Sydney NSW 2000. A description of the nature of the group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements. The financial statements were authorised for issue in accordance with a resolution of directors, on 27 September 2019. The directors have the power to amend and reissue the financial statements. Our Mission, Vision & Values Mission: Help people thrive in the new world. Vision: Create a world where people know what’s important. Values: Reflect our identity and help shape our culture. We are committed to: • Discovery: We’re always learning, keeping an open mind, empowering creative thinking and always innovating. • Ownership: We take ownership for delivering work we are proud of and we genuinely care about our relationships with stakeholders. • Trust: Honesty, transparency and mutual respect are non-negotiable. We act with integrity and kindness. • Teamwork: We work as a team, respect our stakeholders and get in the trenches and win together. WE ASPIRE TO BE THE FIRST CONSUMER-TRUSTED DATA BRAND. Data & Insights, powered by technology We believe in a world where consumers have access to more of what they want, and businesses have the opportunity to connect with more of the people that matter. Our platform helps businesses identify, connect and engage with consumers as part of a mutually beneficial relationship. By capturing declared, first-party data and the formation of deep consumer profiles, our clients gain the ability to segment, target and engage with their audiences for the purpose of research, advertising, customer acquisition and consumer profiling. In exchange, consumers receive value for their data and opinions, both as an immediate reward and through the delivery of preferred, more relevant content and advertising. Pureprofile is at the nexus of consumers realising the value of their data and the importance of transparency. We aspire to be the first consumer-trusted data brand by enabling consumers to take ownership and control of their data and helping them derive substantial benefit from it. Financial Highlights Discontinued declining / lower margin businesses NPAT loss improved by $11.5m through decrease in non- cash write down of intangibles and amortisation expenses Extension on all debt facilities to 1 October 2020 Revenue on continuing businesses was $26.7m up 5% on pcp D&I business grew revenue 14% with UK growing 89% Media business grew revenue 3%, ramping up to 23% in H2 Further cost savings of $0.5m on continuing businesses Operating cash flow improved by $1.9m through increased collection of receipts in H2 Continuing EBITDA was up 49% driven by growth in revenue, gross margin and cost savings Chairman’s Letter DEAR FELLOW INVESTORS, It is my privilege to present to you Pureprofile’s FY2019 Annual Report. There is no doubt that it has been a year of challenges and changes, most recently to the composition of the Board and senior management, which included me stepping back into an executive role as Executive Chairman. With a leaner and more agile team to continue the focus on growing our core business, I am confident that we will return to positive operating cash flow and EBITDA. In this regard, we have provided to the market an FY20 EBITDA guidance of $2.7m - $3.0m. We have reached this position after completing the first phase of our turnaround strategy, which included: • a $5m reduction in the annualised cost base; • simplification of the business with the sale of the Company’s media trading and ANZ lead generation business units; and revenue growth of its core Data & Insights and Media offerings. • I am especially pleased that the next phase of the Company’s turnaround will be led by Mrs Melinda Sheppard, who has been promoted from Chief Financial Officer to Chief Operating Officer. Melinda has been instrumental over the past year in ensuring that the Company’s finances continue to be managed tightly and prudently. WITH A LEANER AND MORE AGILE TEAM TO CONTINUE THE FOCUS ON GROWING OUR CORE BUSINESS, I AM CONFIDENT THAT WE WILL RETURN TO POSITIVE OPERATING CASH FLOW AND EBITDA. In working with her, Melinda has not been afraid to roll up her sleeves and get down into the weeds and she shows genuine enthusiasm to see this Company succeed. I can think of no one better to take on the day-to-day management responsibilities for Pureprofile and she has the strongest confidence and support of the Board. I welcome our latest board appointment, Mr Aaryn Nania, as a non-executive director. Aaryn is also a co-founder and director of Lucerne Investment Partners, Pureprofile primary lender. Lucerne has been supportive of Pureprofile’s for almost 2 years and to have Aaryn on board as a director shows the commitment Lucerne has to working with us as true partners. The past 18 months have been challenging for Pureprofile as it has undergone a fundamental transformation. Notwithstanding this, the underlying fundamentals of the Company are encouraging and continue to improve. On a continuing business basis: • Total revenue was $26.7m, up 5% on FY2018 • Gross margin was 58%, down 1% on FY2018 • EBITDA was ($1.3m), up 49% on FY2018 It is even more impressive to note that the Company’s core D&I and Media businesses grew 14% and 3% respectively over the year. More challenging though was the Performance UK business unit, which declined 35%. On a statutory basis (which includes the discontinued businesses that were sold during the year), the results are: • Total statutory revenue of $37.8m • Net Profit (Loss) After Tax of ($14.5m) • Operating cash flow improvement of $1.9m The NPAT position was primarily attributable to the final, non- cash write down of intangibles relating to the sale of the Media Trading and Performance ANZ businesses. Accordingly, with the impact of these material write downs behind us, it is expected that NPAT will significantly improve in the coming financial year. There is still much work to do as we enter the next phase of Pureprofile’s turnaround. However, the direction and strategic focus of the business is clear: maintain net positive cash flow; continue to grow revenue; and explore capital restructuring initiatives that reduce our debt exposure. As always, I’d like to thank my board colleagues for their commitment and contribution over the year. I’d also like to thank our talented, hard-working staff across the globe for all their efforts. And, of course, to our shareholders, whose continued patience and support is greatly appreciated. ANDREW EDWARDS CHAIRMAN Meet our Directors ANDREW EDWARDS Executive Chairman Andrew has more than 30 years of marketing experience and, prior to joining Pureprofile, was the Chairman and CEO of internationally- renowned advertising and marketing agency Leo Burnett Group UK and Presi- dent of Leo Burnett Central Europe. Andrew also sat on its Global Executive Leadership Team with the specific remit of M&A (EMEA) and the rollout of the groups Social and Mobile Strategy. Prior to his roles at Leo Burnett, Andrew ran Australia’s most-awarded direct marketing company, Cartwright Williams. Andrew now focusses his time on his portfolio of business interests. SUE KLOSE Non-Executive Director Sue is an experienced executive, board director and team leader, with a diverse background in digital business growth, corporate development, strategy and marketing. Previously the Chief Marketing Offi- cer of GraysOnline, she was responsible for brand strategy, marketing operations and digital product strategy. Prior roles in consulting and global media companies, including 12WBT and News Ltd, Sue has led strategic planning and development and helped teams continually seek new opportunities for growth and innovation. As Director of Digital Corporate Development for News Ltd, Sue screened hundreds of potential investments, leading multiple acquisitions, establishing the CareerOne and Carsguide joint ventures. Sue is currently a Non-Executive Director of ASX-listed Nearmap, and After- care, one of Australia’s largest mental health care providers. AARYN NANIA Non-Executive Director Aaryn is co-founder and Head of Funds Management at Lucerne Investment Partners – an active, long-term investor in both listed and unlisted compa- nies globally. Prior to Lucerne, Aaryn was a Portfolio Manager at Canadian investment bank Canaccord Genuity (Australia) where he established and managed the Absolute Return Portfolio. In addition to his directorship at Lucerne, Aaryn is currently a non- executive director of Headware, an optometry group, Connexion Telematics, an ASX-listed software company, holds a Bachelor of Commerce from the University of Melbourne and is a Member of the Australian Institute of Com- pany Directors. Directors’ Report Pureprofile Ltd Directors' report 30 June 2019 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'group') consisting of Pureprofile Ltd (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2019. Directors The following persons were directors of Pureprofile Ltd during the whole of the financial year and up to the date of this report, unless otherwise stated: Andrew Edwards - Executive Chairman (formerly Non-Executive, appointed Executive on 28 August 2019) Sue Klose - Non-Executive Director (appointed on 1 September 2018) Aaryn Nania - Non-Executive Director (appointed on 28 August 2019) Marcelo Ulvert - Non-Executive Director (appointed on 1 September 2018 and resigned on 12 February 2019) Clifford Rosenberg - Non-Executive Director (resigned on 28 February 2019) Nic Jones - Managing Director & Chief Executive Officer (resigned on 28 August 2019) Principal activities During the financial year the principal continuing activities of the group consisted of the provision of profile marketing and insights technology services. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the group after providing for income tax amounted to $14,460,042 (30 June 2018: $25,979,877). Earnings before interest, tax, depreciation and amortisation (‘EBITDA’) for the financial year amounted to a loss of $713,742 (30 June 2018: profit of $740,914). EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents the profit under AAS adjusted for non-specific non-cash and significant items. The following table summarises key reconciling items between statutory loss after income tax and EBITDA: Loss after income tax Add: Depreciation and amortisation Add: Impairment of assets Add: Loss on disposal of intangible assets Add: Derecognition of goodwill on disposal of businesses Less: Interest income Add: Finance costs Less: Income tax expense/(benefit) EBITDA Consolidated 2019 $ 2018 $ (14,460,042) (25,979,877) 5,251,229 3,803,103 2,453,010 17,994,882 1,058,000 1,027,054 3,500,000 - (5,584) (3,246) 1,574,900 2,522,508 847,364 443,871 (713,742) 740,914 Total statutory revenue for FY2019 was $37.8m, a decline of 27% on prior comparable period (pcp) (FY2018: $52.0m). However, the decline was largely due to the group not having the benefit of full-year results of the Media Trading and Performance (ANZ) businesses, which were sold in October 2018 and March 2019 respectively. These businesses were sold as they were forecast to have declining revenues and with lower margins compared to the group’s core business units. Following the release of the preliminary financials on 28 August 2019, an additional amount of ($3.8m) was recognised, which impacted the group's NPAT. This included a non-cash write down of intangibles relating to the disposal of the Media Trading business ($3.5m); provision for retroactively applied council rates in the UK ($0.2m); and revenue reversal ($0.1m). This accounts for the difference in the statutory NPAT of ($14.5m) compared to NPAT of ($10.7m) stated in the preliminary financials. 2 Pureprofile Ltd Directors' report 30 June 2019 On a continuing business basis, total revenue was $26.7m, a 5% increase on pcp (FY2018: $25.4m). The full impact of the growth from the core businesses was masked by the decline of the retained Performance business in the UK, which was down 35% on pcp (FY19: $2.2m; FY18: $3.4m) due to unforeseen reduction in sales resources and capability. Data & Insights was up 14% on pcp (FY19: $18.4m, FY18: 16.1m). Of this growth, the D&I business in the UK grew 95%. The Media business also showed modest growth for the year of 3% (FY19: $6.1m, FY18: $5.9m) though it significantly ramped up in the second half with growth of 23% on pcp. Gross margin remained relatively stable at 58%, a 1% decline on pcp. The decline was more marked across the Media Trading and Performance ANZ businesses, which were sold. Had these business units not been divested, it is likely that gross margin levels would have declined further. The revenue growth had a positive impact on EBITDA on continuing businesses, which improved by 49%, up from ($2.5m) in FY2018 to ($1.3m) in FY2019. Statutory net profit (loss) after tax was also improved by 44% (FY2019: ($14.5m); FY2018: ($26.0m)), largely due to the reduction in non-cash write-downs of intangibles that were recognised in FY2018. Significant changes in the state of affairs The following significant changes in the state of affairs occurred during the year: ● ● ● Board resignations: Mr Marcelo Ulvert and Mr Cliff Rosenberg resigned from the Board on 12 February 2019 and 28 February 2019, respectively. Debt facilities: the group agreed new terms on its existing debt facility with Lucerne Investment Partners (Lucerne). Under the revised terms, the group secured an additional line of credit of $3m in February 2019 and $2.6m in June 2019. Sales of businesses: the group divested its Media Trading and Performance (ANZ) businesses (in October 2018 and March 2019 respectively), which were considered to be declining in revenue with lower margins compared to its core businesses. There were no other significant changes in the state of affairs of the group during the financial year. Matters subsequent to the end of the financial year On 28 August 2019, Mr Nic Jones resigned as CEO and Managing Director, with Mr Andrew Edwards taking over in an ongoing executive capacity as Executive Chairman. At the same time, CFO, Mrs Melinda Sheppard, was promoted to Chief Operating Officer, with responsibility for managing finance, HR, operational delivery and corporate services. Mr Aaryn Nania was also appointed Non-Executive Director to replace Mr Jones on the board. Effective 1 September 2019, the following changes were made to the group’s existing debt facilities with Lucerne: ● ● ● Maturity date: the maturity date on all facilities has been extended to 1 October 2020; Interest rate: the interest rate has been set at 20% on all drawn facilities and the group has the option to capitalise interest and repay it with the principal upon maturity; and Repayment fee: the ‘Repayment Fee’, which Lucerne would have been entitled to on the happening of a ‘Control Transaction’ (as disclosed to the ASX on 28 February 2019), has been removed. Effective 27 September 2019, the group’s debt facilities with Lucerne were increased by $5,400,000. The line of credit on Facility C was increased from $2,600,000 to $7,000,000. The maturity date and interest rate remain unchanged from the amendments made to the facility on 1 September 2019. No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the group's operations, the results of those operations, or the group's state of affairs in future financial years. Likely developments and expected results of operations Revenue growth for the group’s core Data & Insights and Media business units are expected to continue while revenues for the Performance UK business is expected to recover after a decline in FY2019. The group has provided EBITDA guidance of $2.7m - $3.0m (excluding the impact of AASB16 lease accounting standard). The group further expects to realise net positive cash flows from operating activities and will continue to explore capital restructuring initiatives and other strategic options to reduce its debt exposure. 3 Pureprofile Ltd Directors' report 30 June 2019 Environmental regulation The group is not subject to any significant environmental regulation under Australian Commonwealth or State law. Information on directors Name: Title: Experience and expertise: Andrew Edwards Executive Chairman Andrew has more than 30 years of marketing experience behind him. Most recently, he was Chairman and CEO of internationally-renowned advertising and marketing agency Leo Burnett Group UK and President of Leo Burnett Central Europe. Andrew joined Leo Burnett as the Global Discipline Lead for DM and CRM of Arc in 2003 and was soon promoted to Managing Director of Leo Burnett Sydney, incorporating Arc. During his tenure, the agency topped the new business league, and in September 2005, Leo Burnett/Arc was voted Australia’s number one agency. For over 10 years, Andrew was appointed to several senior roles within the company, including President of Arc for the EMEA region, Chairman of Arc UK and Deputy Chairman of the Leo Burnett Group London, before becoming CEO of the UK Group in November 2007 and Chairman in December 2010. Andrew was a member of the Global Executive Board and was tasked to drive Leo Burnett's Global Strategy for Social and Mobile and Acquisitions in EMEA. Prior to his roles for Leo Burnett and Arc. Andrew ran Australia’s most-awarded Database and Direct Marketing company, Cartwright Williams. Andrew now focusses his time on his growing portfolio of business interests. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Interests in shares: Interests in options: Interests in rights: Contractual rights to shares: Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): None Special responsibilities: Interests in shares: Interests in options: Interests in rights: Contractual rights to shares: Chairman of the Audit Committee and Chairman of the Nomination and Remuneration Committee 984,691 ordinary shares 400,000 options over ordinary shares None None Sue Klose Non-Executive Director (appointed on 1 September 2018) Sue has an MBA in Finance, Strategy and Marketing from the JL Kellogg School of Management at Northwestern University, and a Bachelor of Science in Economics from the Wharton School of the University of Pennsylvania. Sue is an experienced executive, board director and team leader, with a diverse background in digital business growth, corporate development, strategy and marketing. Previously the Chief Marketing Officer of GraysOnline, Sue was responsible for brand strategy, marketing operations and digital product strategy. In prior roles in consulting and global media companies, including 12WBT and News Ltd, Sue has led strategic planning and development and is passionate about helping teams continually seek new opportunities for growth and innovation. As Director of Digital Corporate Development for News Ltd, Sue screened hundreds of potential investments, leading multiple acquisitions, establishing the CareerOne and Carsguide joint ventures, and holding multiple board roles in high-growth digital and SaaS business. Non-Executive Director of Nearmap (ASX: NEA) Member of the Audit Committee and Member of the Nomination and Remuneration Committee None None None None 4 Pureprofile Ltd Directors' report 30 June 2019 Name: Title: Qualifications: Experience and expertise: Aaryn Nania Non-Executive Director (appointed on 28 August 2019) Bachelor of Commerce from the University of Melbourne and is a Member of the Australian Institute of Company Directors Aaryn is co-founder and Head of Funds Management at Lucerne Investment Partners – an active, long-term investor in both listed and unlisted companies globally. Prior to Lucerne, Aaryn was a Portfolio Manager at Canadian investment bank Canaccord Genuity (Australia) where he established and managed the Absolute Return Portfolio.In addition to his directorship at Lucerne, Aaryn is currently a Non-Executive director of Headware, an optometry group, Connexion Telematics Ltd, an ASX-listed software company. Non-Executive director of Connexion Telematics Ltd (ASX: CXZ) Member of the Audit Committee and Member of the Nomination and Remuneration Committee None None None None Other current directorships: Former directorships (last 3 years): None Special responsibilities: Interests in shares: Interests in options: Interests in rights: Contractual rights to shares: 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary Kohei Katagiri was appointed Company Secretary on 1 May 2018. Kohei is an admitted solicitor and holds a Bachelor of Arts (Psychology) / Bachelor of Laws from Macquarie University, and a Graduate Diploma in Taxation and a Master of Laws from the University of Sydney. He is an associate member of the Governance Institute of Australia. Meetings of directors The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2019, and the number of meetings attended by each director were: Full Board Nomination and Remuneration Committee Audit and Risk Committee Attended Held Attended Held Attended Held Andrew Edwards Nic Jones Cliff Rosenberg Sue Klose Marcelo Ulvert 9 9 5 7 2 9 9 7 7 3 - - - - - - - - - - 1 1 1 - - 1 1 1 - - Held: represents the number of meetings held during the time the director held office. Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● ● ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional disclosures relating to key management personnel 5 Pureprofile Ltd Directors' report 30 June 2019 Principles used to determine the nature and amount of remuneration The objective of the group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● ● competitiveness and reasonableness; acceptability to shareholders; performance linkage / alignment of executive compensation; and transparency. The Nomination and Remuneration Committee is responsible for reviewing and making recommendations to the Board on remuneration packages and policies relating to the directors and executives and to ensure that the remuneration policies and practices are consistent with the group's strategic goals and human resource objectives. In consultation with external remuneration consultants (refer to the section 'use of remuneration consultants' below), the Nomination and Remuneration Committee has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the group. The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by: ● ● having economic profit as a core component of plan design; focussing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and attracting and retaining high calibre executives. ● Additionally, the reward framework should seek to enhance executives' interests by: ● ● ● rewarding capability and experience; reflecting competitive reward for contribution to growth in shareholder wealth; and providing a clear structure for earning rewards. In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors' remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors do not receive short-term incentives and their remuneration must not include a commission on, or a percentage of, operating revenue. ASX listing rules require the aggregate non-executive directors remuneration be determined periodically by a general meeting. Under the company’s constitution and as set out in the IPO Prospectus, total aggregate remuneration available to non-executive directors is set currently at $600,000 per annum. Non-executive director fees (directors' fees and committee fees, inclusive of superannuation) proposed for the year ending 30 June 2020 are summarised as follows: Name Sue Klose Aaryn Nania FY 2020 Fees $70,000 $70,000 All directors are also eligible for additional long term incentives under the company's Long Term Incentive plan ('LTI'). The company from time to time grant Director share options under the LTI. Refer to Long Term Incentives section below for key terms and conditions of the LTI. 6 Pureprofile Ltd Directors' report 30 June 2019 Executive remuneration The group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has four components: ● ● ● ● base pay and non-monetary benefits; short-term performance incentives; share-based payments; and other remuneration such as superannuation and long service leave. The combination of these comprises the executive's total remuneration. The remuneration packages for executives are considered by the Nomination and Remuneration Committee and approved by the Board. At the absolute discretion of the Nomination and Remuneration Committee, the company may seek external advice on the appropriate level and structure of remuneration packages from time to time. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, is reviewed annually by the Nomination and Remuneration Committee, based on individual and business unit performance, the overall performance of the group and comparable market remuneration. Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the group and provides additional value to the executive. The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles of executives. Under the STI, eligible executives may be offered cash incentives ('rewards') which may be subject to vesting conditions set by the Board. Each offer of rewards under the STI is, or will be, on the terms generally described as follows: ● ● the Board will determine the total dollar amount of the STI, calculated as a percentage of their salary package; the payment (or part payment) of the STI will be subject to fulfilment (or part fulfilment) of performance conditions set by the Board; any STI that becomes payable will be paid in cash and, at the discretion of the Board, by the grant of rights to receive shares ('service rights') of equivalent value (as determined by the Board at the time of grant); if granted, the service rights will vest 13 months from grant date provided that the eligible employee is still employed by the company at the vesting date; on vesting employees will receive the shares that are subject to the service rights without payment of any exercise price; service right holders are not entitled to participate in new issues of shares or other securities made by the company to holders of shares without receiving the shares that are subject to the service rights before the record date for the relevant issue; if, prior to the receipt of shares that are subject to the service right, the company makes a pro rata bonus issue to the holders of its shares, and the shares that are subject to the service right are not issued prior to the record date in respect of that bonus issue, the service right will, when vested, entitle the holder to one share plus the number of bonus shares which would have been issued to the holder if the shares that are subject to the service right had been issued prior to the record date; and if, prior to the receipt of shares that are subject to the service right, the company undergoes a reorganisation of capital (other than by way of a bonus issue for cash), the terms of the service rights will be changed to the extent necessary to comply with the ASX Listing Rules as they apply at the relevant time. ● ● ● ● ● ● The long-term incentives include long service leave and share-based payments. The company has adopted a long term incentive plan ('LTI') in order to assist in the motivation and retention of key staff. The LTI is designed to align the interest of eligible executives and employees more closely with the interests of the shareholders by providing an opportunity for eligible executives and employees to receive an equity interest in the company. 7 Pureprofile Ltd Directors' report 30 June 2019 Under the LTI, eligible executives and employees may be given options to acquire shares which may be subject to vesting conditions set by the Board. Each grant of options under the LTI is, or will be, on the terms generally described as follows: ● ● the Board will determine the number of options to be granted to each eligible employee; options will vest progressively over the periods which were determined by the Board at the time of the grant. One third of the options vested on completion of the IPO; another one third of the options vested on 31 August 2016 and the remaining one third of the options vested on 31 August 2017; the options will expire five years from the vesting date; the exercise price is set by the Board at the time of the grant. For the initial grant of options under the LTI as outlined in the prospectus, the exercise price is $0.60 for non-executive directors and $0.50 for all other executives and employees issued options; options holders are not entitled to participate in new issues of shares or other securities made by the company to holders of shares without exercising the options before the record date for the relevant issue; if, prior to the exercise of an option, the company makes a pro rata bonus issue to the holders of its shares, and the option is not exercised prior to the record date in respect of that bonus issue, the option will, when vested, entitle the holder to one share plus the number of bonus shares which would have been issued to the holder if the option had been exercised prior to the record date; and if, prior to the exercise of an option, the company undergoes a reorganisation of capital (other than by way of a bonus issue for cash), the terms of the options will be changed to the extent necessary to comply with the ASX Listing Rules as they apply at the relevant time. ● ● ● ● ● Group performance and link to remuneration Remuneration for certain individuals is directly linked to the performance of the group. A portion of cash bonus and incentive payments are dependent on defined earnings per share targets being met. The remaining portion of the cash bonus and incentive payments are at the discretion of the Nomination and Remuneration Committee. The Nomination and Remuneration Committee is of the opinion that the adoption of performance based compensation will have a positive impact on its earnings, which in turn will have a positive impact on its share price. This is expected to increase shareholder wealth if maintained over the coming years. Consequences of performance on shareholder wealth In considering the group's performance and benefits to shareholder wealth, the remuneration committee has had regard to the share price in respect of the current financial year and the previous three financial years. Share price 2019 2018 2017 $0.01 $0.14 $0.34 Use of remuneration consultants During the financial year ended 30 June 2019, the company did not engage remuneration consultants to review its existing remuneration policies and provide recommendations on how to improve both the STI and LTI programs. Voting and comments made at the company's 2018 Annual General Meeting ('AGM') At the 2018 AGM, 96.5% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2018. The company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the group are set out in the following tables. The key management personnel of the group consisted of the following directors of Pureprofile Ltd: ● ● ● ● ● Andrew Edwards - Executive Chairman Sue Klose - Non-Executive Director (appointed on 1 September 2018) Marcelo Ulvert - Non-Executive Director (appointed on 1 September 2018 and resigned on 12 February 2019) Clifford Rosenberg - Non-Executive Director (resigned on 28 February 2019) Nic Jones - Managing Director & Chief Executive Officer (appointed on 5 February 2018 and resigned on 28 August 2019) And the following person: ● Melinda Sheppard - Chief Operating Officer/Chief Financial Officer 8 Pureprofile Ltd Directors' report 30 June 2019 2019 Non-Executive Directors: S. Klose* C. Rosenberg* M. Ulvert* Executive Directors: A. Edwards N. Jones* Other Key Management Personnel: M. Sheppard Short-term benefits Cash salary and fees $ Cash bonus $ Other $ Post- employment benefits Long-term benefits Share- based payments Super- annuation $ Employee Equity- settled* $ leave $ 53,273 52,500 32,083 120,000 417,469 275,119 950,444 - - - - - - - - - - - - - - 5,061 - - 11,400 20,531 20,531 57,523 - - - - - - - Total $ 58,334 52,500 32,083 131,400 438,000 - - - - - - 295,650 - 1,007,967 * Represents remuneration from the date of appointment and/or to the date of resignation Short-term benefits Cash salary and fees $ Cash bonus $ Other $ Post- employment benefits Long-term benefits Share- based payments Super- annuation $ Employee Equity- settled* $ leave $ Total $ 62,832 29,165 242,451 237,821 330,351 902,620 - - - - - - - - - - - - 1,518 - 20,049 17,679 20,049 59,295 - - - - - - 778 - 65,128 29,165 778 - 23,345 24,901 263,278 255,500 373,745 986,816 2018 Non-Executive Directors: C. Rosenberg M. Berriman* Executive Directors: A. Edwards N. Jones* P. Chan* * Represents remuneration from the date of appointment and/or to the date of resignation 9 Pureprofile Ltd Directors' report 30 June 2019 The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: S. Klose C. Rosenberg M. Ulvert M. Berriman Executive Directors: A. Edwards N. Jones P. Chan Other Key Management Personnel: M. Sheppard Fixed remuneration 2019 2018 At risk - STI 2019 At risk - LTI 2019 100% 100% 100% - 100% 100% - - 100% - 100% 100% 100% 100% 100% - - - - - - - - - - - - - - - - - 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: Agreement commenced: Term of agreement: Details: Name: Title: Agreement commenced: Term of agreement: Details: Name: Title: Agreement commenced: Term of agreement: Details: Andrew Edwards Executive Chairman 12 June 2015 Appointment until next Annual General Meeting, at which he will be eligible for re- election Base salary for the year ended 30 June 2019 of $120,000 including superannuation, to be reviewed from time to time by the Nomination and Remuneration Committee in accordance with constitution and policies. From 1 July 2019, Andrew will receive an additional $1,500 per week for additional services provided to the group. Share options of up to 400,000 granted in year 1, and eligibility to short-term and long-term incentives under the Incentives Scheme, which defines the amount, form, frequency KPIs and targets to which the incentives relate. Sue Klose Non-Executive Director 1 September 2018 Appointment until next Annual General Meeting, at which she will be eligible for re- election Base salary of $70,000 plus superannuation and any GST, to be reviewed from time to time by the Nomination and Remuneration Committee in accordance with constitution and policies. Eligibility to long-term incentives under the Incentives Scheme, which defines the amount, form, frequency KPIs and targets to which the incentives relate. From 1 July 2019, Sue will receive an additional $1,500 per week for additional services provided to the group. Aaryn Nania Non-Executive Director 28 August 2019 Appointment until next Annual General Meeting, at which he will be eligible for election Base salary of $70,000 plus superannuation and any GST, to be reviewed from time to time by the Nomination and Remuneration Committee in accordance with constitution and policies. Eligibility to long-term incentives under the Incentives Scheme, which defines the amount, form, frequency KPIs and targets to which the incentives relate. 10 Pureprofile Ltd Directors' report 30 June 2019 Name: Title: Agreement commenced: Term of agreement: Details: Melinda Sheppard Chief Operating Officer/Chief Financial Officer 25 June 2018 No fixed end date Base salary for the year ended 30 June 2019 of $275,000 including superannuation, to be reviewed from time to time by the Nomination and Remuneration Committee in accordance with constitution and policies. Reimbursement of reasonable out-of- pocket expenses incurred in connection with the performance of duties. 3 month termination notice period by either party. Eligibility to short-term incentive reward of up to $151,250 and eligibility to long-term incentives, under the Incentives Scheme, which defines the amount, form, frequency, KPI’s and targets to which the incentives relate. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2019 (2018: nil). Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Grant date Vesting date and exercisable date 29/05/2015 (a) 31/08/2017 Expiry date 29/05/2020 Fair value per option Exercise price at grant date $0.60 $0.0931 All options were granted over unissued fully paid ordinary shares in the company. Options vest based on the provision of service over the vesting period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their potential exercise. (a) Andrew Edwards and Clifford Rosenberg were each granted 400,000 options Options granted carry no dividend or voting rights. The number of options over ordinary shares granted to and vested by directors and other key management personnel as part of compensation during the year ended 30 June 2019 are set out below: Number of Number of Number of Number of options granted during the year 2019 options granted during the year 2018 options vested options vested during the year 2019 during the year 2018 Total number of options vested as at 30 June 2019 Total number of options vested at as 30 June 2018 Andrew Edwards Cliff Rosenberg - - - - - - 166,667 133,334 400,000 400,000 400,000 400,000 Service rights There were no service rights over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2019. There were no performance rights over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2019. 11 Pureprofile Ltd Directors' report 30 June 2019 Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the group, including their personally related parties, is set out below: Balance at Received as part of the start of the year remuneration Additions Ordinary shares Andrew Edwards Sue Klose Nic Jones Clifford Rosenberg Marcelo Ulvert Melinda Sheppard 984,691 - 1,067,548 233,000 3,888,889 - 6,174,128 - - - - - - - Disposals/ other* Balance at the end of the year - - - - - - - - - (1,067,548) (233,000) (3,888,889) - (5,189,437) 984,691 - - - - - 984,691 * Disposals/other represents a member no longer being designated as a KMP and does not represent a disposal of holding. Option holding The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the group, including their personally related parties, is set out below: Options over ordinary shares Andrew Edwards Clifford Rosenberg Balance at the start of the year Granted Disposals/ other* Balance at the end of the year Exercised 400,000 400,000 800,000 - - - - - - - (400,000) (400,000) 400,000 - 400,000 * Disposals/other represents a member no longer being designated as a KMP and does not represent a disposal of holding. Other transactions with key management personnel and their related parties During the financial year, expenses totalling $7,098 (2018: $362) were reimbursed to key management personnel. This concludes the remuneration report, which has been audited. Shares under option Unissued ordinary shares of Pureprofile Ltd under option at the date of this report are as follows: Grant date 29/05/2015 29/05/2015 Expiry date 29/05/2020 29/05/2020 Exercise price Number under option $0.50 $0.60 2,009,000 1,200,000 3,209,000 No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate. Shares issued on the exercise of options There were no ordinary shares of Pureprofile Ltd issued on the exercise of options during the year ended 30 June 2019 and up to the date of this report. 12 Pureprofile Ltd Directors' report 30 June 2019 Shares under service rights There were no unissued ordinary shares of Pureprofile Ltd under service rights outstanding at the date of this report. Shares issued on the exercise of service rights There were no ordinary shares of Pureprofile Ltd issued on the exercise of service rights during the year ended 30 June 2019 and up to the date of this report. Shares under performance rights Unissued ordinary shares of Pureprofile Ltd under performance rights at the date of this report are as follows: Grant date Expiry date Exercise price Number under rights 12 December 2017 2 November 2019 $0.00 2,100,000 No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the company or of any other body corporate. Shares issued on the exercise of performance rights There were no ordinary shares of Pureprofile Ltd issued on the exercise of performance rights during the year ended 30 June 2019 and up to the date of this report. Indemnity and insurance of officers The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. Proceedings on behalf of the 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 to 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 part of those proceedings. Non-audit services There were no non-audit services provided during the financial year by the auditor. Officers of the company who are former partners of Grant Thornton There are no officers of the company who are former partners of Grant Thornton. Rounding of amounts The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in the Directors' Report and Financial Report have been rounded to the nearest dollar. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report. Auditor Grant Thornton continues in office in accordance with section 327 of the Corporations Act 2001. 13 Pureprofile Ltd Directors' report 30 June 2019 This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Andrew Edwards Executive Chairman 27 September 2019 Sydney 14 Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Pureprofile Ltd In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Pureprofile Ltd for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants S M Coulton Partner – Audit & Assurance Sydney, 27 September 2019 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 15 Pureprofile Ltd Statement of profit or loss and other comprehensive income For the year ended 30 June 2019 Revenue from continuing operations Other income Interest revenue calculated using the effective interest method Expenses Direct costs of revenue Employee benefits expense Foreign exchange loss Depreciation and amortisation expense Loss on disposal of intangible assets Technology, engineering and licence fees Share-based payment expense Restructuring, acquisition and IPO costs Occupancy costs Other expenses Finance costs Loss before income tax expense from continuing operations Income tax expense Loss after income tax expense from continuing operations Note Consolidated 2019 $ 2018 $ 5 6 7 7 8 26,734,213 25,365,966 232,055 1,145 57,471 786 (11,263,048) (11,037,117) (360,666) (3,439,595) (424,665) (2,637,564) - - (1,408,087) (1,931,355) (2,377,093) (10,492,712) (10,702,569) (123,354) (2,729,882) - (2,653,058) (82,425) (24,666) (1,372,564) (2,451,619) (1,338,138) (7,911,777) (6,546,764) (443,871) (847,364) (8,355,648) (7,394,128) Loss after income tax expense from discontinued operations 9 (6,104,394) (18,585,749) Loss after income tax expense for the year attributable to the owners of Pureprofile Ltd (14,460,042) (25,979,877) Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the year, net of tax 36,356 17,581 36,356 17,581 Total comprehensive loss for the year attributable to the owners of Pureprofile Ltd (14,423,686) (25,962,296) Total comprehensive loss for the year is attributable to: Continuing operations Discontinued operations (8,319,292) (6,104,394) (7,376,547) (18,585,749) (14,423,686) (25,962,296) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 16 Pureprofile Ltd Statement of profit or loss and other comprehensive income For the year ended 30 June 2019 Note Consolidated 2019 $ 2018 $ Cents Cents Earnings per share for loss from continuing operations attributable to the owners of Pureprofile Ltd Basic earnings per share Diluted earnings per share Earnings per share for loss from discontinued operations attributable to the owners of Pureprofile Ltd Basic earnings per share Diluted earnings per share Earnings per share for loss attributable to the owners of Pureprofile Ltd Basic earnings per share Diluted earnings per share 36 36 36 36 36 36 (7.02) (7.02) (6.32) (6.32) (5.13) (5.13) (15.89) (15.89) (12.15) (12.15) (22.22) (22.22) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 17 Pureprofile Ltd Statement of financial position As at 30 June 2019 Assets Current assets Cash and cash equivalents Trade and other receivables Contract assets Other Total current assets Non-current assets Property, plant and equipment Intangibles Deferred tax Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Contract liabilities Borrowings Income tax Provisions Total current liabilities Non-current liabilities Borrowings Provisions Total non-current liabilities Total liabilities Net assets/(liabilities) Equity Issued capital Reserves Accumulated losses Total equity/(deficiency) Note Consolidated 2019 $ 2018 $ 10 11 12 13 524,322 2,481,770 6,413,738 12,430,953 268,481 516,938 8,039,230 15,698,142 412,903 688,267 14 15 16 222,226 377,982 11,121,341 19,144,187 422,870 - 11,343,567 19,945,039 19,382,797 35,643,181 17 18 19 20 331,421 16,469,339 95,174 1,997,449 9,285,091 11,327,255 385,556 5,628,290 303,676 1,977,229 28,178,474 19,622,006 21 22 - 10,000,000 132,085 80,568 80,568 10,132,085 28,259,042 29,754,091 (8,876,245) 5,889,090 23 24 41,461,502 41,803,151 234,203 (36,148,264) 270,559 (50,608,306) (8,876,245) 5,889,090 The above statement of financial position should be read in conjunction with the accompanying notes 18 Pureprofile Ltd Statement of changes in equity For the year ended 30 June 2019 Consolidated Balance at 1 July 2017 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 23) Share-based payments (note 37) Issued capital $ Reserves $ Accumulated losses $ Total equity $ 39,937,294 126,010 (10,168,387) 29,894,917 - - - - 17,581 (25,979,877) - (25,979,877) 17,581 17,581 (25,979,877) (25,962,296) 1,865,857 - - 90,612 - - 1,865,857 90,612 Balance at 30 June 2018 41,803,151 234,203 (36,148,264) 5,889,090 Consolidated Balance at 1 July 2018 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Share buy-back Issued capital $ Reserves $ Accumulated losses $ Total deficiency in equity $ 41,803,151 234,203 (36,148,264) 5,889,090 - - - - 36,356 (14,460,042) - (14,460,042) 36,356 36,356 (14,460,042) (14,423,686) (341,649) - - (341,649) Balance at 30 June 2019 41,461,502 270,559 (50,608,306) (8,876,245) The above statement of changes in equity should be read in conjunction with the accompanying notes 19 Pureprofile Ltd Statement of cash flows For the year ended 30 June 2019 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and other finance costs paid Income taxes (paid)/refunded Note Consolidated 2019 $ 2018 $ 44,802,722 54,824,312 (55,104,783) (42,797,944) 2,004,778 3,246 (2,226,449) (152,357) (280,471) 5,584 (1,574,900) (452,673) Net cash used in operating activities 38 (370,782) (2,302,460) Cash flows from investing activities Final payments for prior period's purchase of subsidiary Payments for property, plant and equipment Payments for intangibles Proceeds from disposal of business Proceeds from disposal of intangibles 14 15 9 Net cash used in investing activities Cash flows from financing activities Share issue transaction costs Proceeds from borrowings Repayment of borrowings Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents - (52,848) (2,742,282) 650,000 9,354 (4,298,856) (306,354) (3,914,542) - - (2,135,776) (8,519,752) - (810) 4,400,000 15,628,290 (4,000,000) (3,883,147) 516,853 11,627,480 (1,989,705) 2,481,770 32,257 805,268 1,676,502 - Cash and cash equivalents at the end of the financial year 10 524,322 2,481,770 The above statement of cash flows should be read in conjunction with the accompanying notes 20 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 1. General information The financial statements cover Pureprofile Ltd as a group consisting of Pureprofile Ltd and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Pureprofile Ltd's functional and presentation currency. Pureprofile Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 20 233 Castlereagh Street Sydney NSW 2000 Australia A description of the nature of the group's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 27 September 2019. The directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the group. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the group: The group has adopted AASB 9 from 1 July 2018, using the modified retrospective approach. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12- month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. 21 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) The group has adopted AASB 15 from 1 July 2017, using the fully retrospective approach. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise 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 those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period. The adoption of these standards resulted in the following adjustments: interest receivable is now shown on the face of profit or loss; ● provision for impairment of receivables is now reclassified as allowance for expected credit loss; ● accrued revenue (previously classified in other current assets) now reclassified as contract asset; and ● deferred revenue now reclassified as contract liability. ● There was no change in the carrying amounts on adoption of AASB 9 as at 1 July 2018 and AASB 15 as at 1 July 2017. Going concern The financial statements have been prepared on a going concern basis, which contemplates continuity of normal activities and realisation of assets and settlement of liabilities in the normal course of business. The group incurred a loss after income tax of $14,460,042 (2018: loss after income tax of $25,979,877) and was in a net current liability position of $20,139,244 (2018: $3,923,864). The group generated negative cash flows from operations of $370,782 (2018: cash outflows of $2,302,460). The directors believe that there are reasonable grounds to conclude that the consolidated entity will continue as a going concern, after consideration of the following factors: ● the group has restructured its debt facility with the Lender to support its 3-year forecast, including the following, which have already been secured: (i) an extension to its existing $10,000,000 debt facility to October 2020; and (ii) 2 additional facilities totalling $10,000,000 used to fund working capital. the group has executed on a number of strategic decisions during the first half of FY2019, including the sale of the Media Trading business, the Adsparc business and the ANZ Performance business. The discontinuation of these business units, which have historically generated declining revenues and lower gross margins, is expected to improve the group’s gross margin and EBITDA as a result; restructuring activities which were executed during FY2019 and the ongoing identification of further cost saving initiatives during FY2020 continue to better align expenses to revenue and to strengthen EBITDA; the above changes complemented by robust processes for cash management will support the cash needs during the transition to a simpler business model; and existing Lender continues to be supportive of the group and its turnaround strategy. ● ● ● ● Accordingly, the directors believe the group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the consolidated financial report. Should the group be unable to continue as a going concern it may be required to release its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying value amounts of the amounts of liabilities that might result should the group be unable to continue as a going concern and meet its debts as and when they fall due. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention. 22 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the group only. Supplementary information about the parent entity is disclosed in note 33. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Pureprofile Ltd ('company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Pureprofile Ltd and its subsidiaries together are referred to in these financial statements as the 'group'. Subsidiaries are all those entities over which the group has control. The group controls an entity when the group 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. The acquisition of common control subsidiaries is accounted for at book value. The acquisition of other subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Foreign currency translation The financial statements are presented in Australian dollars, which is Pureprofile Ltd's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into the company's functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. 23 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Revenue recognition The group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Sales revenue - data and insights Revenue relating to the provision of services for Data & Insights encapsulates online market research services which helps businesses connect to, and receive feedback from, consumers who are registered to www.pureprofile.com. The group generates sales revenue by charging clients for access to its online panel for survey responses and may additionally charge for set-up and support services. Contracts with clients generally comprise a single distinct performance obligation, being the provision of market research services and the transaction price is allocated to the single performance obligation. Some contracts contain multiple deliverables – such as set-up and support services. In such circumstances, these multiple deliverables are considered to represent a single distinct performance obligation, given there is a significant integration performed by the group in delivering the services. For fixed-price contracts, revenue is recognised over time and is based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined based on the actual surveys completed relative to the total expected surveys. Sales revenue - media Revenue relating to the provision of services for Media sales including programmatic buying and selling of ad inventory, online marketing solutions for advertisers and advertising yield optimisation solutions for online publishers. The group generates sales revenue for managed campaign (programmatic trading) services by charging clients for purchasing ad inventory and managing the placement of ads on their behalf (at a marked-up price to the ad inventory purchased or as a service fee). The group also generates sales revenue for Media Trading service by buying and reselling ad inventory. The group also generates sales revenue by helping publishers to increase yield through programmatically selling their ad inventory. Contracts with clients generally comprise a single distinct performance obligation, being the provision of Media services described above and the transaction price is allocated to the single performance obligation. Fees for the provision of services are recognised as revenue as the services are rendered, in accordance with the terms and conditions of the service agreement. Sales revenue - performance Revenue relating to the provision of services for digital marketing by providing lead generation and email marketing services. The group generates sales revenue for lead generation services by charging clients on a price per lead basis. The group generates sales revenue from email marketing by various revenue models including cost per thousand (CPM), cost per click (CPC) and cost per acquisition (CPA). Contracts with clients generally comprise a single distinct performance obligation, being the provision of Lead Generation and Email marketing services described above and the transaction price is allocated to the single performance obligation. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined based on the actual leads obtained relative to the total expected leads. 24 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Grant income Grant income received is recognised as income in the period in which it is received. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Pureprofile Ltd. (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group with tax funding agreements, under the tax consolidation regime, effective 7 November 2014. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity. 25 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Discontinued operations A discontinued operation is a component of the group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Contract assets Contract assets are recognised when the group has transferred goods or services to the customer but where the group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives as follows: Office and computer equipment 3 to 9 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements (including make-good asset) and plant and equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. 26 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Leases Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease. Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Goodwill Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed. Software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reductions are capitalised. Costs capitalised include external direct costs of materials and service and employee costs. Software development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the group has an intention and ability to use the asset. Software costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of between four and five years. Customer and partnership network relationships In November 2016, Pureprofile, with the acquisition of the Cohort Group, acquired customer and partner network relationships which will be amortised over their useful economic life of between 6 to 8 years, on a straight line basis. The Cohort Group was subsequently disposed during the year ended 30 June 2019 and the Customer and partnership network relationships intangible assets were subsequently disposed of and/or impaired. Membership base In November 2016, Pureprofile, with the acquisition of the Cohort Group, acquired a membership database which will be amortised over its useful economic life of 7 years, on a straight line basis. The Membership base was not disposed as part of sale of the Performance ANZ business. Brand names Acquired brand names are not amortised. Instead, brand names are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired, and is carried at cost less accumulated impairment losses. Impairment of non-financial assets Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. 27 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Trade and other payables These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30-45 days of recognition. Contract liabilities Contract liabilities represent the group's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the group has transferred the goods or services to the customer. Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Provisions Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past event, it is probable the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. Reward redemption The group invites its internet panel members to complete surveys in exchange for a cash or points-based incentive. These amounts are not paid until a predetermined target value has accrued on a members account. An assessment of incentives likely to be paid (present obligation) is made taking into account past behaviour and activity. This is recognised as an expense in the period in which the service is provided. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for employee benefits not expected to be settled wholly within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. Share-based payments Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. 28 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, they are treated as if they had vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award are treated as if they were a modification. Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. 29 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the group's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Pureprofile Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. 30 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) 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 tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Rounding of amounts The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this Report have been rounded to the nearest dollar. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the group for the annual reporting period ended 30 June 2019. The group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the group, are set out below. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured as the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The group has elected to apply the modified retrospective approach as permitted by AASB 16. The cumulative effect of adopting AASB 16 will be recognised as an adjustment to the opening balance of retained earnings at 1 July 2019 with no restatement of comparative information. The group has chosen to measure the existing operating leases at the present value of the remaining lease payments, discounted using the group's incremental borrowing rate at the date of initial application. Recognition of right-of-use assets on adoption of AASB 16 Recognition of lease liability on adoption of AASB 16 Net impact on retained earnings at 1 July 2019 1 July 2019 $ 4,426,507 (4,426,507) - The effect on NPAT is not expected to be significant. However, EBITDA will be positively affected because the operating lease expense will be replaced by depreciation and interest charges, which are recorded below the EBITDA line. 31 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 2. Significant accounting policies (continued) New Conceptual Framework for Financial Reporting A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have public accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which will impact for-profit private sector entities. The application of new definition and recognition criteria as well as new guidance on measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1 January 2020, includes such amendments. Where the group has relied on the conceptual framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under Australian Accounting Standards, the group may need to revisit such policies. The group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact. Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Share-based payment transactions The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black- Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Estimation of useful lives of assets The group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Goodwill and other indefinite life intangible assets The group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Following the disposal of the business units during the year ended 30 June 2019, goodwill has been apportioned between continuing operations and goodwill disposed of through the discontinued operations. Considerable judgement is required in determining the amounts to be apportioned between the continuing and discontinued operations. Impairment of non-financial assets other than indefinite life intangible assets The group assesses impairment of non-financial assets other than indefinite life intangible assets at each reporting date by evaluating conditions specific to the group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. 32 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 3. Critical accounting judgements, estimates and assumptions (continued) Income tax The group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Reward redemption provision In determining the level of provision required for reward redemptions the group has made judgements in respect of the expected outflows necessary to settle the redemptions. The provision represents the maximum amount that the group estimates is likely to be claimed by panel members and is based on estimates made from historical data and likely redemption patterns. Balances accrued by panel members that have been inactive (i.e. not completed any transaction) for more than one year are written back to profit or loss. Note 4. Operating segments Identification of reportable operating segments The Group is organised into three operating segments: ● Data & Insights; ● Media; and ● Performance These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. Other segments represent the corporate headquarters of the consolidated entity. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. Types of products and services The principal products and services are as follows: Data & Insights Media Performance Conducting market research and providing research technology platforms Buying and selling online advertising inventory on behalf of advertisers and publishers Generates leads for clients through its consumer database and proprietary and partner digital assets On 4 October 2018, the group entered into a binding agreement to sell its media trading business unit which acquired as part of the acquisition of Sparcmedia in 2015 and on 1 March 2019 the group sold 100% of its interest in Cohort Holdings Australia Pty Ltd and its controlled entities. Both business units were part of the media segment. Refer note 9 for further information. Major customers During the years ended 30 June 2019 and 30 June 2018 no single customer contributed more than 10% to the Group's external revenue. 33 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 4. Operating segments (continued) Operating segment information (continuing and discontinued operations) Consolidated - 2019 Revenue Sales to external customers Interest Total revenue EBITDA Depreciation and amortisation Impairment of assets Loss on disposal of intangible assets Derecognition of goodwill on disposal of businesses Finance costs Finance costs Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Consolidated - 2018 Revenue Sales to external customers Interest Total revenue Data & Insights $ Media $ Performance $ Other segments $ Total $ 18,375,807 11,574,006 - - 18,375,807 11,574,006 7,852,283 - 7,852,283 - 37,802,096 3,246 3,246 3,246 37,805,342 6,534,540 (2,493,136) - (212,987) 2,235,106 (405,550) - (602,389) (271,498) (686,834) (2,453,010) (211,678) (9,211,890) (217,583) - - (713,742) (3,803,103) (2,453,010) (1,027,054) - - - 3,828,417 (3,500,000) - - (2,272,833) - - - (3,623,020) - 3,246 (2,522,508) (11,948,735) (3,500,000) 3,246 (2,522,508) (14,016,171) (443,871) (14,460,042) Data & Insights $ Media $ Performance $ Other segments $ Total $ 16,058,862 16,359,632 19,565,615 - 16,058,862 16,359,632 19,565,615 - - - 51,984,109 5,584 5,584 5,584 51,989,693 EBITDA Depreciation and amortisation Impairment of assets Loss on disposal of intangible assets Interest revenue Finance costs Profit/(loss) before income tax expense Income tax expense Loss after income tax expense 5,417,563 (2,154,816) - - - - 3,262,747 1,428,644 (433,136) - - - - 995,508 1,370,476 (2,346,525) (17,994,882) (1,058,000) - - (20,028,931) (7,475,769) (316,752) - - 5,584 (1,574,900) (9,361,837) 740,914 (5,251,229) (17,994,882) (1,058,000) 5,584 (1,574,900) (25,132,513) (847,364) (25,979,877) All assets and liabilities, including taxes are not allocated to the operating segments as they are managed on an overall group basis. Revenue by geographical area (continuing and discontinued operations) The group operates in 3 (2018: 3) regions. The sales revenue for each region is as follows: 34 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 4. Operating segments (continued) Sales to external customers Australasia Europe United States Note 5. Revenue From continuing operations Data & Insights Media Performance Revenue from continuing operations Consolidated 2019 $ 2018 $ 30,740,479 45,861,718 5,245,252 877,139 5,679,573 1,382,044 37,802,096 51,984,109 Consolidated 2019 $ 2018 $ 18,375,807 16,058,862 5,890,299 3,416,805 6,145,245 2,213,161 26,734,213 25,365,966 Disaggregation of revenue Refer to note 4 'Operating segments' for analysis of revenue by major product line and geographical region. During the financial years ended 30 June 2019 and 30 June 2018, all revenue was recognised based on services transferred over time. Note 6. Other income Net gain on disposal of property, plant and equipment Rental income Other income Other income Consolidated 2019 $ 2018 $ 10,203 171,950 49,902 - 57,471 - 232,055 57,471 35 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 7. Expenses Loss before income tax from continuing operations includes the following specific expenses: Depreciation Office and computer equipment Amortisation Software Membership base Total amortisation Total depreciation and amortisation Finance costs Interest and finance charges paid/payable Superannuation expense Defined contribution superannuation expense Share-based payments expense Share-based payments expense Consolidated 2019 $ 2018 $ 147,693 207,901 2,900,551 391,351 2,521,982 - 3,291,902 2,521,982 3,439,595 2,729,883 2,377,093 1,338,138 697,096 655,753 - 90,612 Employee benefits expense excluding superannuation Employee benefits expense excluding superannuation 10,340,021 10,046,815 36 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 8. Income tax expense Income tax expense Current tax Deferred tax - origination and reversal of temporary differences Adjustment recognised for prior periods Aggregate income tax expense Deferred tax included in income tax expense comprises: Decrease in deferred tax assets (note 16) Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense from continuing operations Loss before income tax expense from discontinued operations Tax at the statutory tax rate of 30% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Entertainment expenses Share-based payments Eligible research and development expenditure Impairment/Revaluation on Cohort earn-out payment Merger and acquisition expenditure Disposal of intangible assets Sundry items Adjustment recognised for prior periods Current year tax losses not recognised Derecognition of deferred tax liability on sale of subsidiary Reversal of deferred tax asset on carried forward losses Prior year deferred tax balances no longer recognised Difference in overseas tax rates Research and development tax concession Tax refund previously not provided for Income tax expense Consolidated 2019 $ 2018 $ 21,001 422,870 - 116,814 805,551 (75,001) 443,871 847,364 422,870 805,551 (7,911,777) (6,104,394) (6,546,764) (18,585,749) (14,016,171) (25,132,513) (4,204,851) (7,539,754) 8,723 - 95,843 - - - 1,065,470 (3,034,815) - 2,570,636 (211,087) 422,870 729,415 62,695 (95,843) - 20,157 20,610 146,795 4,991,455 7,064 317,400 (15,509) (2,051,782) (75,001) 2,169,532 - - 962,283 33,202 (176,773) (14,097) 443,871 847,364 Consolidated 2019 $ 2018 $ Tax losses not recognised Potential unused tax benefit for which no deferred tax asset has been recognised 5,026,658 2,464,379 The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed. 37 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 9. Discontinued operations Description On 4 October 2018, the group entered into a binding agreement to sell its media trading business unit ('Media Trading Business') which was acquired as part of the acquisition of Sparcmedia in 2015. The Media Trading Business was sold for total consideration of $541,499 comprising $200,000 which was paid in cash and $341,649 by way of a buy-back of the company's shares. On 1 March 2019, the group sold 100% of its interest in Cohort Holdings Australia Pty Ltd and its controlled entities to Unity4. The sale price for the transaction is $450,000 which was paid in cash. Financial performance information Revenue from contracts with customers Interest revenue calculated using the effective interest method Total revenue Other income Direct cost of sales Employee benefits expense Foreign exchange gain/(loss) Depreciation and amortisation expense Impairment of assets Loss on disposal of intangible assets Technology, engineering and licence fees Share-based payment expense Occupancy costs Other expenses Finance costs Total expenses Loss before income tax expense Income tax expense Loss after income tax expense Gain on disposal before income tax Income tax expense Loss on disposal after income tax expense Consolidated 2019 $ 2018 $ 11,067,883 26,618,143 4,798 11,069,984 26,622,941 2,101 179,738 1,366,000 (7,877,896) (2,141,435) (57,167) (363,508) (2,453,010) (602,389) (290,295) - (225,026) (206,229) (145,415) (14,362,370) (17,294,958) (5,289,646) (27,318) (2,521,347) (17,994,882) (1,058,000) (903,176) (8,187) (282,978) (957,436) (236,762) (46,574,690) (3,112,648) - (18,585,749) - (3,112,648) (18,585,749) (2,991,746) - (2,991,746) - - - Loss after income tax expense from discontinued operations (6,104,394) (18,585,749) 38 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 9. Discontinued operations (continued) Carrying amounts of assets and liabilities disposed Cash and cash equivalents Trade and other receivables Property, plant and equipment Intangibles Total assets Trade and other payables Provisions Total liabilities Net assets Details of the disposal Total sale consideration Carrying amount of net assets disposed Less working capital adjustment Loss on disposal before income tax Loss on disposal after income tax Note 10. Current assets - cash and cash equivalents Cash at bank Cash on deposit* Consolidated 2019 $ 2018 $ 164,114 1,660,648 25,478 3,667,991 5,518,231 1,623,470 107,092 1,730,562 3,787,669 Consolidated 2019 $ 2018 $ 991,499 (3,787,669) (195,576) (2,991,746) (2,991,746) - - - - - - - - - - - - - - Consolidated 2019 $ 2018 $ 513,991 10,331 2,289,560 192,210 524,322 2,481,770 * Cash on deposit of $10,331 (2018: $192,210) is a restricted cash balance which is held and maintained as security over the group's bank overdraft facility, bank guarantees and leased properties. 39 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 11. Current assets - trade and other receivables Trade receivables Less: Allowance for expected credit losses Other receivables Consolidated 2019 $ 2018 $ 6,560,276 12,894,416 (615,897) (266,091) 6,294,185 12,278,519 119,553 152,434 6,413,738 12,430,953 Allowance for expected credit losses The group has recognised a loss of $39,865 (2018: $528,941) in profit or loss in respect of impairment of receivables for the year ended 30 June 2019. The ageing of the receivables and allowance for expected credit losses provided for above are as follows: Consolidated Not overdue 0 to 3 months overdue 3 to 6 months overdue Over 6 months overdue Movements in the allowance for expected credit losses are as follows: Expected credit loss rate 2019 % Carrying amount 2019 $ Allowance for expected credit losses 2019 $ - 0.7928% 4.0846% 41.3430% 4,760,821 1,002,303 324,352 592,353 - 7,946 13,248 244,897 6,679,829 266,091 Consolidated 2019 $ 2018 $ 615,897 222,345 (389,671) (182,480) 199,302 540,090 (112,347) (11,148) 266,091 615,897 Consolidated 2019 $ 2018 $ 412,903 268,481 Opening balance Additional provisions recognised Receivables written off during the year as uncollectable Unused amounts reversed Closing balance Note 12. Current assets - contract assets Contract assets (2018: accrued revenue) 40 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 12. Current assets - contract assets (continued) Reconciliation Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Recognition of contract assets on adoption of AASB 15 Additions Cumulative catch-up adjustments Transfer to trade receivables Closing balance Allowance for expected credit losses The allowance for expected credit losses on contract assets for the year ended 30 June 2019 is $nil. Note 13. Current assets - other Consolidated 2019 $ 268,482 412,312 26 (267,917) 412,903 Prepayments Note 14. Non-current assets - property, plant and equipment Office and computer equipment - at cost Less: Accumulated depreciation Consolidated 2019 $ 2018 $ 688,267 516,938 Consolidated 2019 $ 2018 $ 862,755 (640,529) 1,235,488 (857,506) 222,226 377,982 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Balance at 1 July 2017 Additions Depreciation expense Balance at 30 June 2018 Additions Disposals Sale of businesses Exchange differences Depreciation expense Balance at 30 June 2019 41 Office and computer equipment $ 356,863 306,354 (285,235) 377,982 55,407 (1,401) (25,478) 2,231 (186,515) 222,226 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 15. Non-current assets - intangibles Goodwill - at cost Less: Impairment Software - at cost Less: Accumulated amortisation Less: Impairment Customer contracts and partner network arrangement - at cost Less: Accumulated amortisation Less: Impairment Membership base - at cost Less: Accumulated amortisation Brand names - at cost Consolidated 2019 $ 2018 $ 15,503,285 19,003,285 (13,396,158) 5,607,127 (13,396,158) 2,107,127 23,854,594 22,745,638 (9,467,946) (4,598,724) 8,678,968 (11,982,825) (4,598,724) 7,273,045 3,622,000 (1,168,990) (2,453,010) - 3,622,000 (896,428) - 2,725,572 2,694,410 (1,047,241) 1,647,169 2,694,410 (655,890) 2,038,520 94,000 94,000 11,121,341 19,144,187 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Customer contracts and partner network arrangement $ Goodwill Software $ $ Membership base $ Brand names $ Total $ 19,003,285 13,388,843 3,914,542 - - - (4,598,724) (13,396,158) (4,025,693) - 3,270,697 - - - (545,125) 5,607,127 - - (3,500,000) - - 8,678,968 2,742,880 (1,028,137) (167,991) - (2,952,675) 2,725,572 - - - (2,453,010) (272,562) 2,433,696 - - - (395,176) 2,038,520 - - - - (391,351) 1,152,000 39,248,521 3,914,542 (1,058,000) (17,994,882) (4,965,994) - (1,058,000) - - 94,000 19,144,187 2,742,880 (1,028,137) (3,667,991) (2,453,010) (3,616,588) - - - - - Consolidated Balance at 1 July 2017 Additions Disposals Impairment of assets Amortisation expense Balance at 30 June 2018 Additions Disposals Sale of businesses Impairment of assets Amortisation expense Balance at 30 June 2019 2,107,127 7,273,045 - 1,647,169 94,000 11,121,341 Impairment testing Goodwill and brand names are tested annually for impairment. Goodwill and brand names are allocated to the Media GCU. 42 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 15. Non-current assets - intangibles (continued) The recoverable amount of the CGU has been determined based on a value in use calculation. This calculation uses a 5 year cash flow projection based upon financial budgets approved by management. Cash flows beyond the five year period are extrapolated using the long term growth rate stated below. The growth rate does not exceed the long term average growth rate for the business. Key assumptions used in the value in use calculations Media CGU - Forecast growth 5%-18% (2018: 8%-12%); - Long-term growth rate 1% (2018: 1%); and - Pre-tax discount rate 24% (2018: 17%). Impairment test results - Media CGU Based on the testing performed no impairment was recognised for this CGU, for the year ended 30 June 2019. Impact of possible changes in assumptions The directors have made judgments and estimates in respect of impairment testing of goodwill. Should these judgments and estimates not occur the resulting goodwill carrying may decrease. The sensitivities specific to the Media CGU are as follows: (a) budgeted revenue growth would be required to be less than 16% for the year ending 30 June 2020 and 4% in subsequent years before further goodwill and other intangibles assets would be impaired, with all other assumptions remaining constant. (b) the discount rate would be required to increase to 28% before goodwill and other intangibles assets would be impaired, with all other assumptions remaining constant. Management believes that other reasonable changes in the key assumptions on which the recoverable amount of goodwill is based would not cause the cash-generating unit's carrying amount to exceed its recoverable amount. 43 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 16. Non-current assets - deferred tax Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Tax losses Allowance for expected credit losses Prepayments Capitalised expenditure Partner network arrangements Brand names Employee benefits Accrued expenses and other payables Provision for reward redemptions Other assets Unrealised foreign exchange loss Business related capital expenditure Research and development expenditure Borrowing costs Unrealised FX Loss Deferred tax asset Movements: Opening balance Charged to profit or loss (note 8) Closing balance Consolidated 2019 $ 2018 $ - 21,346 (1,769) (1,350,800) - (28,200) 235,493 97,829 321,238 (533,746) - 326,245 853,930 - 58,434 422,870 137,315 (936) (1,802,235) (792,107) (28,200) 216,943 146,352 349,105 5,507 (15,312) 535,218 1,205,199 43,151 - - 422,870 422,870 (422,870) 1,228,421 (805,551) - 422,870 The group has unused tax losses of $5,026,658 (2018: $2,464,379) for which no tax benefit has been recognised. Based on management's assessment, taking into consideration the group's future forecasts, deferred tax assets on tax losses have only been recognised to the extent that it is probable that there will be taxable future income from which to off set the tax losses. Note 17. Current liabilities - trade and other payables Trade payables Accrued expenses Other payables Refer to note 26 for further information on financial instruments. Note 18. Current liabilities - contract liabilities Contract liabilities (2018: Deferred revenue) 44 Consolidated 2019 $ 2018 $ 4,153,807 3,740,973 1,390,311 5,276,716 4,493,178 1,557,361 9,285,091 11,327,255 Consolidated 2019 $ 2018 $ 331,421 385,556 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 18. Current liabilities - contract liabilities (continued) Reconciliation Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Recognition of contract liabilities on adoption of AASB 15 Payments received in advance Transfer to revenue Disposals Closing balance Consolidated 2019 $ 385,556 447,358 (497,607) (3,886) 331,421 Unsatisfied performance obligations The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was $331,421 as at 30 June 2019 and is expected to be recognised as revenue in future periods as follows: Within 6 months 6 to 12 months Note 19. Current liabilities - borrowings Loans Trade receivables financing facility Consolidated 2019 $ 231,561 99,860 331,421 Consolidated 2019 $ 2018 $ 14,400,000 2,069,339 - 5,628,290 16,469,339 5,628,290 Refer to note 26 for further information on financial instruments. Loan facility As at 30 June 2019, the loan comprises as 3 facilities as follows: (a) Facility A was $10,000,000 (2018: $10,000,000). Interest was fixed and payable at 12.5% per annum and was payable monthly in arrears. The facility expires on 25 October 2019. As at 30 June 2019, the facility is fully used and there are As at 30 June 2018, the loan was included in non-current liabilities. (b) Facility B was $3,000,000 (2018: $nil). Interest was fixed and payable at 9.5% per annum and was payable monthly in arrears. The facility expires on 30 June 2020. As at 30 June 2019, the facility is fully used and there are no unused amounts. (c) Facility C was $2,600,000 (2018: $nil). Interest was fixed and payable at 20% per annum and was payable monthly in arrears. The facility expires on 15 October 2019. As at 30 June 2019, $1,400,000 of the facility was drawn down and $1,200,000 remains available to be drawn at the discretion of the lender. 45 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 19. Current liabilities - borrowings (continued) Subsequent to 30 June 2019, the group agreed revised terms on its existing loan facilities. Under the revised terms: (a) Facility A is $10,000,000 (2018: $10,000,000). Interest is fixed and payable at 20% per annum and is payable on the date the facility expires. The facility expires on 1 October 2020. (b) Facility B is $3,000,000 (2018: $nil). Interest is fixed at 20% per annum and is payable on the date the loan expires. The facility expires on 1 October 2020. (c) Facility C is $7,000,000 (2018: $nil). Interest is fixed at 20% per annum and is payable on the date the loan expires. The facility expires on 1 October 2020. Total secured liabilities The total secured liabilities (current and non-current) are as follows: Loans Assets pledged as security The loans are secured by the assets of the group. Financing arrangements At the reporting date to the following lines of credit were available: Total facilities Loans Trade receivables financing facility Used at the reporting date Loans Trade receivables financing facility Unused at the reporting date Loans Trade receivables financing facility * Unused amounts available to the group at the discretion of the lender. Note 20. Current liabilities - provisions Employee benefits Reward redemption Rent straight-lining 46 Consolidated 2019 $ 2018 $ 14,400,000 10,000,000 Consolidated 2019 $ 2018 $ 15,600,000 10,000,000 5,628,290 17,669,339 15,628,290 2,069,339 14,400,000 10,000,000 5,628,290 16,469,339 15,628,290 2,069,339 1,200,000 - 1,200,000 - - - Consolidated 2019 $ 2018 $ 453,584 1,155,052 388,813 529,616 1,277,019 170,594 1,997,449 1,977,229 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 20. Current liabilities - provisions (continued) Reward redemption This provision represents the estimated costs of rewards awarded to customers in respect of services sold. The provision is estimated based on historical reward redemption information, sales levels and any recent trends that may suggest future reward redemptions could differ from historical amounts. Rent straight-lining The provision represents operating lease incentives received. The incentives are allocated to profit or loss in such a manner that the rent expense is recognised on a straight-line basis over the lease term. Movements in provisions Movements in each class of provision during the current financial year, other than employee benefits, are set out below: Consolidated - 2019 Carrying amount at the start of the year Additional provisions recognised Amounts used Payments Unused amounts reversed Carrying amount at the end of the year Note 21. Non-current liabilities - borrowings Loans Refer to note 26 for further information on financial instruments. Refer to note 19 for further details. Note 22. Non-current liabilities - provisions Employee benefits Note 23. Equity - issued capital Reward Rent redemption straight-lining $ $ 1,277,019 3,937,250 (3,429,371) (195,853) (433,993) 170,594 250,880 (29,568) (3,093) - 1,155,052 388,813 Consolidated 2019 $ 2018 $ - 10,000,000 Consolidated 2019 $ 2018 $ 80,568 132,085 Ordinary shares - fully paid 117,526,063 120,495,625 41,461,502 41,803,151 Consolidated 2019 Shares 2018 Shares 2019 $ 2018 $ 47 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 23. Equity - issued capital (continued) Movements in ordinary share capital Details Date Shares Issue price $ Balance Shares issued on acquisition of Cohort Conversion of service rights to ordinary shares Less: share issue costs net of taxation 1 July 2017 8 November 2017 7 May 2018 111,171,611 8,888,889 435,125 - 39,937,294 1,866,667 - (810) $0.21 $0.00 $0.00 Balance Share buy-back Less: adjustment for prior year share issue costs net of taxation 30 June 2018 24 December 2018 120,495,625 (2,969,562) 41,803,151 (341,499) $0.11 - $0.00 (150) Balance 30 June 2019 117,526,063 41,461,502 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share buy-back There is no current on-market share buy-back. Capital risk management The group's objectives when managing capital is to safeguard its ability to continue as a going concern so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current company's share price at the time of the investment. The group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the previous period. Note 24. Equity - reserves Foreign currency reserve Share-based payments reserve 48 Consolidated 2019 $ 2018 $ (178,682) 449,241 (215,038) 449,241 270,559 234,203 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 24. Equity - reserves (continued) Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Balance at 1 July 2017 Foreign currency translation Share-based payments Balance at 30 June 2018 Foreign currency translation Balance at 30 June 2019 Note 25. Equity - dividends Foreign currency $ Share-based payments $ Total $ (232,619) 17,581 - 358,629 - 90,612 (215,038) 36,356 449,241 - 126,010 17,581 90,612 234,203 36,356 (178,682) 449,241 270,559 There were no dividends paid, recommended or declared during the current or previous financial year. Note 26. Financial instruments Financial risk management objectives The group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. The group may use derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk. Market risk Foreign currency risk The group operates internationally and is exposed to foreign currency risk from various currency exposures, primarily with respect to the US dollar and GB Pound. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The carrying amount of the group's foreign currency denominated financial assets and financial liabilities at the reporting date were not significant. Price risk The group is not exposed to any significant price risk. 49 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 26. Financial instruments (continued) Interest rate risk The group's main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk. An analysis by remaining contractual maturities is shown in the liquidity section below. As at the 30 June 2019 and 30 June 2018, the group's borrowings were subject to a fixed interest rate, hence the group was not susceptible to interest rate risk arising from fluctuation in the variable interest rate. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. The group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The group does not have any material credit risk exposure to any single debtor or group of debtors and does not hold any collateral. The group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the group based on recent sales experience, historical collection rates and forward- looking information that is available. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. The group has a concentration of credit risk exposure with its debtors financing facility. The finance provider, as at 30 June 2019, is owed $2,069,339 (2018: $5,628,290) from the group's trade receivables. In the event that the group's trade receivables are not collect the group will be liable for amounts owed to the finance provider. Amounts owing represent 31.5% (2018: 81.6%) of trade receivables at 30 June 2019. The group has recognised a provision for impairment of receivables of $266,091 at 30 June 2019 (2018: 615,897) and management is confident of collection of the remaining trade receivables balances. There are no guarantees against these receivables but management closely monitors the receivable balance on a monthly basis and is in regular contact with this customer to mitigate risk. Liquidity risk Vigilant liquidity risk management requires the group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Financing arrangements Unused borrowing facilities at the reporting date: Loans Consolidated 2019 $ 2018 $ 1,200,000 - 50 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 26. Financial instruments (continued) Remaining contractual maturities The following tables detail the group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 2019 Non-derivatives Non-interest bearing Trade payables Other payables Reward redemption provision Interest-bearing - fixed rate Loans Trade receivables financing facility Total non-derivatives Consolidated - 2018 Non-derivatives Non-interest bearing Trade payables Other payables Reward redemption provision Interest-bearing - fixed rate Loans Trade receivables financing facility Total non-derivatives Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - - 4,153,807 1,390,311 1,155,052 20.00% 14,897,427 26.82% 2,069,339 23,665,936 - - - - - - - - - - - - - - - 4,153,807 1,390,311 1,155,052 - 14,897,427 - 2,069,339 - 23,665,936 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - - 5,276,716 1,557,361 1,277,019 - - - 9.50% 950,000 10,316,667 26.82% 5,628,290 - 14,689,386 10,316,667 - - - - - - - - - 5,276,716 1,557,361 1,277,019 - 11,266,667 - 5,628,290 - 25,006,053 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Note 27. Fair value measurement Fair value hierarchy The following tables detail the group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. 51 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 27. Fair value measurement (continued) The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities. Valuation techniques for fair value measurements categorised within level 2 and level 3 During the year ended 30 June 2018, the fair value of the contingent consideration has been valued using a discounted cash flow model and the fair value of shares to be issued. Level 3 assets and liabilities Movements in level 3 assets and liabilities during the current and previous financial year are set out below: Consolidated Balance at 1 July 2017 Payment of contingent consideration Issue of shares in lieu of payment Fair value movement recognised in profit or loss Balance at 30 June 2018 Balance at 30 June 2019 Note 28. Key management personnel disclosures Contingent consideration $ 7,522,222 (4,298,856) (1,866,667) (1,356,699) - - Compensation The aggregate compensation made to directors and other members of key management personnel of the group is set out below: Short-term employee benefits Post-employment benefits Share-based payments Consolidated 2019 $ 2018 $ 950,444 57,523 - 902,620 59,295 24,901 1,007,967 986,816 52 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 29. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by Grant Thornton, the auditor of the company, and unrelated firms: Audit services - Grant Thornton Audit or review of the financial statements Audit services - other firms Audit or review of the financial statements Other services - other firms Taxation services Assistance in financial due diligence Consolidated 2019 $ 2018 $ 158,593 160,028 50,935 99,900 116,507 35,300 120,899 35,050 151,807 155,949 202,742 255,849 Note 30. Contingent liabilities The group has given a bank guarantee as at 30 June 2019 of $182,337 (2018: $182,337) to its landlord for leased property. Note 31. Commitments Lease commitments - operating Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years More than five years Consolidated 2019 $ 2018 $ 1,542,243 2,701,710 1,488,922 1,271,783 1,161,844 1,806,350 5,732,875 4,239,977 Operating lease commitments includes contracted amounts for offices and plant and equipment under non-cancellable operating leases expiring within 1 to 5 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. Note 32. Related party transactions Parent entity Pureprofile Ltd is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 34. Key management personnel Disclosures relating to key management personnel are set out in note 28 and the remuneration report included in the directors' report. 53 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 32. Related party transactions (continued) Transactions with related parties The following transactions occurred with related parties: Payment for goods and services: Payment for expenses reimbursed to key management personnel Consolidated 2019 $ 2018 $ 7,098 362 Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 33. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive loss Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Accumulated losses Total equity/(deficiency) Parent 2019 $ 2018 $ (14,423,686) (32,297,136) (14,423,686) (32,297,136) Parent 2019 $ 2018 $ 176,684 227,218 6,937,633 16,040,212 15,813,878 151,122 15,813,878 10,151,122 41,461,502 41,803,151 449,241 (36,363,302) 449,241 (50,786,988) (8,876,245) 5,889,090 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity is a party to a deed of cross guarantee (refer note 35), under which it guarantees the debts of certain of its subsidiaries as at 30 June 2019 and 30 June 2018. 54 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 33. Parent entity information (continued) Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018 other than those disclosed in note 30. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018. Significant accounting policies The accounting policies of the parent entity are consistent with those of the group, as disclosed in note 2, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Note 34. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name Pureprofile.com, Inc. Pureprofile Australia Pty Limited Pureprofile Global Pty Ltd Pureprofile Media PLC Pureprofile UK Ltd Pureprofile US Inc. Pure Network Pty Ltd Real Research Global Pty Ltd Real Research Pty Ltd Sparc Media Pty Ltd Funbox India Private Limited Sparc Media sp. Z o.o. Pureprofile NZ Ltd Cohort Holdings Australia Pty Limited Cohort Australia Pty Ltd Cohort Developments Pty Ltd Cohort Global LLC Cohort Global Ltd Note 35. Deed of cross guarantee Principal place of business / Country of incorporation Ownership interest 2018 2019 % % USA Australia Australia United Kingdom United Kingdom USA Australia Australia Australia Australia India Poland New Zealand Australia Australia Australia USA United Kingdom 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - - - - - 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the others: Pureprofile Australia Pty Limited Pureprofile Global Pty Ltd Pure Network Pty Ltd Real Research Global Pty Ltd Real Research Pty Ltd Sparc Media Pty Ltd By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission. The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other parties to the deed of cross guarantee that are controlled by Pureprofile Ltd, they also represent the 'Extended Closed Group'. 55 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 35. Deed of cross guarantee (continued) Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position of the 'Closed Group'. Statement of profit or loss and other comprehensive income Revenue Other income Interest revenue calculated using the effective interest method Direct costs of revenue Employee benefits expense Foreign exchange loss Loss on disposal of intangible assets Depreciation, amortisation and impairment expense Loss on disposal of investments Technology, engineering and licence fees Share-based payment expense Restructuring, acquisition and IPO costs Other expenses Loss before income tax expense Income tax expense Loss after income tax expense Other comprehensive income for the year, net of tax Total comprehensive loss for the year Equity - accumulated losses Accumulated losses at the beginning of the financial year Loss after income tax expense Accumulated losses at the end of the financial year 2019 $ 2018 $ 29,177,873 31,706,698 - - (16,094,793) (9,102,649) (400,441) - (21,904,282) - (3,177,898) (68,700) (23,548) (5,611,871) 568,359 1,145 (13,432,576) (8,719,075) (359,413) (4,527,054) (3,053,627) (8,416,100) (2,782,531) - - (2,151,142) (13,694,141) (502,669) (24,677,484) (278,974) (14,196,810) (24,956,458) - - (14,196,810) (24,956,458) 2019 $ 2018 $ (39,586,150) (14,196,810) (14,629,692) (24,956,458) (53,782,960) (39,586,150) 56 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 35. Deed of cross guarantee (continued) Statement of financial position Current assets Cash and cash equivalents Trade and other receivables Contract assets Other Non-current assets Property, plant and equipment Intangibles Deferred tax Investment in subsidiary Total assets Current liabilities Trade and other payables Contract liabilities Borrowings Income tax Provisions Related party payables Non-current liabilities Borrowings Provisions Total liabilities Net assets/(liabilities) Equity Issued capital Reserves Accumulated losses Total equity/(deficiency) Note 36. Earnings per share Earnings per share for loss from continuing operations Loss after income tax attributable to the owners of Pureprofile Ltd 2019 $ 2018 $ 406,371 6,165,058 287,049 507,812 7,366,290 948,962 4,207,371 - 437,345 5,593,678 75,319 125,186 9,474,174 14,393,271 1,559,248 1,311,230 9,181,561 765,465 11,626,188 25,259,266 18,992,478 30,852,944 8,046,896 316,186 16,543,518 1,275,924 596,884 3,063,216 7,892,508 224,594 - 459,101 1,559,815 7,893,261 29,842,624 18,029,279 - 10,000,000 1,070,794 71,992 1,070,794 10,071,992 30,913,418 28,101,271 (11,920,940) 2,751,673 41,461,502 41,803,151 534,672 (39,586,150) 400,518 (53,782,960) (11,920,940) 2,751,673 Consolidated 2019 $ 2018 $ (8,355,648) (7,394,128) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 118,966,097 116,934,616 Weighted average number of ordinary shares used in calculating diluted earnings per share 118,966,097 116,934,616 57 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 36. Earnings per share (continued) Basic earnings per share Diluted earnings per share Earnings per share for loss from discontinued operations Loss after income tax attributable to the owners of Pureprofile Ltd Cents Cents (7.02) (7.02) (6.32) (6.32) Consolidated 2019 $ 2018 $ (6,104,394) (18,585,749) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 118,966,097 116,934,616 Weighted average number of ordinary shares used in calculating diluted earnings per share 118,966,097 116,934,616 Basic earnings per share Diluted earnings per share Earnings per share for loss Loss after income tax attributable to the owners of Pureprofile Ltd Cents Cents (5.13) (5.13) (15.89) (15.89) Consolidated 2019 $ 2018 $ (14,460,042) (25,979,877) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 118,966,097 116,934,616 Weighted average number of ordinary shares used in calculating diluted earnings per share 118,966,097 116,934,616 Basic earnings per share Diluted earnings per share Options have been excluded from the diluted earnings per share as they were anti-dilutive. Note 37. Share-based payments Cents Cents (12.15) (12.15) (22.22) (22.22) Share options and service rights A long term incentive plan ('LTI') and short term incentive plan ('STI') has been established by the group, whereby the group may, at the discretion of the Board, grant options or performance rights (in the case of an LTI) or service rights (in the case of an STI) over ordinary shares in the company to certain key management personnel and employees of the group. The existing options are issued for consideration and are granted in accordance with guidelines established by the Board. The existing service rights are issued for nil consideration and are granted in accordance with performance guidelines established by the Board. The general terms under which the share options and service rights are granted are summarised in the Remuneration report section of the Directors' report. 58 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 37. Share-based payments (continued) Performance rights On 12 December 2017, the company issued 2,100,000 performance rights to its finance facility provider, as part consideration for the financing facility obtained in November 2017. 950,000 performance rights, which will convert to fully paid-up ordinary shares upon the 60-day volume weighted average price ('VWAP') of Pureprofile shares reaching $0.40 per share; and 1,150,000 performance rights, which will convert to fully paid-up ordinary shares upon the 60-day VWAP of Pureprofile shares reaching $0.60 per share. Share-based payments expense for the financial year was $nil (2018: $90,612). Set out below are summaries of options granted under the long term incentive plan: 2019 Grant date Expiry date price Exercise Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 29/05/2015 29/05/2015 29/05/2020 29/05/2020 $0.50 $0.60 2,009,000 1,200,000 3,209,000 - - - - - - - - - 2,009,000 1,200,000 3,209,000 Weighted average exercise price $0.54 $0.00 $0.00 $0.00 $0.54 2018 Grant date Expiry date price Exercise Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 29/05/2015 29/05/2015 29/05/2020 29/05/2020 $0.50 $0.60 2,009,000 1,200,000 3,209,000 - - - - - - - - - 2,009,000 1,200,000 3,209,000 Weighted average exercise price $0.54 $0.00 $0.00 $0.00 $0.54 Set out below are the options that have vested and are exercisable at the end of the financial year: Grant date Expiry date 29/05/2015 29/05/2015 29/05/2020 29/05/2020 2019 2018 Number Number 2,009,000 1,200,000 2,009,000 1,200,000 3,209,000 3,209,000 The weighted average share price during the financial year was $0.07 (2018: $0.18). The weighted average remaining contractual life of options outstanding at the end of the financial year was 0.9 years (2018: 1.9 years). Set out below are summaries of service rights granted under the short term incentive plan: 2018 Grant date Expiry date price Exercise Balance at the start of the year Granted 28/02/2018 31/01/2018 $0.00 435,125 435,125 59 Exercised - - (435,125) (435,125) Expired/ forfeited/ other Balance at the end of the year - - - - Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 37. Share-based payments (continued) No service rights are exercisable at the end of the financial year (2018: nil) The weighted average remaining contractual life of service rights outstanding at the end of the financial year was nil (2018: nil). Set out below are summaries of performance rights granted under the plan: 2019 Grant date Expiry date price Exercise Balance at the start of the year Granted 12/12/2017 02/11/2019 $0.00 2,100,000 2,100,000 Exercised - - - - Expired/ forfeited/ other Balance at the end of the year - - 2,100,000 2,100,000 No performance rights are exercisable at the end of the financial year (2018: n/a) The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 0.3 years (2018: 1.3 years). 2018 Grant date Expiry date price Exercise Balance at the start of the year Granted Exercised Expired/ forfeited/ other Balance at the end of the year 12/12/2017 02/11/2019 $0.00 - - 2,100,000 2,100,000 - - - - 2,100,000 2,100,000 60 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 38. Cash flow information Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year (14,460,042) (25,979,877) Consolidated 2019 $ 2018 $ Adjustments for: Depreciation and amortisation Impairment of intangibles Share-based payments Net loss on disposal of non-current assets Foreign currency differences Revaluation of earn-out liability Loss on sale of businesses Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Increase in contract assets Decrease in deferred tax assets Decrease/(increase) in prepayments Increase/(decrease) in trade and other payables Decrease in contract liabilities Decrease in provision for income tax Increase/(decrease) in deferred tax liabilities Decrease in employee benefits Increase/(decrease) in other provisions Net cash used in operating activities Changes in liabilities arising from financing activities Consolidated Balance at 1 July 2017 Net cash from financing activities Balance at 30 June 2018 Net cash from/(used in) financing activities Changes through discontinued operations Balance at 30 June 2019 Note 39. Events after the reporting period 3,803,103 5,251,229 2,453,010 17,994,882 90,612 1,058,000 17,581 (1,356,699) - - 831,380 1,759 - 2,991,746 4,760,248 (144,421) 102,827 (250,815) (793,288) (53,606) (130,019) 320,043 (69,553) 266,846 (349,591) (186,290) 889,887 278,175 768,949 - (410,860) (84,336) (32,387) (251,735) (370,782) (2,302,460) Trade receivables financing facility $ Loans $ 4,000,000 6,000,000 - 5,628,290 10,000,000 4,400,000 - 5,628,290 (3,883,147) 324,196 14,400,000 2,069,339 On 28 August 2019, Mr Nic Jones resigned as CEO and Managing Director, with Mr Andrew Edwards taking over in an ongoing executive capacity as Executive Chairman. At the same time, CFO, Mrs Melinda Sheppard, was promoted to Chief Operating Officer, with responsibility for managing finance, HR, operational delivery and corporate services. Mr Aaryn Nania was also appointed Non-Executive Director to replace Mr Jones on the board. Effective 1 September 2019, the following changes were made to the group’s existing debt facilities with Lucerne: 61 Pureprofile Ltd Notes to the financial statements 30 June 2019 Note 39. Events after the reporting period (continued) ● ● ● Maturity date: the maturity date on all facilities has been extended to 1 October 2020; Interest rate: the interest rate has been set at 20% on all drawn facilities and the group has the option to capitalise interest and repay it with the principal upon maturity; and Repayment fee: the ‘Repayment Fee’, which Lucerne would have been entitled to on the happening of a ‘Control Transaction’ (as disclosed to the ASX on 28 February 2019), has been removed. Effective 27 September 2019, the group’s debt facilities with Lucerne were increased by $5,400,000. The line of credit on Facility C was increased from $2,600,000 to $7,000,000. The maturity date and interest rate remain unchanged from the amendments made to the facility on 1 September 2019. No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the group's operations, the results of those operations, or the group's state of affairs in future financial years. 62 Pureprofile Ltd Directors' declaration 30 June 2019 In the directors' opinion: ● ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements; the attached financial statements and notes give a true and fair view of the group's financial position as at 30 June 2019 and of its performance for the financial year ended on that date; 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 at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 35 to the financial statements. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Andrew Edwards Executive Chairman 27 September 2019 Sydney 63 Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Pureprofile Limited Report on the audit of the financial report Opinion We have audited the financial report of Pureprofile Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the 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, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 64 Material uncertainty related to going concern We draw attention to Note 1 in the financial statements, which indicates that the Group incurred a net loss of $14,460,042 during the year ended 30 June 2019, and as of that date, the Group’s current liabilities exceeded its current assets by $20,139,244. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key audit matter How our audit addressed the key audit matter Carrying value of intangible assets Note 15 At 30 June 2019, the Group’s consolidated statement of financial Our audit procedures included the following: position included intangible assets of $11.1 million. AASB 136 Impairment of Assets requires, for the purposes of impairment testing, that goodwill acquired in a business combination be allocated to each of the Group’s cash-generating units (CGUs). Each CGU to which goodwill has been allocated must be tested for impairment at least annually or when indicators of impairment are present. During the period, the Group sold two of its Media businesses. As a result, goodwill of $3.5 million relating to these businesses within the Media CGU has been disposed. The remaining goodwill balance of $2.1 million allocated to the Media CGU has been tested for impairment. This assessment was performed by comparing the carrying amount of the Media CGU with its recoverable amount, which was determined using a value-in–use impairment model. We considered this to be a key audit matter given the value of these assets relative to total assets and the significant judgements and assumptions involved in the application of the value-in-use model used by management in testing intangible assets for impairment.  Evaluating the allocation of goodwill to the businesses disposed of during the period by considering the underlying transactions which originated the goodwill;  Assessing whether the impairment testing model (“the model”) used by management met the requirements of Australian Accounting Standard AASB136 Impairment of Assets;  Evaluating the determination of Cash Generating Units (CGUs) with respect to the independence of cash inflows generated by each CGU;  Testing the mathematical accuracy of the model;  Considering the underlying assumptions regarding future cash flows used in the model by comparing these to approved budgets, historical performance, business plans, industry forecasts and other supporting information ;  Considering the historical accuracy of the Group’s forecasting ability;  Assessing the discount rates and the terminal growth rates used in the model, with involvement from our valuation specialists;  Considering the sensitivity of the model, focussing on areas where a reasonably possible change in assumptions could cause the carrying amount to exceed its recoverable amount and therefore indicate impairment; and  Considering the adequacy of the disclosures relating to intangible assets in the financial statements, including those made with respect to judgements and estimates. 65 Key audit matter How our audit addressed the key audit matter Capitalisation of development costs Note 15 During the year ended 30 June 2019, the Group capitalised $2.7 million of costs related to the development of its software assets. Our audit procedures included the following:  Assessing the assumptions used and estimates made in AASB 138 Intangible Assets sets out the criteria that are required to be met in order to record intangible assets arising from the development phase of a project. Judgment is required by management in determining if the internal labour and external supplier costs incurred are directly attributable to the development projects and the appropriateness of these costs to be capitalised under AASB 138. This was considered to be a key audit matter due to the magnitude of amounts capitalised and the judgments and estimates involved in determining which costs may be capitalised throughout the life of the project and determining the useful life of the asset. capitalising development costs;  Assessing whether the useful life of development costs is appropriate;  Testing, on a sample basis, costs capitalised to underlying evidence including employment contracts, payroll reports and invoices from external suppliers to assess the nature and eligibility of development costs for capitalisation as an intangible asset under AASB 138; and  Considering the adequacy of the financial report disclosures. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. 66 A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report. Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 5 to 12 of the Directors’ report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Pureprofile Limited, for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Grant Thornton Audit Pty Ltd Chartered Accountants S M Coulton Partner – Audit & Assurance Sydney, 27 September 2019 67 Pureprofile Ltd Corporate directory 30 June 2019 Directors Andrew Edwards Sue Klose Aaryn Nania Company secretary Kohei Katagiri Notice of annual general meeting The details of the annual general meeting of Pureprofile Ltd. are: Thursday, 28 November 2019 at 10:00am at: Automic Level 5, 126 Phillip Street Sydney NSW 2000 Registered office Principal place of business Share register Auditor Level 20, 233 Castlereagh Street Sydney NSW 2000 Tel: +61 2 9333 9700 Level 20, 233 Castlereagh Street Sydney NSW 2000 Tel: +61 2 9333 9700 Automic Level 5, 126 Phillip Street Sydney NSW 2000 Tel: +61 2 9698 5414 Grant Thornton Level 17, 383 Kent Street Sydney NSW 2000 Tel: +61 2 8297 2400 Stock exchange listing Pureprofile Ltd. shares are listed on the Australian Securities Exchange (ASX code: PPL) Website www.pureprofile.com Business objectives Pureprofile Ltd. has used cash and cash equivalents held at the time of listing, in a way consistent with its stated business objectives. Corporate Governance Statement The Corporate Governance Statement was approved by the Board of Directors at the same time as the Annual Report and can be found on the Investor Relations page at https://business.pureprofile.com/investors/ 68 Pureprofile Ltd Shareholder information 30 June 2019 The shareholder information set out below was applicable as at 1 September 2019. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Merrill Lynch (Australia) Nominees Pty Limited Mr Paul Augustine Chan (The Chan Family A/C) Appwam Pty Ltd Fmg Holdings Pty Ltd Super Options Fund Pty Ltd (Super Options Fund A/C) Mrs Judith Swaab HSBC Custody Nominees (Australia) Limited Nofusa Pty Ltd (Hersch Family A/C) Onmell Pty Ltd (ONM BPSF A/C) BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient DRP) Dato Lim Sen Yap Pilmore Pty Limited (Miwa Superannuation Fund A/C) Vadina Pty Limited (Jordan Super Fund A/C) Mrs Saverina Comperatore Mr Wouter Dimitri Adam Van Damme Depofo Pty Ltd (Super A/C) Mr Malcolm John Badgery Depofo Pty Ltd (Ordinary A/C) Mr Lance Sacks Osgood Holdings Pty Ltd (Nicky6 Family A/C) 69 Number of holders of options over ordinary shares Number of holders of ordinary shares 28 159 82 235 137 641 431 - 1 - 7 10 18 - Ordinary shares Number held % of total shares issued 22,998,594 6,202,090 6,000,000 5,868,139 4,500,000 3,921,977 3,870,950 2,500,000 2,411,755 2,046,286 1,758,756 1,660,065 1,600,000 1,360,950 1,350,000 1,300,000 1,200,391 1,150,000 1,073,076 1,067,548 73,840,577 19.57 5.28 5.11 4.99 3.83 3.34 3.29 2.13 2.05 1.74 1.50 1.41 1.36 1.16 1.15 1.11 1.02 0.98 0.91 0.91 62.84 Pureprofile Ltd Shareholder information 30 June 2019 Unquoted equity securities Options over ordinary shares Performance rights over ordinary shares The following person holds 20% or more of unquoted equity securities: Number on issue Number of holders 3,209,000 2,100,000 7 1 Name Lucerne Finance Class Number held Performance rights over ordinary shares issued 2,100,000 Substantial holders Substantial holders in the company are set out below: Merrill Lynch (Australia) Nominees Pty Limited Mr Paul Augustine Chan (The Chan Family A/C) Appwam Pty Ltd Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares Number held 22,998,594 6,202,090 6,000,000 % of total shares issued 19.57 5.28 5.11 Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. 70 

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