(ACN 125 931 964)
Annual Financial Report
for the Year Ended 30 June 2017
For personal use only
Index
Corporate Information
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
Corporate Governance Statement
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Peppermint Innovation Limited
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2017 Annual Financial Report
For personal use only
COMPANY DIRECTORY
Peppermint Innovation Limited
Directors
Mr Christopher Kain
Managing Director
Mr Anthony Kain
Executive Director
Mr Mathew Cahill
Non-executive Director
Mr Leigh Ryan
Non-executive Director
Mr Rod Tasker
Non-executive Director
Company Secretary
Mr Anthony Kain
Registered Office
Suite 8, 7 The Esplanade
Mt Pleasant WA 6153
Tel: +61 8 9316 9100
Fax: +61 8 9315 5475
Auditors
RSM Australia Partners
8 St Georges Terrace
Perth, WA 6000
Solicitors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth, WA 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Tel: +61 8 9323 2000
Fax: +61 8 9323 2033
Web: www.computershare.com.au
Web Address
www.pepltd.com.au
ASX Code:
PIL
2017 Annual Financial Report
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Peppermint Innovation Limited
Directors’ Report
Your Directors submit the financial report of Peppermint Innovation Limited (the Company or Peppermint),
and the entities it controlled (the Group), for the year ended 30 June 2017.
1. Directors
The names of directors who held office during or since the end of the financial year and until the date of this
report are as follows. Directors were in office for the entire financial year unless otherwise stated.
Name, qualifications,
independence status and
special responsibilities
Mr Anthony Kain (BJuris, LLB)
Chairperson
Executive Director
Secretary
Appointed 4 December 2015
Mr Christopher Kain (B Comm,
MBA)
Managing Director
Appointed 4 December 2015
Mr Matthew Cahill
Independent Non-executive
Director
Appointed 4 December 2015
Experience
Anthony has over 20 years’ experience working in Australian capital
markets. He has played a key role in the formation of numerous
privately owned and publicly listed companies and has an in-depth
understanding of intellectual property and its commercialisation.
Anthony also has considerable experience as a director and has held
managing director roles with Australian Stock Exchange
listed
companies operating foreign assets.
Anthony has held advisory roles in capital raising, joint ventures and
mergers and acquisitions through his exposure to a diverse range of
international and national development opportunities working with
technical teams primarily in the energy, motor vehicle and resources
sectors.
Directorships in the past 3 years: None
Christopher is a practised company director with over 15 years’
experience in finance and investment markets and is accomplished in
identifying business opportunities and executing commercial strategies
for the benefit of both stakeholders and investors. Christopher has
specific expertise in investment evaluation, public and private capital
raising programs, debt funding strategies and, project development
and financing.
Christopher has held advisory and development roles with institutions
such as Barclays Capital and Credit Suisse First Boston in London,
National Australia Bank and Macquarie Bank in Australia where he
worked across institutional, wholesale and retail investment and
financial markets.
Directorships in the past 3 years: None
Matthew is an accomplished technical director with over 16 years’
experience in the Web industry working across a broad range of
technologies. He has been involved in roles such as management,
strategy, team lead, business analysis, application architecture and
development.
As technical director at Vivid Group (now Isobar of Dentsu Aegis
Network), Matthew has worked with some of Australia’s largest brands,
including Sunbeam, JB HiFi, Echo Entertainment, Fusion Retail
Brands, Coates Hire and many more. Matthew’s responsibilities
included guiding the technical direction of the company, along with
leadership of the large development teams that spanned multiple
disciplines and technologies.
Directorships in the past 3 years: None
2017 Annual Financial Report
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Directors’ Report (continued)
Peppermint Innovation Limited
Name, qualifications,
independence status and
special responsibilities
Leigh Ryan, (BSc Geology,
MAIG)
Independent Non-executive
Director from 4 December 2015,
Former CEO and Managing
Director of Chrysalis Resources
Limited to 3 December 2015
Rod Tasker, (BA BSc Grad Dip
Banking and Finance)
Independent Non-executive
Director appointed 28 September
2016
Dr Vincent Power, (PhD, BSc
(Hons))
Independent Non-executive
Director
Appointed 4 December 2015
Resigned 14 September 2016
2. Company Secretary
Experience and special responsibilities
Leigh is a highly qualified geologist with 29 years experience in the
exploration and resources industry, specifically in exploration and
executive management throughout Australia and Africa.
He has been involved in targeting, evaluation, discovery and resource
definition of numerous gold and base metal deposits and has
successfully negotiated purchase option and joint venture agreements.
Leigh was the managing director of Chrysalis Resources Limited prior
to the reverse take-over by Peppermint Innovation Limited.
Directorships in the past 3 years:
- Chrysalis Resources Limited (23 September 2014 to 3 December
2015)
- Boss Resources Limited (4 May 2011 to 24 July 2014)
Rod consults in strategic management and innovative solution delivery
in the banking and finance industry, especially payment services and
electronic banking.
In addition to consulting, Rod has worked in venture capital, start-ups
and mainstream banking (ANZ and WBC).
He has been at the forefront of developments in payment services for
three decades, spanning cards, EFTPOS, ATM, cheques, cash,
mobile, internet, crypto-currency, wallets, direct debit/credit, RTGS,
SWIFT, trade finance. Rod has worked on consumer, business and
government payment services, in Australia and abroad.
Directorships in the past 3 years: None
Vincent has over 20 years of experience in domestic and international
payment schemes. He has extensive current knowledge of global
payments technologies and is well connected internationally.
Directorships in the past 3 years: None
The company secretary is Anthony Kain. Details disclosed in director information.
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Directors’ Report (continued)
3. Directors’ Meetings
The number of meetings of Directors held during the financial year and the number of meetings attended by
each Director was as follows:
Name
Anthony Kain
Christopher Kain
Matthew Cahill
Leigh Ryan
Rod Tasker
Vincent Power
4. Principal Activities
Number of meeting
eligible to attend
6
6
6
6
4
2
Number of meetings
attended
6
6
6
3
4
1
The principal activities of the Group during the year were the commercialisation, deployment and further
development of the Peppermint Platform, a mobile banking, payments and remittance technology designed
for banks, mobile money operators, money transfer and funds remittance companies, payment processors,
retailers/merchants, credit card companies and microfinance institutions.
The Peppermint Platform is currently operated in the Philippines. Peppermint has a particular focus on the
developing world (starting with the Philippines) and on providing an attractive tool to the unbanked
population to access mobile banking and remit money to and from family and others through a system not
tied to a particular bank or telephony company.
No significant change in the nature of these activities occurred during the year.
5. Operating and financial review
Overview for the year
‘Non-Bank’ Payment Platform
The Company’s commenced on-boarding billers and customer to its non-bank payment platform in the
Philippines.
Under an arrangement with the Bayad Centre, 49 billers are active, 4 billers are soon to be on-boarded post
a successful testing program, and 10 billers are about to commence testing.
Customers are being on-boarded via established payment agent networks, which commenced with pilot
programs with MyWeps, Metro Gas and SUNMar:
Approval was obtained from Filipino central bank, the Bangko Sentral ng Pilipinas (BSP), for a pilot
for up to 500 agents under a Mobile Remittance Pilot granted to MyWeps to provide their customers
with the opportunity to remit money, pay bills and buy eLoad services via the MyWeps platform. The
three-month trial is taking place in the Philippines across the National Capital Region, key regional
areas, and six specific municipalities in provinces that have been identified as marginalised or
underserved. 351 MyWeps remittance agents have completed registration formalities to date.
In May 2017 a three-month pilot of the Metro Gas Agent App commenced, with Metro Gas delivery
personnel offering its customers the option to pay household bills at the time an LPG delivery is
accepted. Metro Gas delivers LPG to over 60,000 customers via an established network of 50
delivery personnel, delivering on average 15-20 deliveries every day of the week in the Philippines.
30 delivery personnel are registered to use the platform.
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Directors’ Report (continued)
5. Operating and financial review (continued)
SUNMar provides a range of products and services to its Filipino customers through its local partner
branches and network of over 14,000 agents. An initial 3-month pilot of the white-label, SUNMar
branded app is underway with 13 partner and agent branches.
The pilots are intended to engender agent familiarity and produce platform user enhancements to underlie
commercial adoption post pilot stage.
In recognition of its efforts with the Non Bank Payment Platform, Peppermint was pleased to accept a
Finnie at the 2017 FinTech Australia’s inaugural awards night, recognising the Company for
‘Excellence in Financial Inclusion (Social Good)’.
Bank Mobile Banking and Payments Platform
White labelled mobile banking and payments services continue to be provided to three banks in the
Philippines:
Union Bank. The number of users and transactions across the UMobile App powered by Peppermint
increased, however, UnionBank have indicated that they are going to substitute the UMobile App
with their own in house app. At this stage UnionBank have not launched their mobile banking app
and continue to utilise the Umobile App under the terms of the existing service provider agreement.
Peppermint is continuing to work with UnionBank to resolve this matter and understand how
Peppermint can assist with, and provide, specific functionality and services to empower
UnionBank’s own mobile app based on our technical experience and platform knowhow.
UCPB. The Peppermint Faster Remittance System will enable a direct credit to bank facility for
international money transfers. The system still is progressing through a scoping analysis as
Peppermint waits for complete project specifications.
Metro Bank. Business volumes were stable over the course of the year.
Transactions via Peppermint’s Mobile Banking and Payments (MBS) platform reached 21.5 million during the
year as the number of registered users increased 52.7% from 155,248 to 237,054.
Australian Outbound Remittance Business
Establishment of an outbound remittance business commenced, and has achieved AUSTRAC registration, is
compliant with AML/CTF requirements, and has opened operational bank accounts. These step are key
enablers for the commencement of an international remittance business out of Australia.
Shareholder returns
2017
2016
2015
Net loss for the year
Earnings per share (cents)
Net assets
Share price
(1,599,598)
(0.2)
539,196
$0.009
(8,797,978)
(1.4)
2,129,004
$0.015
(400,251)
(0.1)
(179,348)
n/a
No information existed prior to 2015 because the Company was incorporated on 24 July 2014 and
completed a reverse take-over to list on the Australian Securities Exchange on 4 December 2015.
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Peppermint Innovation Limited
Directors’ Report (continued)
5. Operating and financial review (continued)
Investments for future performance
The main expense item for the Company is its human resources, which have continued to focus on the
Company’s three business lines:
1. Non-bank Payments Platform;
2. Bank Mobile Banking and Payments Platform; and
3. Australian Outbound Remittance Business.
All areas are expected to grow with continued product development over the year, however, it is noted that
Bank Mobile Banking and Payments Platform business line is expected to represent a small portion of the
Company’s business in coming years as the Non-bank Payments Platform and Australian Outbound
Remittance Business are expected to grow at a faster pace than the Bank Mobile Banking and Payments
Platform.
Review of financial condition
The Company had $429k cash at bank as at 30 June 2017, is sufficiently funded to continue to execute its
growth strategy and operational plans for the coming quarter, and is now working with strategic partners with
respect to future funding.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group to the date of this report, not
otherwise disclosed in this report.
6. Dividends
No dividends have been paid or declared since the start of the financial year and the Directors do not
recommend the payment of a dividend in respect of the financial year.
7. Significant events after balance date
Subsequent to reporting date 1,000,000 fully paid ordinary shares were issued pursuant to a share based
payment for an asset acquired.
Apart from the item above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to affect significantly the operations of the Group, the results of those operations,
or the state of affairs of the Group, in future financial years.
8. Likely developments
The Group intends to continue to develop its mobile banking and payments business via organic growth and
strategic acquisitions.
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Peppermint Innovation Limited
Directors’ Report (continued)
9. Environmental legislation
The Group’s operations are not regulated by any significant environmental regulations under a law of the
Commonwealth or of a state or territory.
10. Directors’ interests
As at the date of this report, the interests of the Directors in the Company were:
Anthony Kain
Christopher Kain
Matthew Cahill
Leigh Ryan
Rod Tasker
11. Share Options
Number of
fully paid
ordinary
shares
93,991,416
110,325,322
6,437,768
3,000,000
1,000,000
Number of
performance
shares
26,854,690
31,521,521
1,839,362
-
-
No options were issued during the year. No shares were issued as a result of the exercise of options.
At the date of this report, there were no unissued shares of the Company under option.
The Options do not entitle the holder to participate in any share issue of the Company or any other body
corporate.
During or since the end of the financial year the Company has not issued any Shares as a result of the
exercise of Options.
12. Indemnification and insurance of Directors and Officers
The Company has agreed to indemnify all the directors and executive officers against all liabilities to another
person (other than the Company or related body corporate) that may arise from their position as officers of
the Company and its controlled entities, except where the liability arises out of conduct involving a lack of
good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities,
including costs and expenses.
The Company has also agreed to indemnify the current Directors of its controlled entities for all liabilities to
another person (other than the Company or related body corporate) that may arise from their position, except
where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the
Company will meet the full amount of any such liabilities, including costs and expenses.
13. Auditor Independence and Non-Audit Services
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this Directors’ Report.
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Directors’ Report (continued)
14. Non-Audit Services
The directors are of the opinion that the services as disclosed in Note 18 to the financial statements do not
compromise the external auditor's independence requirements of the Corporations Act 2001 for the following
reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a
management or decision-making capacity for the company, acting as advocate for the company or
jointly sharing economic risks and rewards
15. Proceedings on Behalf of the Company
There are no proceedings on behalf of the Company under section 237 of the Corporations Act 2001 in the
financial year or at the date of this report.
2017 Annual Financial Report
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RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Peppermint Innovation Limited for the year ended 30 June
2017 I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
JAMES KOMNINOS
Partner
Perth, WA
Dated: 29 August 2017
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
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Directors’ Report (continued)
Remuneration report (audited)
This remuneration report for the financial year ended 30 June 2017 outlines remuneration arrangements of
the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and
its regulations. This information has been audited as required by section 308(3C) of the Act.
The remuneration report details the remuneration arrangements for key management personnel (KMP) who
are defined as those persons having authority and responsibility for planning, directing and controlling the
major activities of the Company and the Group, directly or indirectly, including any director (whether
executive or otherwise) of the parent company, and including the executives in the Parent and the Group
receiving the highest remuneration.
For the purposes of this report, the term “executive” includes the Chief Executive Officer (CEO), executive
directors and senior management of the Parent and where applicable, subsidiaries, and the term “director”
refers to non-executive directors only.
Individual key management personnel disclosures
Details of KMPs of the Company and Group are set out below:
Key management personnel
(i) Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill
Mr Leigh Ryan
Mr Rod Tasker
Mr Vincent Power
(ii) Executives
None
Chairman, Executive Director, Company Secretary, appointed 4
December 2015
Managing Director, appointed 4 December 2015
Non-Executive Director, appointed 4 December 2015
Non-Executive Director. CEO and Managing Director prior to the
reverse take-over on 4 December 2015
Non-Executive Director, appointed 28 September 2016
Non-Executive Director, appointed 4 December 2015, resigned 14
September 2016
There have not been any changes to KMP after reporting date and before the financial report was authorised
for issue.
The Remuneration Report is set out under the following main headings:
A.
B.
C.
D.
E.
F.
G.
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Option holdings of key management personnel
Performance Shares of key management personnel
Other transactions and balances with Key Management Personnel
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Directors’ Report (continued)
Remuneration report (audited) (continued)
A.
Principles used to determine the nature and amount of remuneration
Remuneration philosophy
The performance of the Group depends upon the quality of its directors and executives. To prosper, the
Group must attract, motivate and retain highly skilled directors and executives.
To this end, the Group embodies the following principles in its compensation framework:
• Provide competitive rewards to attract high calibre executives;
• Link executive rewards to shareholder value; and
• Establish appropriate, demanding performance hurdles
compensation
in
relation
to variable executive
Remuneration consists of fixed remuneration and variable remuneration.
Fixed Remuneration
Fixed remuneration is reviewed annually by the Board of Directors. The process consists of a review of
relevant comparative remuneration in the market and internally and, where appropriate, external advice on
policies and practices.
Variable Remuneration
The Group does not currently have a variable component to the remuneration of the board and
management, however, the Group intends to introduce a variable remuneration plan in the near future.
Remuneration Reviews
The Board of Directors of the Company is responsible for determining and reviewing compensation
arrangements for the directors, the Managing Director and all other key management personnel.
The Board of Directors assesses the appropriateness of the nature and amount of compensation of key
management personnel on a periodic basis by reference to relevant employment market conditions with the
overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and
executive team.
Remuneration structure
In accordance with best practice Corporate Governance, the structure of non-executive director and
executive remuneration is separate and distinct.
Non-executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive
directors shall be determined from time to time by a general meeting. The amount of aggregate remuneration
sought to be approved by shareholders and the manner in which it is apportioned amongst directors is
reviewed annually. The Board considers advice from external shareholders as well as the fees paid to non-
executive directors of comparable companies when undertaking the annual review process.
Non-executive directors receive a fee for being a director of the Company. The compensation of non-
executive directors for the year ended 30 June 2017 is detailed below.
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Directors’ Report (continued)
Remuneration report (audited) (continued)
The total maximum remuneration of non-executive directors is initially set by the Constitution and
subsequent variation is by ordinary resolution of Shareholders in general meeting in accordance with the
Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non-
executive directors’ remuneration within that maximum will be made by the Board having regard to the inputs
and value to the Company of the respective contributions of each non-executive Director. This amount has
been set at an amount not to exceed $300,000 per annum.
In addition, a director may be paid fees or other amounts and non-cash performance incentive such as
options, subject to necessary shareholder approval, where a director performs special duties or otherwise
performs services outside the scope of the ordinary duties of a director.
Directors are also entitled to be reimbursed reasonable travelling, hotel and other expenses incurred by them
respectively in or about the performance of their duties as directors.
Senior Manager and Executive Director remuneration
Objective
The entity aims to reward executives with a level and mix of compensation commensurate with their position
and responsibilities within the entity so as to:
•
•
•
•
reward executives for company, business unit and individual performance against targets set to
appropriate benchmarks;
align the interests of executives with those of shareholders;
link rewards with the strategic goals and performance of the Group; and
ensure total compensation is competitive by market standards.
Compensation consists of the following key elements:
•
•
Fixed Compensation; and
Variable Compensation.
The proportion of fixed compensation and variable compensation (potential short term and long term
incentives) is established for each key management person by the Directors.
Fixed Compensation
Objective
Fixed compensation is reviewed annually by the Directors. The process consists of a review of individual
performance, relevant comparative compensation in the market and internally and, where appropriate,
external advice on policies and practices.
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash
and fringe benefits such as motor vehicles and expense payment plans.
Variable Compensation
Objective
The objective of the Variable Compensation is to reward executives in a manner that aligns this element of
compensation with the creation of shareholder wealth.
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Directors’ Report (continued)
Remuneration report (audited) (continued)
Structure
The Company and Group do not currently have a Variable Compensation plan, however, it is intended that
one be established in the near future.
Use of remuneration consultants
The Group did not use the services of remuneration consultants.
Objective of the remuneration committee
The Company did not have a remuneration committee.
Voting and comments made at 2016 Annual General Meeting
All resolutions at the 2016 Annual General Meeting were passed by a show of hands.
Overview of Group performance
The performance of the Group is detailed in the Directors’ Report.
There is no link between remuneration and performance.
B.
Details of remuneration
Year ended 30 June 2017
Directors
Mr Anthony Kain (i)
Mr Christopher Kain (ii)
Mr Matthew Cahill (iii)
Mr Leigh Ryan (iv)
Mr Rod Tasker (v)
Mr Vincent Power
Salary &
Fees
190,000
252,500
67,750
31,425
90,000
21,300
Totals
Compensation is stated on an accruals basis.
652,975
Non
monetary
benefits
Post
employ-
ment
benefits
Share-
based
payments
Total
Performance
Related
5,345
9,500
-
204,845
7,102
12,588
-
272,190
1,853
880
1,425
1,425
-
-
71,028
33,730
2,449
1,425
13,000
106,874
571
-
-
21,871
18,200
26,363
13,000
710,538
-
-
-
-
-
-
-
(i) Until 31 December 2016 Anthony Kain was remunerated via Cicak Pty Ltd, a company of which he is a director
and shareholder.
(ii) Until 31 December 2016 Christopher Kain was remunerated via Ohka Pty Ltd, a company of which he is a
director and shareholder.
(iii) Includes remuneration via Digital Domain Consulting, a business in which he holds a beneficial interest.
(iv) Until 31 December 2016 Leigh Ryan was remunerated via Spatial Data Services, a business in which he holds
a beneficial interest.
Includes remuneration via Adapts Pty Ltd, a business in which he holds a beneficial interest.
(v)
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Directors’ Report (continued)
Remuneration report (audited) (continued)
B.
Details of remuneration (continued)
Year ended 30 June 2016
Directors
Mr Anthony Kain (i)
Mr Christopher Kain (ii)
Mr Matthew Cahill (iii)
Mr Leigh Ryan (iv)
Mr Vincent Power
Salary &
Fees
180,000
240,000
42,000
19,162
42,000
Totals
Compensation is stated on an accruals basis.
523,162
Non
monetary
benefits
Post
employ-
ment
benefits
Share-
based
payments
Total
Performance
Related
1,499
1,499
1,499
1,975
1,499
7,971
-
-
-
-
-
-
-
181,499
-
241,499
-
43,499
40,000
61,137
-
43,499
40,000
571,133
-
-
-
-
-
-
(i) Anthony Kain was remunerated via Cicak Pty Ltd, a company of which he is a director and shareholder.
(ii) Christopher Kain was remunerated via Ohka Pty Ltd, a company of which he is a director and shareholder.
(iii) Matthew Cahill was remunerated via Digital Domain Consulting, a business in which he holds a beneficial
interest.
(iv) Leigh Ryan was remunerated via Spatial Data Services, a business in which he holds a beneficial interest.
C.
Service agreements
Agreements with Executives
The Company entered into employment contracts with Christopher Kain (as Chief Executive Officer /
Managing Director) and Anthony Kain (as General Counsel and Company Secretary) with an effective
commencement date of 1 January 2017 to replace the then existing consultancy agreements.
The material terms of the employment agreements are as follows:
(a) Remuneration:
i.
ii.
Anthony Kain - $200,000 per annum plus statutory superannuation (currently 9.5%); and
Christopher Kain - $265,000 per annum plus statutory superannuation (currently 9.5%).
(b) Annual review: performance reviewed on an annual basis with the possibility of a performance and
CPI based remuneration adjustments.
(c) Termination: either party may give the other 12 months’ notice, in which the case the Company may
make a payment in lieu of notice. In the event of misconduct, the Company may terminate
employment without notice.
(d) Standard employment terms and conditions.
Previous Agreements with Executives
The Company entered into consultancy services agreements with Christopher Kain (together with Okha Pty
Ltd, an entity controlled by Christopher Kain) and Anthony Kain (together with Cicak Pty Ltd, an entity
controlled by Anthony Kain) (Consultants) (Consultancy Services Agreements). The material terms of the
Consultancy Services Agreements were as follows:
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Directors’ Report (continued)
Remuneration report (audited) (continued)
(e) Term: two years from the date of readmission of the Company to the ASX after completion of the
Acquisition;
(f) Remuneration:
iii.
iv.
Anthony Kain - $15,000 per month (exclusive of GST), paid to Cicak Pty Ltd, based on
minimum work commitment of 35 hours per week;
Christopher Kain - $20,000 per month (exclusive of GST), paid to Ohka Pty Ltd, based on a
minimum work commitment of 35 hours per week;
Further to this, the Company agrees to reimburse the Consultants all reasonable expenses incurred in
the performance of their services;
(g) Non-cash benefits: the Consultants may be granted non cash incentive benefits subject to
shareholder approvals or a performance based bonus subject to shareholder approvals;
(h) Restraint of trade: upon termination of the Consultancy Services Agreements, the Consultants will be
subject to a restraint of trade period of up to 2 years; and
Termination: the Company and Consultants may terminate the respective Consultancy Services Agreements
without cause by giving the other party notice of 12 months.
Agreements with Non-Executive directors
The Company has entered into director and consultancy services agreements with Mathew Cahill (together
with Digital Data Consulting Pty Ltd, an entity controlled by Mathew Cahill) and Vincent Power. The material
terms of the agreements are as follows:
(a) Director’s fees: director’s fees at the rate of $30,000 per annum plus superannuation together with:
i.
an entitlement to fees or other amounts in relation to special duties or service performed
outside the scope of ordinary employment as a director;
ii.
reimbursement for out of pocket expenses incurred as a result of engagement as a director.
(b) Consulting fees: consulting fees of $42,000 per annum.
(c) Termination: Non-Executive Directors may retire at any time and are subject to re-election at the
annual general meeting of shareholders in accordance with the Company’s policy of at least one
third of the Non-Executive Directors being nominated for re-election each year based on the
Company’s rotation schedule.
The Company has entered into a director agreement with Leigh Ryan. The material terms of the agreement
is as follows:
(a) Director’s fees: director’s fees at the rate of $30,000 per annum plus superannuation together with:
iii.
an entitlement to fees or other amounts in relation to special duties or service performed
outside the scope of ordinary employment as a director;
iv.
reimbursement for out of pocket expenses incurred as a result of engagement as a director.
(b) Termination: Non-Executive Directors may retire at any time and are subject to re-election at the
annual general meeting of shareholders in accordance with the Company’s policy of at least one
third of the Non-Executive Directors being nominated for re-election each year based on the
Company’s rotation schedule.
2017 Annual Financial Report
15
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Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
The Company has entered into director agreement with Rod Tasker. The material terms of the agreement
are as follows:
(a) Director’s fees: director’s fees at the rate of $30,000 per annum plus superannuation together with:
i.
an entitlement to fees or other amounts in relation to special duties or service performed
outside the scope of ordinary employment as a director;
ii.
reimbursement for out of pocket expenses incurred as a result of engagement as a director.
(b) Termination: Non-Executive Directors may retire at any time and are subject to re-election at the
annual general meeting of shareholders in accordance with the Company’s policy of at least one
third of the Non-Executive Directors being nominated for re-election each year based on the
Company’s rotation schedule.
In addition, the Company pays Adaps IT Pty Ltd (an entity controlled by Rod Tasker) a monthly consulting
fee of $7,500 plus GST.
D.
Share-based compensation
Compensation shares, options - granted and vested during the financial year
2017
1,250,000 shares were granted as remuneration in 2017.
No options were granted as compensation during the 2017 year.
2016
No shares nor options were granted as compensation during the 2016 year.
Value of shares or options awarded, exercised and lapsed during the financial year
2017
2016
1,250,000 shares were granted as compensation during the 2017 year. These shares were
valued at the market price on the day of issue, being 1.3 cents for a total value of $16,250
No options were granted as compensation during the 2017 year.
No shares nor options were granted as compensation during the 2016 year. 2,000,000
shares worth $40,000 vested during the 2016 year.
E.
Performance Rights holdings of key management personnel
Balance at
start of
the
financial
year
26,854,690
31,521,521
1,839,362
-
-
-
60,215,573
30 June 2017
Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill
Mr Leigh Ryan
Mr Rod Tasker
Mr Vincent Power
Totals
2017 Annual Financial Report
Granted as
remuneration
Performance
hurdle
achieved
Net
change
other
Balance at the
end of financial
year
Vested and
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,854,690
31,521,521
1,839,362
-
-
-
60,215,573
-
-
-
-
-
-
-
16
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Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
F.
Share holdings of key management personnel
Granted as
remuneration
On
exercise
of
options
Acquisitions
/(Disposals)
Balance at
the end of
financial
year
Vested and
exercisable
30 June 2017
Directors
Mr Anthony Kain
Balance at
start of the
financial
year
93,991,416
Mr Christopher Kain
110,325,322
Mr Matthew Cahill
6,437,768
Mr Leigh Ryan
3,000,000
-
Mr Rod Tasker
Mr Vincent Power
-
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
93,991,416
93,991,416
110,325,322
110,325,322
6,437,768
6,437,768
3,000,000
3,000,000
1,000,000
1,000,000
-
-
Totals
213,754,506
1,000,000
-
-
214,754,506
214,754,506
G.
Other transactions and balances with Key Management Personnel
Apart from reimbursements for expenses paid on behalf of the Company and the Group, director and fees
paid directly or indirectly to director related entities, there were no transactions or balances with KMP during
the year ended 30 June 2017 (2016: Nil).
END OF THE REMUNERATION REPORT
Signed in accordance with a resolution of the Directors:
Christopher Kain
Managing Director
Perth, 29 August 2017
2017 Annual Financial Report
17
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Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Peppermint Innovation Limited (the Company) is responsible for the corporate
governance of the Group. The Board guides and monitors the business affairs of the Group on the behalf of
the shareholders by whom they are elected and to whom they are accountable.
ASX Corporate Governance Principles
The ASX Corporate Governance Council (the Council) has Corporate Governance Principles and
Recommendations (the Principles), which are designed to maximise corporate performance and accountability
in the interests of shareholders and the broader economy. The Principles encompass matters such as board
composition, committees and compliance procedures.
(being
those under ASX’s 3rd edition of Corporate Governance Principles and
The Principles
Recommendations dated March 2014) can be viewed at www.asx.com.au. The Principles are not prescriptive,
however ASX listed entities are required to disclose the extent of their compliance with the Principles, and to
explain why they have not adopted a Principle if they consider it inappropriate in their particular circumstances.
Commensurate with the spirit of the ASX Principles, the Company has followed each of the Recommendations
to the extent the Board considered that their implementation was practicable and likely to genuinely improve
the Group’s internal processes and accountability to external stakeholders. The Corporate Governance
Statement contains certain specific information and discloses the extent to which the Group has followed the
guidelines during the financial year. Where a recommendation has not been followed, the fact is disclosed,
together with reasons for the departure.
The Company has lodged with the ASX an Appendix 4G (Key to Disclosures – Corporate Governance Council
Principles and Recommendations) and Recommendations. A summary against the Principles is set out below.
2017 Annual Financial Report
18
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CORPORATE GOVERNANCE STATEMENT (continued)
Peppermint Innovation Limited
Corporate Governance Checklist
Corporate Governance Council Recommendation
Principle 1 - Lay solid foundations for management and oversight
Disclose roles and responsibilities of board and management
1.1
1.2
Undertake appropriate checks before appointing or electing a person as director
1.3 Written agreement with each director and senior executive
Company Secretary accountable directly to Board
1.4
Diversity Policy disclosures reported
1.5
Board performance evaluation undertaken
1.6
1.7
Senior executive performance evaluation undertaken
Principle 2 – Structure the board to add value
Nomination committee requirements met
2.1
Board skills matrix disclosed
Director Independence and tenure disclosed
2.2
2.3
2.4 Majority of the board are independent directors
2.5
Chair of the board is an independent director and not the same person as the
CEO
2.6
Director induction and ongoing training program
Principle 3 – Act ethically and responsibly
Code of conduct available on website
3.1
Does the Company
follow the
recommendation?
Comment
Y
Y
Y
N
Y
N
N
N
Y
Y
Y
N
N
Y
The Chair of the Board is the company secretary
In view of the size of the operations and limited number of directors, a formal
performance evaluation process is not performed.
In view of the size of the operations and limited number of executives, a formal
performance evaluation process is not performed.
The duties and responsibilities typically delegated to such committee are included in the
responsibilities of the full Board.
The Chair of the Board is an executive director and the company secretary.
The Chair is not the CEO.
In view of the size of the operations of the Company and the limited number of
directors, the Company does not have a formal director induction and ongoing training
program.
2017 Annual Financial Report
19
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CORPORATE GOVERNANCE STATEMENT (continued)
Peppermint Innovation Limited
Corporate Governance Checklist (Continued)
Corporate Governance Council Recommendation
Principle 4 – Safeguard integrity in corporate reporting
4.1
Audit committee requirements met
4.2
4.3
CEO and CFO financial statements declarations received
External auditors attend AGM and available to answer questions
from securityholders
Continuous Disclosure Policy available on website
Principle 5 – Make timely and balanced disclosure
5.1
Principle 6 – Respect the rights of securityholders
6.1
6.2
6.3
6.4
Principle 7 – Recognise and manage risk
7.1
Risk committee requirements met
Corporate and governance information available on website
Investor relations program
Processes to facilitate and encourage participation at securityholders meetings
Electronic securityholder communication functionality
7.2
7.3
7.4
Annual review of risk management framework
No internal audit function but internal control processes in place
Disclosure of material exposure to, and management of, economic,
environmental and social sustainability risk
Principle 8
8.1
Remuneration committee requirements
8.2
8.3
Remuneration practices disclosed
Remuneration Policy disclosures regarding equity based remuneration
Does the Company
follow the
recommendation?
Comment
The Board considers that the Company is not currently of a size, nor are its affairs of
such complexity to justify the expense of appointing additional independent Non-
Executive Directors simply to fill an audit committee.
In view of the size of the operations of the Company, this is performed by the Board.
In view of the size of the operations of the Company, this is performed by the Board.
N
Y
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
N
Y
Y
2017 Annual Financial Report
20
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Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Principle 1 - Lay solid foundations for management and oversight
Recommendation 1.1 - Disclose roles and responsibilities of board and management
The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical
expectations and obligations. In addition, the Board is responsible for identifying areas of significant business
risk and ensuring arrangements are in place to adequately manage those risks.
To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the
nomination and selection of directors and for the operation of the Board. The responsibility for the operation
and administration of the Group is delegated, by the Board, to the CEO and the executive management team.
The Board is responsible for ensuring that management’s objectives and activities are aligned with the
expectations and risks identified by the Board. The Board has a number of mechanisms in place to ensure this
is achieved including:
Board approval of a strategic plan designed to meet stakeholders’ needs and manage business risk
Ongoing development of the strategic plan and approving initiatives and strategies designed to ensure
the continued growth and success of the entity
Implementation of budgets by management and monitoring progress against budget — via the
establishment and reporting of both financial and non-financial key performance indicators
Other functions reserved to the Board include:
Approval of the annual, half-yearly and quarterly financial reports
Approving and monitoring the progress of major capital expenditure, capital management, and
acquisitions and divestitures
Ensuring that any significant risks that arise are identified, assessed, appropriately managed and
monitored
Reporting to shareholders
Recommendation 1.2 - Undertake appropriate checks before appointing or electing a person as
director
Reference checks are performed for each director.
Recommendation 1.3 - Written agreement with each director and senior executive
Each director has received a letter of appointment which details the key terms of their appointment. This letter
includes all of the recommended matters in the Principles. Each director also enters into required agreements
regarding insurance, access to records and disclosure of any trading in Company securities as required under
the Listing Rules.
All directors have formalised job descriptions and letters of appointment.
Recommendation 1.4 - Company Secretary accountable directly to Board
The Chair of the Board is the Company Secretary.
Recommendation 1.5 - Diversity Policy disclosures reported
The Group recognises the value contributed to the organisation by employing people with varying skills,
cultural backgrounds, ethnicity and experience and employs people based on their underlying skill sets in an
environment where everyone is treated equally and fairly, and where discrimination, harassment and inequity
are not tolerated.
14% of the Group’s employees are females, and the Chief Operating Officer of the Company based in the
Philippines is a female.
2017 Annual Financial Report
21
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Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Recommendation 1.6 - Board performance evaluation undertaken
In view of the size of the operations of the Group and the number of directors, a formal performance
evaluation process is not performed.
Recommendation 1.7 - Senior executive performance evaluation undertaken
In view of the size of the operations of the Group and the limited number of executives, a formal performance
evaluation process is not performed.
Principle 2 – Structure the board to add value
Recommendation 2.1 - Nomination committee requirements met
During the year ended 30 June 2017, the Group did not have a separately established nomination committee.
However, the duties and responsibilities typically delegated to such committee are included in the
responsibilities of the full Board.
Recommendation 2.2 - Board skills matrix disclosed
The directors possess a broad range of complimentary skill sets. The skills, experience and expertise relevant
to the position of director held by each director in office at the date of the annual report are included in the
Directors’ report.
Recommendation 2.3 - Director Independence and tenure disclosed
Directors of the Company are considered to be independent when they are independent of management and
free from any business or other relationship that could materially interfere with — or could reasonably be
perceived to materially interfere with — the exercise of their unfettered and independent judgement.
In the context of director independence, “materiality” is considered from both the Company and individual
director perspective. The determination of materiality requires consideration of both quantitative and qualitative
elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the
appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if
it is equal to or greater than 10% of the appropriate base amount.
Qualitative factors considered include whether a relationship is strategically important, the competitive
landscape, the nature of the relationship and the contractual or other arrangements governing it and other
factors that point to the actual ability of the director in question to shape the direction of the Group’s loyalty.
In accordance with the definition of independence above, and the materiality thresholds set, the following
directors of the Company are considered to be independent:
Name
Position
Mr Matthew Cahill
Non-Executive Director
Mr Leigh Ryan
Mr Rod Tasker
Non-Executive Director
Non-Executive Director
2017 Annual Financial Report
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Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
The term in office held by each director in office at the date of this report is as follows:
Name
Term in office
Mr Anthony Kain
Appointed 24 July 2014 (inception), tenure 3 years, 1 month
Mr Christopher Kain
Appointed 24 July 2014 (inception), tenure 3 years, 1 month
Mr Matthew Cahill
Appointed 24 July 2014 (inception), tenure 3 years, 1 month
Mr Leigh Ryan
Mr Rod Tasker
Appointed 4 December 2015, tenure 1 year, 9 months
Appointed 28 September 2016, tenure 9 months
Recommendation 2.4 - Majority of the board are independent directors
The Company has five directors, three of whom are independent.
Recommendation 2.5 - Chair of the board is an independent director and not the same person as the
CEO
The Chair of the board is not an independent director and is not the CEO. The Board considers that the
Group is not currently of a size, nor are its affairs of such complexity to justify the expense of appointing a
suitably qualified additional independent Non-Executive Director to Chair the Company.
Recommendation 2.6 - Director induction and ongoing training program
In view of the size of the operations of the Group and the limited number of directors, the Group does not have
a formal director induction and ongoing training program.
Principle 3 – Act ethically and responsibly
Recommendation 3.1 - Code of conduct available on website
The Company’s Code of Conduct is available on the Company’s website.
Principle 4 – Safeguard integrity in corporate reporting
Recommendation 4.1 - Audit committee requirements met
Recommendation 4.1 requires the audit committee to be structured so that it consists only of non-executive
directors with a majority of independent directors, chaired by an independent chairperson who is not
chairperson of the Board and has at least three members. During the year ended 30 June 2017, the Company
did not have a separately established audit committee. The Board considers that the Group is not currently of
a size, nor are its affairs of such complexity to justify the expense of appointing additional independent Non-
Executive Directors simply to fill an audit committee.
Recommendation 4.2 - CEO and CFO financial statements declarations received
In accordance with section 295A of the Corporations Act, the CEO and CFO have provided a written
statement to the Board that:
Their view provided on the Group’s financial report is founded on a sound system of risk management
and internal compliance and control which implements the financial policies adopted by the Board; and
The Group’s risk management and internal compliance and control system is operating effectively in all
material respects.
2017 Annual Financial Report
23
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Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Recommendation 4.3 - External auditors attend AGM and available to answer questions from
securityholders
The external auditors are required to attend the annual general meeting and are available to answer any
shareholder questions about the conduct of the audit and preparation of the audit report.
Principle 5 – Make timely and balanced disclosure
Recommendation 5.1 - Continuous Disclosure Policy available on website
The Group’s policy is to comply with its continuous disclosure obligations under the Listing Rules at all times.
Principle 6 – Respect the rights of securityholders
Recommendation 6.1 - Corporate and governance information available on website
Information about the Group and its governance is available to investors via the Company’s website.
Recommendation 6.2 - Investor relations program
The Group’s objective is to promote effective communication with its shareholders at all times.
The Group is committed to:
Ensuring that shareholders and the financial markets are provided with full and timely information about
the Group’s activities in a balanced and understandable way;
Complying with continuous disclosure obligations contained in the ASX listing rules and the Corporations
Act in Australia; and
Communicating effectively with its shareholders.
To promote effective communication with shareholders and encourage effective participation at general
meetings, information is communicated to shareholders:
Through the release of information to the market via the ASX
Through the distribution of the annual report and notices of annual general meeting
Through shareholder meetings and investor relations presentations
Through letters and other forms of communications directly to shareholders
By posting relevant information on the Group’s website: www.pepltd.com.au.
The Group’s website publishes all important company information and relevant announcements made to the
market.
Recommendation 6.3 - Processes to facilitate and encourage participation at security holders
meetings
Meetings of security holders of the Company are convened at least once a year, usually in October.
An explanatory memorandum on the resolutions is included with the notice of meeting. Unless specifically
stated in the notice of meeting, all holders of fully paid securities are eligible to vote on all resolutions.
In the event that security holders cannot attend formal meetings, they are able to lodge a proxy in accordance
with the Corporations Act. Proxy forms can be mailed, lodged by facsimile or emailed.
2017 Annual Financial Report
24
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Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
Recommendation 6.4 - Electronic securityholder communication functionality
Securityholders are provided with the option to receive communications from, and send communications to,
the Group and its security registry electronically.
Principle 7 – Recognise and manage risk
Recommendation 7.1 - Risk committee requirements met
The Group does not have a committee to oversee risk. In view of the size of the operations of the Group, this
is performed by the Board.
Recommendation 7.2 - Annual review of risk management framework
The Board has identified the significant areas of potential business and legal risk of the Group. The
identification, monitoring and, where appropriate, the reduction of significant risk to the Group will be the
responsibility of the Board.
To this end, comprehensive practices are in place which are directed towards achieving the following
objectives:
effectiveness and efficiency in the use of the Group’s resources;
compliance with applicable laws and regulations;
preparation of reliable published financial information.
Recommendation 7.3 - No internal audit function but internal control processes in place
In view of the size of the operations of the Group, the Group does not have an internal audit function. Internal
processes include segregating incompatible functions, dual signatories on bank accounts and oversight by the
Board.
Recommendation 7.4 - Disclosure of material exposure to, and management of, economic,
environmental and social sustainability risk
The Group does not believe it has any material exposure to economic, environmental and social sustainability
risks.
Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1 - Remuneration committee requirements
Recommendation 8.1 requires listed entities to establish a remuneration committee. During the year ended 30
June 2017, the Group did not have a separately established remuneration committee. However, the duties
and responsibilities typically delegated to such committee are included in the responsibilities of the full Board.
Recommendation 8.2 - Remuneration practices disclosed and Recommendation 8.3 - Remuneration
Policy disclosures regarding equity based remuneration
It is the Group’s objective to provide maximum stakeholder benefit from the retention of a high quality board
and executive team by remunerating directors and key executives fairly and appropriately with reference to
relevant employment market conditions.
Further details are disclosed in the Remuneration Report
2017 Annual Financial Report
25
For personal use only
STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
Revenue
Cost of sales
Gross profit
Other income
Administration expenses
Finance costs
Share based payment expense
Restructuring/relisting expense
(Loss) before income tax
Income tax expense
(Loss) for the year
Note
Consolidated
2017
$
2016
$
1,007,474
(809,249)
606,453
(489,918)
198,225
116,535
5
5
5
6
2(c)
7
41,077
3,072
(1,821,853)
(797)
(16,250)
-
(1,492,336)
(26,180)
(40,000)
(7,359,069)
(1,599,598)
(8,797,978)
-
-
(1,599,598)
(8,797,978)
Other comprehensive income / (loss)
Items that may be reclassified to profit or loss:
- Nil
Total comprehensive (loss) for the year
(Loss) for the year attributable to members of the parent
entity
Total comprehensive (loss) for the year attributable to
members
-
-
-
-
(1,599,598)
(8,797,978)
(1,599,598)
(8,797,978)
(1,599,598)
(8,797,978)
Basic and diluted loss per share (cents per share)
4
(0.2)
(1.4)
The accompanying notes form part of these financial statements
2017 Annual Financial Report
26
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STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Total Current Assets
NON-CURRENT ASSETS
Intangible assets
Other non-current assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
Peppermint Innovation Limited
Note
8
9
Consolidated
2017
$
2016
$
428,439
2,097,761
65,649
22,807
36,847
-
516,895
2,134,608
10
84,687
141,146
11
-
-
84,687
141,146
601,582
2,275,754
37,349
25,037
62,386
146,750
-
146,750
62,386
146,750
539,196
2,129,004
12
11,337,023
(10,797,827)
11,327,233
(9,198,229)
539,196
2,129,004
The accompanying notes form part of these financial statements
2017 Annual Financial Report
27
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STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
Cash flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest received
Note
Consolidated
2017
$
2016
$
978,672
(2,676,832)
606,453
(2,008,931)
8,503
3,072
Net cash (used in) operating activities
8(b)
(1,689,657)
(1,399,406)
Cash Flows from Investing Activities
Acquisition of subsidiary
Proceeds on the sale of plant and equipment
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities
Issue of shares
Share issue expenses
Net cash (used in) / provided by financing activities
-
26,795
26,795
(281,770)
-
(281,770)
-
(6,460)
(6,460)
3,874,300
(251,029)
3,623,271
Net (decrease) / increase in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
(1,669,322)
2,097,761
1,942,095
155,666
8(a)
428,439
2,097,761
The accompanying notes form part of these financial statements
2017 Annual Financial Report
28
For personal use only
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
Issued
Capital
Accumulated
Losses
$
$
Total
$
Balance at 1 July 2016
11,327,233
(9,198,229)
2,129,004
Loss for the year
Total comprehensive loss for the year
-
(1,599,598)
(1,599,598)
-
(1,599,598) (1,599,598)
Transactions with owners in their capacity
as owners:
Share issue expenses
Share based payments
Balance at 30 June 2017
(6,460)
16,250
-
-
(6,460)
16,250
11,337,023
(10,797,827)
539,196
Issued
Capital
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2015
220,903
(400,251)
(179,348)
Loss for the year
Total comprehensive loss for the year
-
-
(8,797,978)
(8,797,978)
(8,797,978)
(8,797,978)
Transactions with owners in their capacity
as owners:
Issue of shares prior to
acquisition
Issue of shares for acquisition of subsidiary
Shares issued
Share issue expenses
Share based payments
Balance at 30 June 2016
533,377
6,909,683
3,874,300
(251,030)
40,000
-
-
-
-
-
533,377
6,909,683
3,874,300
(251,030)
40,000
11,327,233
(9,198,229)
2,129,004
The accompanying notes form part of these financial statements
2017 Annual Financial Report
29
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Peppermint Innovation Limited (the Company) is an Australian company incorporated on 24 July 2014. On 4
December 2015, the Company listed on the Australian Securities Exchange via the reverse takeover of
Chrysalis Resources Limited.
The principal activities of the Group (the Company and its controlled entities) were the development and
commercialisation of its mobile banking, payment and remittance platform.
(a)
Basis of Preparation
Statement of compliance
The financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and
Interpretations, and as appropriate for profit oriented entities.
Accounting Standards
include Australian Accounting Standards (AASBs). Compliance with
Australian Accounting Standards ensures that the financial statements and notes comply with
International Financial Reporting Standards (IFRS) adopted by the International Accounting
Standards Board (IASB).
The financial statements were authorised for issue by the directors on 29 August 2017.
Basis of measurement
The financial report has also been prepared under the historical cost convention.
Functional and presentation currency
The financial report is presented in Australian dollars, which is the Company’s functional currency.
Reverse acquisition accounting
On 4 December 2015, Peppermint Innovation Limited (formerly Chrysalis Resources Limited), the
legal parent and legal acquirer, completed the acquisition of Peppermint Technology Limited
(previously Peppermint Innovation Limited) and its controlled subsidiary. The acquisition did not
meet the definition of a business combination in accordance with AASB 3 Business Combinations,
with Peppermint Technology Limited deemed to be the accounting acquirer. The acquisition has
been treated as a group recapitalisation, using the principles of reverse acquisition accounting in
AASB 3 Business Combinations. Effectively Peppermint Technology Limited has been recapitalised,
acquiring the net assets and listing status of Peppermint Innovation Limited.
Accordingly the consolidated financial statements of the Peppermint Innovation Limited have been
prepared as a continuation of the business and operations of Peppermint Technology Limited. The
recapitalisation is measured at the fair value of the equity instruments that would have been given by
the controlled entity, Peppermint Technology Limited, to have exactly the same percentage holding
in the new structure at the date of acquisition.
The implications of the acquisition on the group restructure on the financial statements are as
follows;
Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated
Statement of Changes in Equity and Consolidated Statement of Cash flow.
The 30 June 2016 comparatives comprises 12 months of Peppermint Technology Pty Ltd
and Peppermint Tech. Inc., and 6 months and 27 days of Peppermint Innovation Limited.
Consolidated Statement of Financial Position
The statement of financial position as at 30 June 2016 comprises of Peppermint Technology
Limited, Peppermint Innovation Limited and the other controlled entities listed in Note 13(c).
2017 Annual Financial Report
30
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Going concern
The financial statements have been prepared on the going concern basis, which contemplates
continuity of normal business activities and the realisation of assets and the discharge of liabilities in
the normal course of business.
As disclosed in the financial statements, the Group incurred a net loss of $1,599,598 and had net
cash outflows from operating activities of $1,689,657 for the year ended 30 June 2017. As at that
date, the Group had net asset of $539,196.
The Directors believe that there are reasonable grounds to believe that the Group will continue as a
going concern, after consideration of the following factors:
In accordance with the Corporations Act 2001, the Group has plans to raise further working
capital through the issue of equity during the financial year end 30 June 2018; and
The Group continues to keep costs at a minimum in order to conserve cash reserves for the
financial year ended 30 June 2018; and
Revenues from the Group’s business continues to increase.
Accordingly, the Directors believe that 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 financial report.
Should the Group not achieve the matters set out above, there is a material uncertainty which may
cast significant doubt as to whether the Group will continue as a going concern and therefore
whether it will realise its assets and extinguish its liabilities in the normal course of business and at
the amounts stated in the financial report.
The financial report does not include any adjustments relating to the amounts or classification of
recorded assets or liabilities that might be necessary if the Group is not able to continue as a going
concern.
(c)
Application of new and revised Accounting Standards
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for
the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory
have not been early adopted.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations issued by the AASB
which are not yet mandatorily applicable to the Group have not been applied in preparing these
consolidated financial statements. Those which may be relevant to the Group are set out below. The
Group does not plan to adopt these standards early.
AASB 9 Financial Instruments and associated Amending Standards (applicable for annual
reporting period commencing 1 January 2018)
The Standard will be applicable retrospectively and includes revised requirements for the
classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.
2017 Annual Financial Report
31
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Application of new and revised Accounting Standards (continued)
Key changes made to this standard that may affect the Group on initial application include
certain simplifications to the classification of financial assets, simplifications to the accounting of
embedded derivatives, and the irrevocable election to recognise gains and losses on
investments in equity instruments that are not held for trading in other comprehensive income.
The directors anticipate that the adoption of AASB 9 will not have a material impact on the
Group’s financial instruments.
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods
commencing on or after 1 January 2018).
When effective, this Standard will replace the current accounting requirements applicable to
revenue with a single, principles-based model. Except for a limited number of exceptions,
including leases, the new revenue model in AASB 15 will apply to all contracts with customers
as well as non-monetary exchanges between entities in the same line of business to facilitate
sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for the goods or services. To achieve this objective,
AASB 15 provides the following five-step process:
-
-
-
-
-
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
This Standard will require retrospective restatement, as well as enhanced disclosures regarding
revenue.
The directors anticipate that the adoption of AASB 15 will not have a material impact on the
Group’s revenue recognition and disclosures.
AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January
2019).
AASB 16 removes the classification of leases as either operating leases or finance leases for the
lessee effectively treating all leases as finance leases. Short term leases (less than 12 months)
and leases of a low value are exempt from the lease accounting requirements. Lessor
accounting remains similar to current practice.
The directors anticipate that the adoption of AASB 16 will not have a material impact on the
Group’s asset and liabilities recognition and disclosures.
(d)
Statement of Compliance
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the financial report, comprising the financial statements and notes thereto, complies with
International Financial Reporting Standards (IFRS).
2017 Annual Financial Report
32
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Critical accounting judgements and key sources of estimation uncertainty
The application of accounting policies requires the use of judgements, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
Share-based payment transactions:
The Group measures the cost of equity-settled share-based payments at fair value at the grant date
using an option pricing model, taking into account the terms and conditions upon which the
instruments were granted. The fair value is determined by a valuation using a Black Scholes Option
Pricing Model.
Acquisition accounting:
On 4 December 2015, Peppermint Innovation Limited (formerly Chrysalis Resources Limited), the
legal parent and legal acquirer, completed the acquisition of Peppermint Technology Limited
(previously Peppermint Innovation Limited) and its controlled subsidiary. The acquisition did not
meet the definition of a business combination in accordance with AASB 3 Business Combinations,
with Peppermint Technology Limited deemed to be the accounting acquirer. The acquisition has
been treated as a group recapitalisation, using the principles of reverse acquisition accounting in
AASB 3 Business Combinations. Effectively Peppermint Technology Limited has been recapitalised,
acquiring the net assets and listing status of Peppermint Innovation Limited.
Accordingly the consolidated financial statements of Peppermint Innovation Limited have been
prepared as a continuation of the business and operations of Peppermint Technology Limited. The
recapitalisation is measured at the fair value of the equity instruments that would have been given by
the controlled entity, Peppermint Technology Limited, to have exactly the same percentage holding
in the new structure at the date of acquisition.
(f)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received or receivable.
Rendering of services
Rendering of service revenue from payments and remittance fees is recognised when the services is
provided.
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective
yield on the financial asset.
(g)
Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and
cash equivalents as defined above.
2017 Annual Financial Report
33
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h)
Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured
at amortised cost using the effective interest rate method, less provision for impairment. Trade
receivables are generally due for settlement within periods ranging from 30 to 90 days.
(i)
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the
contractual provisions to the financial instrument. For financial assets, this is equivalent to the date
that the Group commits itself to either purchase or sell the asset (ie trade date accounting is
adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified “at fair value through profit or loss” in which case transaction costs are
recognised as expenses in profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective
interest method or cost. Where available, quoted prices in an active market are used to determine
fair value. In other circumstances, valuation techniques are adopted.
Amortised cost is calculated as the amount at which the financial asset or financial liability is
measured at initial recognition less repayments made and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between that initial amount and the
maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the
relevant period and is equivalent to the rate that exactly discounts estimated future cash payments
or receipts (including fees, transaction costs and other premiums or discounts) through the expected
life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the
net carrying amount of the financial asset or financial liability. Revisions to expected future net cash
flows will necessitate an adjustment to the carrying amount with a consequential recognition of an
income or expense item in profit or loss.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques
are applied to determine the fair value for all unlisted securities, including recent arm’s length
transactions, reference to similar instruments and option pricing models.
Financial instruments
a.
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and
when the financial liability is derecognised.
2017 Annual Financial Report
34
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
(j)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible assets
Research and development costs
Research costs are expensed as incurred. An intangible asset arising from development expenditure
on an internal project is recognised only when the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available for use or sale, its intention to complete
and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete the development and the ability to measure reliably the
expenditure attributable to the intangible asset during its development. Following the initial
recognition of the development expenditure, the cost model is applied requiring the asset to be
carried at cost less any accumulated amortisation and accumulated impairment losses. Any
expenditure so capitalised is amortised over the period of expected benefit from the related project
on a straight line basis.
The carrying value of an intangible asset arising from development expenditure is tested for
impairment annually when the asset is not yet available for use, or more frequently when an
indication of impairment arises during the reporting period.
Licences
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation
and any accumulated impairment losses. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure is charged against profit or loss
in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets
with finite lives are amortised over the useful life on a straight line basis and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period
and the amortisation method for an intangible asset with a finite useful life is reviewed at least at
each financial year-end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are accounted for by changing the amortisation
period or method, as appropriate, which is a change in accounting estimate. The amortisation
expense on intangible assets with finite lives is recognised in profit or loss in the expense category
consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or
at the cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible
asset with an indefinite life is reviewed each reporting period to determine whether indefinite life
assessment continues to be supportable. If not, the change in the useful life assessment from
indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for
on a prospective basis.
Disposals
Gains or losses arising from de-recognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognised in profit
or loss when the asset is de-recognised.
(k)
Income tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by reporting date.
Deferred income tax is provided on all temporary differences at reporting date between the tax bases
of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
2017 Annual Financial Report
35
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Income tax (continued)
when the deferred income tax liability arises from the initial recognition of goodwill or of 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 profit nor taxable profit or loss; or
when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax
credits and unused tax losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only
recognised to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against which the temporary difference
can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit
or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to
set off current tax assets against current tax liabilities and the deferred tax assets and liabilities
relate to the same taxable entity and the same taxation authority.
(l)
Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax
(‘GST’) except:
when the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the Statement of Financial Position.
2017 Annual Financial Report
36
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
(l)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Other taxes (continued)
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST
component of cash flows arising from investing and financing activities, which is recoverable from, or
payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
(m)
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is
the higher of its fair value less costs to sell and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets and the asset's value in use cannot be estimated to be close to its
fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to
which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, the asset or cash-generating unit is considered impaired and is written down to
its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses relating to continuing operations are
recognised in those expense categories consistent with the function of the impaired asset unless the
asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation
decrease).
An assessment is also made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If that is the case the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset
is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After
such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised
carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(n)
Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods
and services provided to the Group prior to the end of the period that are unpaid and arise when the
Group becomes obliged to make future payments in respect of the purchase of these goods and
services.
(o)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the
statement of profit and loss and other comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax
rate that reflects the risks specific to the liability.
2017 Annual Financial Report
37
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Provisions (continued)
When discounting is used, the increase in the provision due to the passage of time is recognised as
a finance cost.
Employee Benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating
long service leave are recognised in other payables in respect of employees’ services up to the
reporting date, They are measured at the amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are
measured at the rates paid or payable.
(p)
Share-based payment transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of
share-based payments, whereby employees render services in exchange for shares or rights over
shares (equity-settled transactions).
The cost of these equity-settled transactions with employees is measured by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by
an internal valuation using an option pricing model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of the Group (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in
equity, over the period in which the performance and/or service conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until
vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best
estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in
the determination of fair value at grant date. The statement of comprehensive income charge or
credit for a period represents the movement in cumulative expense recognised as at the beginning
and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
only conditional upon a market condition. If the terms of an equity-settled award are modified, as a
minimum an expense is recognised as if the terms had not been modified. In addition, an expense is
recognised for any modification that increases the total fair value of the share-based payment
arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original
award, as described in the previous paragraph.
(q)
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.
2017 Annual Financial Report
38
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
1.
(r)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-
recurring basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a
liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing
information is used to determine fair value. Adjustments to market values may be made having
regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities
that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset
or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in
the absence of such a market, the most advantageous market available to the entity at the end of the
reporting period (ie the market that maximises the receipts from the sale of the asset or minimises
the payments made to transfer the liability, after taking into account transaction costs and transport
costs).
For non-financial assets, the fair value measurement also takes into account a market participant's
ability to use the asset in its highest and best use or to sell it to another market participant that would
use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-
based payment arrangements) may be valued, where there is no observable market price in relation
to the transfer of such financial instruments, by reference to observable market information where
such instruments are held as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the respective note to the financial
statements.
Valuation techniques
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.
(s)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the
Company, 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.
2017 Annual Financial Report
39
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
REVERSE ACQUISITION ACCOUNTING
Peppermint Innovation Limited
On 4 December 2015, Peppermint Innovation Limited (formerly Chrysalis Resources Limited)
completed the legal acquisition of Peppermint Technology Limited (formerly Peppermint Innovation
Limited). Under the Australian Accounting Standards, Peppermint Technology Limited was deemed
to be the accounting acquirer in this transaction. The acquisition has been accounted for as a share
based payment in which Peppermint Technology Limited acquired the net assets and listing status of
Peppermint Innovation Limited.
(a)
Deemed Consideration:
The purchase consideration was the 350,000,000 shares in Peppermint Innovation Limited (formerly
Chrysalis Resources Limited and legal parent) to the shareholders of Peppermint Technology
Limited (formerly Peppermint Innovation Limited) deemed to have a value of $6,909,683 determined
as follows:
Quoted share price on 4 December 2015
Peppermint Innovation Limited (formerly Chrysalis Resources Limited)
shares on issue at acquisition date
Deemed consideration
$0.02
345,484,128
$6,909,683
As part of the transaction, Peppermint Innovation Limited (formerly Chrysalis Resources Limited)
issued a total of 100,000,000 performance shares to the shareholders of Peppermint Technology
Limited (formerly Peppermint Innovation Limited) which convert to fully paid ordinary shares on the
basis of one (1) performance share into one (1) fully paid ordinary share in the capital of the
Company, upon the following milestones being achieved:
Event/Milestone
Milestone 1: the Company or its subsidiaries generating cumulative revenue of
$15,000,000 from the Mobile Banking Payments Remittance Business
(MBPRB) by 20 May 2020
Milestone 2: the Company or its subsidiaries generating cumulative revenue of
$50,000,000 from the MBPRB by 20 May 2020
Number of
Shares
50,000,000
50,000,000
100,000,000
No value has been allocated to the Performance Shares due to the significant uncertainty of meeting
the two performance milestones which are based on future events.
(b)
Fair value of Peppermint Innovation Limited at acquisition:
Cash deficit
Trade and other receivables
Trade and other payables
Net liabilities (deemed fair value)
(c)
Restructuring and relisting costs:
Excess of consideration provided over the fair value of net liabilities
at the date of acquisition, being group restructuring and relisting
costs, recorded in the statement of profit or loss and other
comprehensive income
2017 Annual Financial Report
$
(281,770)
39,253
(206,869)
(449,386)
$
7,359,069
40
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
3.
SEGMENT REPORTING
The Group operates predominantely in the mobile banking, payment and remittance industry. For
management purposes, the Group is organised into one main operating segment being the mobile
banking, payment and remittance business. All of the Group’s activities are inter-related and
discrete financial information is reported to the Board (Chief Operating Decision Maker) as a single
segment. Accordingly, all significant operating decisions are based upon analysis of the Group as
one segment. The financial results from this segment are equivalent to the financial results of the
Group as a whole.
4.
LOSS PER SHARE
2017
$
2016
$
Basic and diluted loss per share (cents per share)
(0.2)
(1.4)
The loss and weighted average number of ordinary shares used in the calculation of basic earnings
per share is as follows:
Loss for the year
Weighted average number of shares outstanding during the
year used in the calculations of basic loss per share:
(1,599,598)
(8,797,978)
891,863,512
639,387,743
There is no dilution of shares due to options as the potential ordinary shares are not dilutive and are
therefore not included in the calculation of diluted loss per share.
5.
RESULT FOR THE YEAR
Other income
-
-
-
Proceeds on the sale of assets
Security deposit refund
Interest income
Administration costs
-
-
-
-
-
-
-
-
-
-
-
-
Audit fees
Consulting fees
Depreciation and amortisation
Directors' fees and consulting remuneration
Employee expenses
Insurance
Investor relations
Licence fees and royalties
Share registry fees
Start-up expenses
Stock exchange fees
Sundry expenses
26,795
5,779
8,503
41,077
-
-
3,072
3,072
32,000
25,833
139,532
109,704
56,459
28,229
679,338
523,163
400,792
325,252
18,200
12,317
165,209
188,334
60,000
106,221
15,470
11,071
29,064
8,496
-
1,265
214,718
163,522
1,821,853
1,492,336
2017 Annual Financial Report
41
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
5.
RESULT FOR THE YEAR (continued)
Finance costs
-
Interest on convertible notes
- Other
Peppermint Innovation Limited
2017
$
2016
$
-
797
797
26,180
-
26,180
Finance costs includes all interest-related expenses, other than those arising from financial assets at
fair value through profit or loss.
6.
SHARE BASED PAYMENTS
2017:
The Company issued 1,000,000 shares to Mr Rod Tasker, a director of the Company, and 250,000
shares to an employee under the terms of his employment contract. A value of $13,000 and $3,250,
respectively, was ascribed to these shares, based on the share price at the dates of issue.
2016:
The Company issued 2,000,000 shares to Mr Leigh Ryan, a director of the Company, under the
terms of Leigh Ryan’s employment contract with Chrysalis Resources Limited. Under this contract,
performance shares previously issued vested upon the takeover of the Company.
A value of $40,000 was ascribed to these shares, based on the issue price of $0.02 per share in
accordance with the prospectus (see note 2 for further details and notes 13 and 14 for transactions
involving key management personnel).
7.
INCOME TAX
(a)
Income tax recognised in profit/loss
No income tax is payable by the Company as it recorded a loss for income tax purposes for the
period.
(b)
Numerical reconciliation between income tax expense and the loss before income tax.
The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the
income tax expense in the financial statements as follows:
Accounting loss before tax
Add: restructuring / relisting expenses
Income tax benefit at 27.5% (2016: 28.5%)
Unrecognised tax losses
Income tax expense
2017
$
2016
$
(1,599,598)
-
(1,599,598)
439,889
(439,889)
(8,797,978)
7,359,069
(1,438,909)
410,089
(410,089)
-
-
2017 Annual Financial Report
42
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
7.
INCOME TAX (continued)
(c) Unrecognised deferred tax balances
Tax losses at 27.5% (2016: 28.5%)
Deferred tax asset not booked
Accrued liabilities
Provision for annual leave
Prepayments
Intangible assets
Blackhole deductions
Net unrecognised deferred tax (asset) / liability at 27.5% (2016:
28.5% )
Peppermint Innovation Limited
2017
$
2016
$
(1,025,513)
(531,867)
(6,600)
(6,885)
(13,860)
-
-
(23,289)
2,681
(40,227)
(131,658)
(21,248)
(1,193,945)
(604,521)
A deferred tax asset attributable to income tax losses has not been recognised at balance date as
the probability criteria disclosed in Note 1(k) is not satisfied and such benefit will only be available if
the conditions of deductibility also disclosed in Note 1(k) are satisfied.
8.
CASH AND CASH EQUIVALENTS
Cash at bank
428,439
2,097,761
428,439
2,097,761
Cash at bank earns interest at floating rates based on daily bank deposit rates.
(a)
Reconciliation to the Statement of Cash Flows
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand
and at bank.
Cash and cash equivalents as shown in the statement of cash flows are reconciled to the related
items in the balance sheet as follows:
Cash and cash equivalents
428,439
2,097,761
(b)
Reconciliation of loss after income tax to net cash flows from operating activities:
Loss for the year
Non cash-flow items in loss for the year:
-
Interest accrued on convertible notes
- Depreciation / assets written off
- Gain on sale of assets
(1,599,598)
(8,797,978)
-
26,180
56,459
28,229
(26,795)
- Share based payment in employee benefits expense
16,250
40,000
- Restructuring / relisting expense
Changes in operating assets and liabilities:
-
-
-
-
(Increase) / decrease in trade and other receivables
(Increase) in inventory
(Decrease) in trade and other payables
Increase in provisions
Net cash used in operating activities
2017 Annual Financial Report
- 7,359,069
(28,802)
(22,807)
12,901
-
(109,401)
(67,807)
25,037
-
(1,689,657)
(1,399,406)
43
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
9.
TRADE AND OTHER RECEIVABLES
Current:
Trade receivables
GST receivable
Prepayments
10.
INTANGIBLE ASSETS
Opening balance at the beginning of the financial year
Additions
Amortisation for the financial year
Closing balance at the end of the financial year
At cost
Accumulated amortisation
Closing balance at the end of the financial year
11.
TRADE AND OTHER PAYABLES
Current:
Sundry payables and accrued expenses
12.
ISSUED CAPITAL
Paid up capital – ordinary shares
Capital raising costs
(a)
Ordinary shares
30 June 2017 movements in issued capital:
Balance at 1 July 2016
Share issue expenses
Share based payment (see note 6)
Balance at 30 June 2017
Peppermint Innovation Limited
2017
$
2016
$
62,002
-
3,647
27,441
-
9,406
65,649
36,847
141,146
169,375
-
-
(56,458)
(28,229)
84,688
141,146
169,375
169,375
(84,687)
(28,229)
84,688
141,146
37,349
37,349
146,750
146,750
11,594,513 11,578,263
(251,030)
(257,490)
11,337,023 11,327,233
Number of
shares
$
891,199,128 11,327,233
-
(6,460)
1,250,000
16,250
892,449,128 11,337,023
2017 Annual Financial Report
44
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
12.
ISSUED EQUITY (continued)
(a)
Ordinary shares (continued)
Peppermint Innovation Limited
30 June 2016 movements in issued capital:
Balance at 1 July 2015
Shares issued (see note 12)
Elimination of Issued Capital on acquisition of subsidiary (i)
Existing Chrysalis Resources Ltd shares on acquisition (see note
2(a))
Issue of shares on acquisition of subsidiary (see note 2(a))
Issue of shares from capital raising (ii)
Share issue expenses
Share based payment (see note 6)
Balance at 30 June 2016
11,650,000
220,903
1,923,077
533,377
(13,573,077)
345,484,128
350,000,000
193,715,000
-
-
6,909,683
3,874,300
-
(251,030)
2,000,000
40,000
891,199,128 11,327,233
(i) On 4 December 2015, Peppermint Innovations Limited (formerly Chrysalis Resources Limited)
acquired 100% of the share capital of Peppermint Technology Limited (formerly Peppermint
Innovations Limited). Under Australian Accounting Standards, Peppermint Technology Limited
was deemed to be the accounting acquirer in this transaction. The acquisition has been
accounted for as a share based payment in which Peppermint Technology Limited acquires the
net assets and listing status of Peppermint Innovations Limited (formerly Chrysalis Resources
Limited).
(ii) The Company issued 193,715,000 at $0.02 to raise $3,874,300, before costs, under a re-
compliance prospectus dated 16 October 2015 as part of a recapitalisation of the Company
pursuant to a reverse takeover. Please see Note 2 for further details of the reverse takeover.
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding
up of the Company. On a show of hands at meetings of the Company, each holder of ordinary
shares has one vote in person or by proxy, and upon a poll each share is entitled to one vote. The
Company does not have authorised capital or par value in respect of its shares.
(b)
Performance shares
100,000,000 performance shares convert to fully paid ordinary shares on the basis of one (1)
performance share into one (1) fully paid ordinary share in the capital of the Company, upon the
following milestones being achieved:
Event/Milestone
Milestone 1: the Company or its subsidiaries generating cumulative revenue of
$15,000,000 from the Mobile Banking Payments Remittance Business
(MBPRB) by 20 May 2020
Milestone 2: the Company or its subsidiaries generating cumulative revenue of
$50,000,000 from the MBPRB by 20 May 2020
Number of
Shares
50,000,000
50,000,000
100,000,000
As at 30 June 2017, none of the milestones of the performance shares had been achieved. Refer to
Note 2 for further information.
(c)
Restricted securities
237,879,827 fully paid ordinary shares and 67,688,535 Performance Shares are restricted from
being disposed of until 3 December 2017 in accordance with the conditions imposed by the
Australian Securities Exchange under the re-structuring and re-listing of the Company
2017 Annual Financial Report
45
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
13.
RELATED PARTIES
Peppermint Innovation Limited
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
(a)
The Group's related parties are as follows:
(i)
Key management personnel (‘KMP’):
Any person(s) having authority and responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly, including any director (whether executive or
otherwise) of that Company are considered key management personnel.
For details of remuneration disclosures relating to key management personnel, refer to Note
14: Key Management Personnel Disclosures.
Other transactions with KMP and their related entities are shown below.
(ii)
Other related parties include close family members of key management personnel and
entities that are controlled.
Other related parties include close family members of key management personnel and
entities that are controlled or significantly influenced by those key management personnel or
their close family members.
(iii)
Apart from reimbursements for expenses paid on behalf of the Company and the Group,
director and fees paid directly or indirectly to director related entities, there were no
transactions or balances with KMP during the year ended 30 June 2017 (2016: Nil).
(b)
Issue of shares under a reverse takeover
During the 2016 financial year, the following directors were issued shares and performance shares in
exchange for shares they owned in Peppermint Technologies Limited, which was the subject of a
reverse takeover by the Company:
Christopher Kain
Anthony Kain
Matthew Cahill
Leigh Ryan
Shares
Performance Shares
110,325,322
93,991,416
6,437,768
Nil
31,521,521
26,854,690
1,839,362
Nil
Refer to Note 2 for further details of the reverse takeover.
2017 Annual Financial Report
46
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
13.
RELATED PARTIES (continued)
(c)
Subsidiaries
Peppermint Innovation Limited
All controlled entities are included in the consolidated financial statements. The parent entity does
not guarantee to pay the deficiency of its controlled entities in the event of a winding up of any
controlled entity.
Name
Parent entities:
Country of
Incorporation
Principal Activity
% Equity
interest
2017
% Equity
interest
2016
Peppermint Innovation Limited
Australia
Peppermint Technology Pty Ltd
Australia
Controlled entities:
Peppermint Technology Pty Ltd
Australia
Peppermint Payments Pty Ltd (ii)
Australia
Peppermint Technology, Inc
Philippines
Information
technology
Information
technology
Information
technology
International
remittance
Information
technology
(i)
(i)
100%
100%
100%
n/a
100%
100%
Zambian Copper Pty Ltd (iii)
Australia
Horizon Copper Zambia Limited
Sedgwick Resources Limited (iii)
Zambia
Zambia
Intermediate
Holding Company
Dormant
Mineral exploration
100%
100%
100%
100%
100%
100%
(i)
(ii)
(iii)
In 2015 the parent entity was Peppermint Technology Pty Ltd (formerly Peppermint
Technology Limited). Upon completion of the reverse take-over of Chrysalis Resources
Limited (see Note 2 for further details), Peppermint Innovation Limited became the parent
entity.
Peppermint Payments Pty Ltd was registered on 10 November 2016.
The Group also holds 100% of Sedgwick Resources Limited, a company incorporated in
Zambia, which holds mineral exploration tenements and projects and its holding company,
Zambian Copper Pty Ltd. The Group has ceased funding these company and all assets were
impaired at the date of the reverse takeover on 4 December 2015.
14.
KEY MANAGEMENT PERSONNEL
Remuneration paid:
Short-term employee benefits
Post-employment benefits
Share-based payments
Non-monetary benefits
Please see the Remuneration Report for further details.
2017
$
2016
$
652,975
523,163
26,363
13,000
18,200
-
40,000
7,971
710,538
571,133
2017 Annual Financial Report
47
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
15.
PARENT ENTITY INFORMATION
(a)
Information relating to Peppermint Innovation Limited
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Total shareholders’ equity
Peppermint Innovation Limited
2017
$
2016
$
359,766
1,991,660
-
-
359,766
51,672
1,991,660
(102,880)
-
-
(51,672)
308,094
10,582,743
(10,274,649)
308,094
(102,880)
1,888,780
10,572,953
(8,684,173)
1,888,780
Loss for the parent entity
Total comprehensive income of the parent entity
(1,590,476)
(1,590,476)
(8,684,173)
(8,684,173)
(b)
Guarantees
No guarantees have been entered into by the Company in relation to the debts of its subsidiaries.
(c)
Commitments
Commitments of the Company as at reporting date are disclosed in note 16 to the financial
statements.
16.
COMMITMENTS
The Group has agreed to provide funding of up to PHP 5,000,000 ($128,750) to one of its services
providers.
Other than the matter noted above, the Group did not have any contractual commitments to capital
expenditure not recognised as liabilities at 30 June 2017.
17.
CONTINGENT LIABILITIES
The Group holds 100% of Sedgwick Resources Limited, a company incorporated in Zambia, which
holds mineral exploration tenements and projects. The Group ceased funding this company and all
assets were impaired at the date of the reverse takeover on 4 December 2015.
It is not known if any liabilities will arise from this entity.
18.
AUDITORS' REMUNERATION
Amounts received or due and receivable by the auditors for:
- Auditing or reviewing the financial report
-
Less amount accrued to date of take-over
- Other services
2017 Annual Financial Report
32,000
-
32,000
-
32,000
38,500
(12,667)
25,833
5,000
30,833
48
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
19.
FINANCIAL RISK MANAGEMENT
Peppermint Innovation Limited
The Group’s financial situation is not complex. Its activities may expose it to a variety of financial
risks in the future: market risk (including currency risk and fair value interest rate risk), credit risk,
liquidity risk and cash flow interest rate risk. At that stage the Group’s overall risk management
program will focus on the unpredictability of the financial markets and seek to minimise potential
adverse effects on the financial performance of the Group.
Risk management is carried out under an approved framework covering a risk management policy
and internal compliance and control by management. The Board identifies, evaluates and approves
measures to address financial risks.
The Group holds the following financial instruments:
Financial Assets:
Cash and cash equivalents
Financial Liabilities:
Financial liabilities at amortised cost
- Trade and other payables
Financial risk management policies
428,439 2,097,761
428,439 2,097,761
37,349 146,750
37,349 146,750
The Board of Directors has overall responsibility for the establishment of the Group’s financial risk
management framework. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Group’s activities. Mitigation strategies for specific risks faced
are described below.
Specific financial risk exposures and management
The main risk the Group is exposed to through its financial instruments are interest rate risk, credit
risk, liquidity and foreign currency risk.
Interest rate risk
The Group is not exposed to any material interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a
financial loss to the Group.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with
banks and financial institutions, as well as credit exposure to wholesale and retail customers,
including outstanding receivables and committed transactions.
The Group does not have any material credit risk exposure to any single receivable under financial
instruments entered into by the Group.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and
principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as and when they fall due.
The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments
for liabilities as well as cash outflows for day-to-day operations.
2017 Annual Financial Report
49
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
19.
FINANCIAL RISK MANAGEMENT (continued)
Peppermint Innovation Limited
The Group‘s liabilities have contractual maturities which are summarised below:
Within 1 year
2017
$
2016
$
1 to 5 years
2017
$
2016
$
Total
2017
$
2016
$
Trade and other
payables
Total
37,349
146,750
37,349
146,750
-
-
-
-
37,349
146,750
37,349
146,750
Foreign currency risk
The Group earns revenues and incurs expenses in Philippines Pesos (PHP). As such, the Group is
subject to foreign exchange risk arising from fluctuations between the PHP and AUD.
At 30 June 2017, the Group had the following exposure to PHP foreign currency expressed in A$
equivalents, which are not designated as cash flow hedges:
Financial Assets:
Cash and cash equivalents
Trade and other receivables
Inventory
Financial Liabilities:
Trade and other payables
Capital Risk Management
2017
$
2016
$
72,164
62,001
22,807
11,275
-
-
156,972
11,275
5,683
5,683
-
-
The Group manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders. The capital structure of the Group consists of equity
attributable to equity holders, comprising issued capital and retained earnings as disclosed in Note
12.
The Board reviews the capital structure on a regular basis and considers the cost of capital and the
risks associated with each class of capital. The Group will balance its overall capital structure
through new share issues as well as the issue of debt, if the need arises.
Sensitivity analysis
The sensitivity effect of possible interest rate and foreign exchange rate movements have not been
disclosed as they are not material.
Fair value of financial instruments
Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.
2017 Annual Financial Report
50
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Peppermint Innovation Limited
20.
EVENTS AFTER THE BALANCE SHEET DATE
Subsequent to reporting date 1,000,000 fully paid ordinary shares were issued pursuant to a share
based payment for an asset acquired.
Apart from the item above, there has not arisen in the interval between the end of the financial year
and the date of this report any item, transaction or event of a material and unusual nature likely, in
the opinion of the Directors of the Group, to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the Group in future.
2017 Annual Financial Report
51
For personal use only
Peppermint Innovation Limted
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors:
a)
the financial statements and notes of the Group are in accordance with the Corporations Act
2001 including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of
their performance for the year ended 30 June 2017; and
(ii)
complying with Accounting Standards and Corporations Regulations 2001;
(iii)
the financial statements and notes thereto are in accordance with International
Financial Reporting Standards issued by the International Accounting Standards
Board; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
2.
This declaration has been made after receiving the declarations required to be made to the
Directors in accordance with Section 295A of the Corporations Act 2001 for the year ended
30 June 2017.
This declaration is signed in accordance with a resolution of the Board of Directors.
Christopher Kain
Managing Director
29 August 2017
2017 Annual Financial Report
52
For personal use only
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of PEPPERMINT INNOVATION LIMITED
Qualified Opinion
We have audited the financial report of Peppermint Innovation Limited (the Company) and its
subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at
30 June 2017, the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section
the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group's financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Qualified Opinion
As at 30 June 2017, the Group includes two controlled entities, Horizon Copper Zambia Limited and
Sedgwick Resources Limited, in the Republic of Zambia, which had combined total assets of $Nil and
total liabilities of $Nil. We were unable to obtain sufficient appropriate evidence about the completeness
of liabilities and contingences within those two controlled entities because the directors of the company
have been unable to obtain audited financial statements for the year ended 30 June 2017.
Consequently, we were unable to determine whether any adjustments to these amounts were
necessary.
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 Company 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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Group, would be in the same terms if given to the directors as at the time of
this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified opinion.
Page 1 of 3
For personal use only Material Uncertainty Related to Going Concern
Without further modifying our opinion, we draw attention to Note 1, which indicates that the Group
incurred a net loss of $1,599,598 and had net cash outflows from operating activities of $1,689,657 for
the year ended 30 June 2017. These conditions, along with other matters as set forth in Note 1, indicate
the existence of a material uncertainty which may cast significant doubt about the Group’s ability to
continue as a going concern and therefore, the Group may be unable to realise its assets and discharge
its liabilities in the normal course of business.
Key Audit Matters
Except for the matters described in the Basis for Qualified Opinion section, and in the Material
Uncertainty Related to Going Concern section, we have determined that there are no other key audit
matters to communicate in our report.
Other Information
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 2017, but does not include the financial
report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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 ability of the Group 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.
Page 2 of 3
For personal use only 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/ar2.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 within the directors' report for the year ended
30 June 2017.
In our opinion, the Remuneration Report of Peppermint Innovation Limited, for the year ended 30 June
2017, 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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 29 August 2017
JAMES KOMNINOS
Partner
Page 3 of 3
For personal use only ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current as at 31 July 2017.
Peppermint Innovation Limted
(A)
DISTRIBUTION OF EQUITY SECURITIES
(i) Ordinary share capital
893,449,128 fully paid ordinary shares are held by 888 individual shareholders
All issued ordinary shares carry one vote per share and carry the rights to dividends.
The number of security holders by size of holding are:
1
–
1,001 –
5,001 –
10,001 –
100,001
1,000
5,000
10,000
100,000
and over
Fully paid
ordinary shares
18
45
53
345
427
888
Holding less than a marketable parcel
344
(ii) Options
No options were on issue.
Options do not carry a right to vote.
(B)
SUBSTANTIAL SHAREHOLDERS
Ordinary shareholders
CHRISTOPHER KAIN
ANTHONY KAIN
EAGLE BRILLIANT HOLDINGS LTD
TIGER RESOURCES LIMITED
Fully paid
Number
Percentage
110,325,322
93,991,416
57,247,355
45,568,894
307,132,987
12.34
10.52
6.41
5.10
34.37
2017 Annual Financial Report
56
For personal use only
Peppermint Innovation Limted
ASX ADDITIONAL INFORMATION (continued)
(C)
TWENTY LARGEST SECURITY HOLDERS
Ordinary shareholders
OHKA PTY LTD
CICAK PTY LTD
EAGLE BRILLIANT HOLDINGS LTD
TIGER RESOURCES LIMITED
ALLGREEN HOLDINGS PTY LTD
Fully paid
Number
110,325,321
93,991,416
57,247,355
45,568,894
20,000,000
THE TRUST COMPANY (AUSTRALIA) LIMITED
17,000,000
15,000,000
14,163,093
13,750,000
11,992,890
10,990,000
10,300,429
10,000,000
10,000,000
10,000,000
9,950,000
9,450,004
9,000,000
8,100,000
TIMRIKI PTY LTD
OHKA PTY LTD
OCCASIO HOLDINGS PTY LTD
TIMRIKI PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ENERGY US PTY LTD
PADSTOCK LIMITED
MR ADRIAN PAUL + MS NOELENE PAUL
MR GRAHAM WILLIAM WALDON + MRS BARBARA
ELIZABETH WALDON
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL
SERV LTD DRP
MR ADRIAN STEPHEN PAUL
ROGUE INVESTMENTS PTY LTD
ICE COLD INVESTMENTS PTY LTD
GREATSIDE HOLDINGS PTY LTD
(D)
HOLDERS OF OVER 20% OF UNLISTED SECURITIES
Performance Shares
OHKA Pty Ltd
Cicak Pty Ltd
Holders of less than 20% each
Percentage
12.35
10.52
6.41
5.10
2.24
1.90
1.68
1.59
1.54
1.34
1.23
1.15
1.12
1.12
1.12
1.11
1.06
1.01
0.91
7,900,000
494,729,402
0.88
55.38
Number
30,785,776
26,118,945
43,095,279
100,000,000
Percentage
30.79
26.12
43.09
100.00
2017 Annual Financial Report
57
For personal use only