(ACN 125 931 964)
Annual Financial Report
for the Year Ended 30 June 2018
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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2018 Annual Financial Report
Company Directory
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
Peppermint Innovation Limited
Auditors
RSM Australia Partners
Level 32
2 The Esplanade
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
2018 Annual Financial Report
2
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 2018.
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
Experience
Mr Anthony Kain (BJuris, LLB)
Chairperson
Executive Director
Company Secretary
Appointed 4 December 2015
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.
Mr Christopher Kain (B Comm,
MBA)
Managing Director
Appointed 4 December 2015
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 practiced company director with over 17 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
Mr Matthew Cahill
Independent Non-executive
Director
Appointed 4 December 2015
Matthew is an accomplished technical director with over 18 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
2018 Annual Financial Report
3
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
Experience and special responsibilities
Leigh is a highly qualified geologist with over 30 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:
- Alchemy Resources 1 January 2017 to present
Rod Tasker, (BA BSc Grad Dip
Banking and Finance)
Independent Non-executive
Director appointed 28 September
2016
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
2. Company Secretary
The company secretary is Anthony Kain. Details disclosed in director information.
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
Number of meeting
eligible to attend
5
Number of meetings
attended
5
5
5
5
5
5
5
3
4
2018 Annual Financial Report
4
Peppermint Innovation Limited
Directors’ Report (continued)
4. Principal Activities
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 and
underbanked 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
Highlights for the year were:
• Online international remittance business from Australia, Bizmoto, launched;
• Agent network in the Philippines, also branded Bizmoto, launched;
• $1.3m placement with strategic investors;
• Service provider agreement signed with MASS-SPECC, the largest cooperative federation in the
Philippines;
• Agreement signed with CHMF, the Philippines first health management organisation, to develop and
automate its organisational process with a mobile application tool and web tool;
• Agreement signed with Sante Barley to provide its 200,000 agents across the Philippines with use of
the Peppermint Platform; and
• Pilot programs for MyWeps, MetroGas and SUNMar completed.
The activities for the year are reflected in Peppermint’s revenues and cash receipts, which are presented on a
quarterly basis in the table below:
$’000s per quarter
Sep 2017 Dec 2017 Mar 2018
Jun 2018
Revenue
Cash receipts
327
331
351
329
98
190
112
111
Revenue is recognised on an accrual basis (income is recorded when it occurs, regardless of whether or not
cash has actually been received) and cash receipts are presented on a cash basis (transactions are recorded
when cash is received). The differences were most pronounced in the March 2018 quarter which saw a pivotal
switch away from bank business to non-bank business.
Over the year business focus has increased on non-bank business, consistent with one of Peppermint’s
objectives of providing payment solutions to the unbanked. This was accelerated by two bank customers
installing their own in-house internet and mobile banking systems, and accordingly revenues and cash receipts
declined with services being reduced to these two bank customers. This can be seen in the March 2018 quarter
relative to the December 2017 quarter.
2018 Annual Financial Report
5
Peppermint Innovation Limited
Directors’ Report (continued)
5. Operating and financial review (continued)
The decline in revenue from banks was partly offset by revenues commencing to be generated from non-bank
channels following the completion of pilot programmes in the first part of the fiscal year. Pilots were run with
MyWeps, SunMAR, Sante Barley and Metro Gas, and have progressed to commercial launch. Plus,
Peppermint launched its own agent network, Bizmoto. These initiatives are less mature than was the case for
the bank business and training and marketing resources are now being dedicated to drive transactions through
these platforms with the goal of increasing revenue.
Bizmoto
May 2018 marked a significant milestone with the launch of an online international remittance business in
Australia, Bizmoto, which allows money to be transferred from Australia to the Philippines and is focused on
enabling ex-pat Filipinos living in Australia and their affiliates to easily transfer money back to family and
friends who are living in the Philippines.
The Group launched its own agent network in the Philippines, also branded Bizmoto, to provide customers in
the Philippines with mobile bill payment and prepaid mobile phone (eLoad) services. Our direct selling multi-
level marketing network of agents operate under the same brand as our online remittance business portal,
Bizmoto.
Our new network of agents are trained in Peppermint’s proprietary non-bank payment platform which delivers
services for mobile banking, mobile Eload, bill/product payment and money transfers and will deliver these
services to Filipino customers via the new Bizmoto mobile phone app. The app gives Bizmoto’s network of
agents the flexibility to visit customers in their own environment making it a convenient way for Filipino’s to
transact.
Bizmoto translates to “Your Business” in Filipino language.
Pilots programs to field test the Peppermint Platform in the Philippines
Pilot programs to test the Peppermint Platform commenced in the June 2017 quarter and concluded in early
December 2017. The programs were undertaken to test the platform and highlighted several things in relation
to the suitability of the agent platforms we are piloting with such as on-ground practical issues the agent
networks face as they move with the Peppermint platform to offer convenient and secure mobile payment
services in the Philippine market place.
The pilot programs included training third party agents, developing marketing programs and continual liaison
with appropriate regulatory bodies in advance of commercial deployment. The pilots addressed real financial
inclusion issues faced by the population of the Philippines.
What we learnt while undertaking the pilot program was important, necessary and invaluable on the road to
full commercialisation of the mobile solution we offer.
Following the conclusion of the pilot programs the bill payments and eLoad service offering has entered the
early stages of commercial production.
MyWeps mobile remittance pilot
MyWeps remittance agents tested remittance, bill payment and buying prepaid mobile phone services (eLoad)
via the Peppermint Platform. The pilot took place across the National Capital Region of the Philippines, key
regional areas and six specific municipalities in provinces that were identified as marginalised or underserved
by the Filipino central bank, the Bangko Sentral ng Pilipinas (BSP).
Following the conclusion of the pilot program MyWeps is now awaiting review from the Filipino central bank.
Metro Gas mobile bill payments pilot
The Metro Gas pilot program concluded successfully with pleasing results which established system
functionality and user interface. The pilot program saw 50 delivery personnel from the Metro Gas Company
offering their customers the option to pay household bills using the Peppermint Platform at the time of an LPG
delivery.
2018 Annual Financial Report
6
Peppermint Innovation Limited
Directors’ Report (continued)
5. Operating and financial review (continued)
The pilot helped us identify improvements to user friendly functionality and highlighted practical problems -
such as ensuring the agent can address a decision maker in the house when delivering product to the household
rather than an assistant who does not have the authority to dispense funds at the time of delivery.
We took an active role alongside Metro Gas promoting marketing strategies to address such problems and to
drive customer use of the innovative mobile bill payment service. We aim to establish a successful marketing
campaign before looking to proceed to commercial production in the coming months.
SUNMar Express pilot
The SUNMar Express pilot allowed participating SUNMar agents with the opportunity to field test the
Peppermint Platform to provide mobile bill payment and prepaid mobile phone (eLoad) services to their
customers.
To date the work with SUNMar has highlighted customer adoption matters which are being addressed and
resolved, along with the issues caused by the focus of the SUNMar operations in the southern Philippines.
This is an area serviced by utilities companies not necessarily connected to Bayad Centre, who we are working
now with separately to on-board. This will underpin agent and customer use of the SUNMar bill payment
service powered by Peppermint and we look forward to increased usage of the service as new and regional
appropriate billers are on-boarded to the Peppermint platform. SUNMar Express Global Services Inc.
(SUNMar) has over 14,000 agents in the Philippines and we have noticed rapid growth in the use of this service
from a zero base.
SANTE Barley – League Pay App
A pilot program to test our League Pay App commenced during the second quarter with full scale commercial
production of the League Pay App rolled out 22 January 2018 with SANTE Barley.
League Pay allows SANTE Barley’s network to accept money from their customers who want to pay
household bills, buy eLoad (mobile phone air time) and pending regulatory approval, provide money transfer
or remittance services.
Under the terms of the contract, Peppermint and SANTE Barley will receive a fee each time a transaction takes
place.
SANTE Barley is one of the fastest growing distribution networks in the Philippines with approx. 200,000
direct members, business partners and business branches and we hope to stimulate growth with this big network
through the development and application of the Bizmoto App by our own agent network.
CHMF agreement
During the first quarter an agreement was signed with the Cooperative Health Management Federation
(CHMF) to automate its payment processes, and to support CHMF providing mobile financial services,
including micro health insurance products and services. Established in July 2014, CHMF has grown into a
significant cooperative health service provider servicing seventy- three (73) member-cooperatives and
eighteen thousand (18,000) enrolees in the CHMF healthcare plan.
Provider agreement with MASS-SPECC
We announced during March 2017 that we had signed a service provider agreement with the largest
cooperative federation in the Philippines, MASS-SPECC (The Mindanao Alliance of Self-Help Societies –
Southern Philippines Educational Cooperative Center). To assist MASS-SPECC manage its funds
management process for the Philippines Government’s Conditional Cash Transfer (CCT) Program we will
develop a Mobile Financial Services App and web tool.
Under the terms of the service agreement the technology will allow MASS-SPECC to effectively monitor and
manage its distribution of funds for CTT activities and allow MAS-SPECC to facilitate CTT services in other
areas.
2018 Annual Financial Report
7
Peppermint Innovation Limited
Directors’ Report (continued)
5. Operating and financial review (continued)
MOU with CredoLab
During February 2018 we entered a MOU with Singapore based risk management firm CredoLab to explore
opportunities to provide real time credit scoring for unbanked and banked Filipino customers to access
microfinance and microinsurance services. With the view to enter a JV to improve financial access for the 70%
of Filipinos who do not operate a bank account.
Tier 1 bank upgraded mobile banking App
During the March quarter we launched our upgraded mobile banking App for UCPB, a tier one bank in the
Philippines. The new App provides access to bank accounts via a mobile phone, allowing customers to perform
transactions including paying bills, transferring funds, obtaining account balances and purchasing mobile air
time. The upgraded App makes usage easier for customers, allowing functionality to save transaction details
such as bill payment reference numbers and allows users to locate the nearest UCPB branch or ATM.
Australian International Remittance Business
We announced during mid-March that we had signed an exclusive option to acquire Australian based
international remittance business AusRemit Pty Ltd (trading as RemitWisely). Under the acquisition
agreement terms, subject to due diligence, we have the exclusive rights to acquire 100% of AusRemit shares
for a purchase price comprising 50 per cent Peppermint shares and 50 per cent cash. The transaction did not
proceed.
Bank Partners
The legacy business in place with Philippine Banks is evolving in line with internal bank policies and
requirements to bring ownership of this valuable facility in house while we work with the banks to provide
new and innovative services in addition to the basic white label App.
Philippine Banks currently use the mobile banking and payments platform powered by Peppermint as a white
label App service offering.
In the March 2018 quarter, services ceased being provided to two of the Company’s former Tier 1 bank
customers due to the particular internal policies and requirements of these banks to bring ownership in-
house. We are continuing discussions with our banking partners about more strategic partnerships to deliver
innovative fintech services to the people of the Philippines or support certain functionality of their own in-
house mobile banking Apps that are rolling out.
UCPB agreement
We signed a five-year agreement during the July Quarter to provide internet payment gateway services for
UCPB customers. UCPB is an existing customer who currently uses the Peppermint Platform to provide mobile
banking services to their account holders and this new agreement extends Peppermint’s services to UCPB.
Corporate
During the September quarter 32.5m shares were issued at 2 cents per share raising $650,000 in a private
placement of 50m shares, the remaining $350,000 issued at 2 cents per share were then placed with strategic
investor Smidge Digital Unit Trust to complete the placement agreement for $1m.
During April 2018 we announced an agreement with Smidge Digital Trust to place shares to the value of $1
million to strategic investors. The $1m placement with Smidge Digital Unit Trust was restructured during
April 2018 with subscriptions for first tranche of the new placement received by the company and with Smidge
subscribing for the issue of 23,333,334 shares at a price of 3 cents per share to complete the second tranche of
the placement. $300,000 was raised from the issue of 10 million shares and $160,000 was advanced prior to
30 June 2018 as part of a $700,000 placement announced on 2 August 2018.
2018 Annual Financial Report
8
Peppermint Innovation Limited
Directors’ Report (continued)
5. Operating and financial review (continued)
Shareholder returns
2018
2017
2016
2015
Net loss for the year
Earnings per share (cents)
Net assets
Share price
(1,743,348)
(0.2)
(5,103)
$0.025
(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.
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 $242k cash at bank as at 30 June 2018, and is now working with strategic partners with
respect to future funding to ensure it is sufficiently funded to continue to execute its growth strategy and
operational plans for the coming year.
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 23,333,334 fully paid ordinary shares were issued at 3 cents per share raising
$700,000, inclusive of $160,000 recorded as a current liability at 30 June 2018, and 10,000,000 options vested.
Apart from the items 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.
2018 Annual Financial Report
9
Peppermint Innovation Limited
Directors’ Report (continued)
8. Likely developments
The Group intends to continue to develop its mobile banking and payments business via organic growth and
strategic acquisitions.
Over the coming year Peppermint is aiming to continue to add additional white labelled payment partners to
continue to diversify and build revenue streams, and in parallel Peppermint is building its own agent network
in the Philippines, plus proceed to the commercial launch of its Australian outbound international remittance
business for which testing has recently been completed.
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
-
-
On 12 March 2018, the following performance options were issued:
Number
10,000,000
Exercise
Price
$0.03
10,000,000
$0.03
10,000,000
$0.05
10,000,000
$0.05
Vesting Condition
Options to acquire fully paid ordinary shares at 3 cents each, which shall vest when the
optionholder successfully raises between $2 million and $5 million for the Company
pursuant to an engagement letter (which either party may terminate with 1 month notice)
(Capital Raising), which are exercisable after the 30 day volume weighted average price
of fully paid ordinary shares exceeds 5 cents.
Options to acquire fully paid ordinary shares at 3 cents each, which shall vest 2 months
after the Capital Raising, which are exercisable after the 30 day volume weighted average
price of fully paid ordinary shares exceeds 10 cents.
Options to acquire fully paid ordinary shares at 5 cents each, which shall vest 4 months
after the Capital Raising, which are exercisable after the 30 day volume weighted average
price of fully paid ordinary shares share price exceeds 15 cents.
Options to acquire fully paid ordinary shares at 5 cents each, which shall vest 6 months
after the Capital Raising, which are exercisable after the 30 day volume weighted average
price of fully paid ordinary shares share price exceeds 20 cents.
Options not exercised within 24 months of the Capital Raising will automatically lapse.
As at the date of this report, the Capital Raising had occurred and 10,000,000 options had vested.
2018 Annual Financial Report
10
Peppermint Innovation Limited
Directors’ Report (continued)
11. Share options (continued)
No shares were issued as a result of the exercise of options.
At the date of this report, 10,000,000 unissued shares of the Company were under option and a further
30,000,000 were subject to vesting periods of two, four and six months in tranches of 10,000,000.
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. Performance shares
No shares were issued as a result of the achievement of performance hurdles.
At the date of this report, 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 were on issue:
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 2018, none of the milestones of the performance shares had been achieved.
Performance shares 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
achievement of performance hurdles.
13. 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.
2018 Annual Financial Report
11
Peppermint Innovation Limited
Directors’ Report (continued)
14. 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.
15. Non-Audit Services
The directors are of the opinion that the services as disclosed in Note 17 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
16. 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.
2018 Annual Financial Report
12
Level 32 Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
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
2018 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
Perth, WA
Dated: 30 August 2018
JAMES KOMNINOS
Partner
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
Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited)
This remuneration report for the financial year ended 30 June 2018 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.
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
Chairman, Executive Director, Company Secretary, appointed 4
December 2015
Mr Christopher Kain
Managing Director, appointed 4 December 2015
Mr Matthew Cahill
Non-Executive Director, appointed 4 December 2015
Mr Leigh Ryan
Mr Rod Tasker
Non-Executive Director, appointed 4 December 2015
Non-Executive Director, appointed 28 September 2016
(ii) Executives
None
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
2018 Annual Financial Report
14
Peppermint Innovation Limited
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 in relation to variable executive compensation
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.
2018 Annual Financial Report
15
Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
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 2018 is detailed below.
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.
2018 Annual Financial Report
16
Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
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.
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 during the year.
Voting and comments made at 2017 Annual General Meeting
All resolutions at the 2017 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 2018
Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill (i)
Mr Leigh Ryan
Mr Rod Tasker (ii)
Totals
Non-
monetary
benefits
(iii)
Post
employ-
ment
benefits
Share-
based
payments
Total
Performance
Related
6,972
9,238
2,178
1,046
3,672
19,000
25,175
2,850
2,850
2,850
23,106
52,725
- 225,972
- 299,413
-
-
70,578
33,896
- 119,022
- 748,881
-
-
-
-
-
-
Salary
& Fees
200,000
265,000
65,550
30,000
112,500
673,050
Compensation is stated on an accruals basis.
(i)
Includes remuneration via Digital Domain Consulting, a business in which he holds a beneficial interest.
(ii) Includes remuneration via Adapts Pty Ltd, a business in which he holds a beneficial interest.
(iii) Comprises of directors and officers’ insurance.
2018 Annual Financial Report
17
Directors’ Report (continued)
Remuneration report (audited) (continued)
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 (vi)
Non-
monetary
benefits
(vii)
5,345
7,102
1,853
880
2,449
571
Salary
& Fees
190,000
252,500
67,750
31,425
90,000
21,300
Peppermint Innovation Limited
Share-
based
payments
Total
Performance
Related
Post
employ-
ment
benefits
9,500
12,588
1,425
1,425
1,425
-
204,845
-
272,190
-
-
71,028
33,730
13,000
106,874
-
-
21,871
-
-
-
-
-
-
-
Totals
Compensation is stated on an accruals basis.
652,975
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.
(v) Includes remuneration via Adapts Pty Ltd, a business in which he holds a beneficial interest.
(vi) Vincent Power resigned from the board of directors on 14 September 2016.
(vii) Comprises of directors and officers’ insurance.
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).
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.
2018 Annual Financial Report
18
Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
Agreements with Non-Executive directors
The Company has entered into a director and consultancy services agreements with Mathew Cahill (together
with Digital Data Consulting Pty Ltd, an entity controlled by Mathew Cahill). 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:
•
an entitlement to fees or other amounts in relation to special duties or service performed outside
the scope of ordinary employment as a director; and
•
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, adjusted when on holiday.
(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 director agreements with Leigh Ryan and Rod Tasker. The material terms of
the agreement are as follow:
(a) Director’s fees: director’s fees at the rate of $30,000 per annum plus superannuation together with:
•
an entitlement to fees or other amounts in relation to special duties or service performed outside
the scope of ordinary employment as a director;
•
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, adjusted when on holiday.
D.
Share-based compensation
Compensation shares, options - granted and vested during the financial year
2018
2017
No shares nor options were granted as compensation during the 2018 year.
1,250,000 shares were granted as remuneration in 2017.
No options were granted as compensation during the 2017 year.
2018 Annual Financial Report
19
Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
E.
Performance Shares of key management personnel
30 June 2018
Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill
Mr Leigh Ryan
Mr Rod Tasker
Totals
Balance at
start of the
financial
year
26,854,690
31,521,521
1,839,362
-
-
60,215,573
Granted as
remuneration
Performance
hurdle
achieved
Net change
other
Balance at the
end of financial
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,854,690
31,521,521
1,839,362
-
-
60,215,573
F.
Share holdings of key management personnel
30 June 2018
Directors
Mr Anthony Kain
Balance at
start of the
financial year
93,991,416
Mr Christopher Kain
110,325,322
Mr Matthew Cahill
Mr Leigh Ryan
Mr Rod Tasker
Totals
6,437,768
3,000,000
1,000,000
214,754,506
Granted as
remuneration
On exercise
of options
Acquisitions
/(Disposals)
Balance at the
end of financial
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
93,991,416
110,325,322
6,437,768
3,000,000
1,000,000
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 2018 (2017: Nil).
END OF THE REMUNERATION REPORT
Signed in accordance with a resolution of the Directors:
Christopher Kain
Managing Director
Perth, 30 August 2018
2018 Annual Financial Report
20
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.
The Principles (being those under ASX’s 3rd edition of Corporate Governance Principles and 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.
2018 Annual Financial Report
21
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.
2018 Annual Financial Report
22
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
Risk committee requirements met
7.1
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
2018 Annual Financial Report
23
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.
35% of the Group’s employees are females, and the Chief Operating Officer of the Company based in the
Philippines is a female.
2018 Annual Financial Report
24
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 2018, 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
2018 Annual Financial Report
25
Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
The term in office held by each director in office at the date of this report is a follows:
Name
Term in office
Mr Anthony Kain
Appointed 24 July 2014 (inception), tenure 4 years, 1 month
Mr Christopher Kain
Appointed 24 July 2014 (inception), tenure 4 years, 1 month
Mr Matthew Cahill
Appointed 24 July 2014 (inception), tenure 4 years, 1 month
Mr Leigh Ryan
Mr Rod Tasker
Appointed 4 December 2015, tenure 2 year, 9 months
Appointed 28 September 2016, tenure1 year, 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 2018, 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.
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.
2018 Annual Financial Report
26
Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
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.
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.
2018 Annual Financial Report
27
Peppermint Innovation Limited
CORPORATE GOVERNANCE STATEMENT (continued)
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 2018, 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.
2018 Annual Financial Report
28
STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
Revenue
Cost of sales
Gross profit
Other income
Administration expenses
Finance costs
Impairment
Share based payment expense
(Loss) before income tax
Income tax expense
(Loss) for the year
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
Note
4
4
4
4
5(a)
5
Consolidated
2018
$
2017
$
887,981
(660,937)
227,044
1,007,474
(809,249)
198,225
20,454
(1,982,753)
(93)
(8,000)
-
(1,743,348)
41,077
(1,821,853)
(797)
-
(16,250)
(1,599,598)
6
-
-
(1,743,348)
(1,599,598)
-
-
-
-
(1,743,348)
(1,599,598)
(1,743,348)
(1,599,598)
(1,743,348)
(1,599,598)
Basic and diluted loss per share (cents per share)
3
(0.2)
(0.2)
The accompanying notes form part of these financial statements
2018 Annual Financial Report
29
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Total Current Assets
NON-CURRENT ASSETS
Intangible assets
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Funds received in advance of the issue of shares
Total Current Liabilities
TOTAL LIABILITIES
Peppermint Innovation Limited
Note
Consolidated
2018
$
2017
$
7
8
9
10
10
241,793
67,626
2,852
312,271
428,439
65,649
22,807
516,895
28,229
28,229
84,687
84,687
340,500
601,582
114,534
71,069
160,000
345,603
37,349
25,037
-
62,386
345,603
62,386
(NET LIABILITIES) / NET ASSETS
(5,103)
539,196
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY
11
12,536,072
(12,541,175)
11,337,023
(10,797,827)
(5,103)
539,196
The accompanying notes form part of these financial statements
2018 Annual Financial Report
30
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
Cash flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest received
Net cash (used in) operating activities
Cash Flows from Investing Activities
Proceeds on the sale of plant and equipment
Proceeds on the sale of geological data
Net cash provided by investing activities
Cash Flows from Financing Activities
Issue of shares
Funds received in advance of the issue of shares
Share issue expenses
Net cash provided by / (used in) financing activities
Consolidated
2018
$
2017
$
960,997
(2,564,146)
454
(1,602,695)
978,672
(2,676,832)
8,503
(1,689,657)
Note
7(b)
-
20,000
20,000
26,795
-
26,795
1,300,000
160,000
(63,951)
1,396,049
-
-
(6,460)
(6,460)
Net decrease in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
(186,646)
428,439
241,793
(1,669,322)
2,097,761
428,439
7(a)
The accompanying notes form part of these financial statements
2018 Annual Financial Report
31
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
Issued
Capital
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2017
11,337,023
(10,797,827)
539,196
Loss for the year
Total comprehensive loss for the year
-
-
(1,743,348)
(1,743,348)
(1,743,348)
(1,743,348)
Transactions with owners in their capacity as owners:
Shares issued
Share issue expenses
Share based payments
Balance at 30 June 2018
1,300,000
(108,951)
8,000
-
-
-
12,536,072
(12,541,175)
1,300,000
(108,951)
8,000
(5,103)
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
The accompanying notes form part of these financial statements
2018 Annual Financial Report
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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.
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 30 August 2018.
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.
(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 $1,743,348 and had net cash
outflows from operating activities of $1,602,695 for the year ended 30 June 2018. As at that date, the
Group had net liabilities of $5,103.
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 2019;
• The Group raised $700,000 subsequent to reporting date as disclosed in Note 20, inclusive of
$160,000 recorded as a current liability 30 June 2018 (see Note 10) which was received in
advance of the issue of shares; and
• The Group has the ability to scale down its operations in order to curtail expenditure, in the
event capital raisings are delayed or insufficient cash is available to meet projected
expenditure.
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.
2018 Annual Financial Report
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Going concern (continued)
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)
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact
on the financial performance or position of the Group.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments
to AASB 107
The Group has adopted AASB 2016-2 from 1 July 2017. The amendments to AASB 107 'Statement
of Cash Flows' require the disclosure of changes in liabilities arising from financing activities,
including both changes arising from cash flows and non-cash changes.
(d)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended
30 June 2018. The Group's assessment of the impact of these new or amended Accounting Standards
and Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is
held within a business model whose objective is to hold assets in order to collect contractual cash
flows, which arise on specified dates and solely principal and interest. All other financial instrument
assets are to be classified and measured at fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains and losses on equity instruments (that are
not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard
requires the portion of the change in fair value that relates to the entity's own credit risk to be presented
in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements
are intended to more closely align the accounting treatment with the risk management activities of the
entity.
2018 Annual Financial Report
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
New Accounting Standards and Interpretations not yet mandatory or early adopted (continued)
New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an
allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a
financial instrument has increased significantly since initial recognition in which case the lifetime ECL
method is adopted. The standard introduces additional new disclosures. The Group will adopt this
standard from 1 July 2018 and the impact of its adoption is expected to be minimal on the Group.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. 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
those goods or services. The standard will require: contracts (either written, verbal or implied) to be
identified, together with the separate performance obligations within the contract; determine the
transaction price, adjusted for the time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations on a basis of relative stand-alone selling price
of each distinct good or service, or estimation approach if no distinct observable prices exist; and
recognition of revenue when each performance obligation is satisfied. Credit risk will be presented
separately as an expense rather than adjusted to revenue. For goods, the performance obligation would
be satisfied when the customer obtains control of the goods. For services, the performance obligation
is satisfied when the service has been provided, typically for promises to transfer services to customers.
For performance obligations satisfied over time, an entity would select an appropriate measure of
progress to determine how much revenue should be recognised as the performance obligation is
satisfied. Contracts with customers will be presented in an entity's statement of financial position as a
contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required
to enable users to understand the contracts with customers; the significant judgments made in applying
the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract
with a customer. The new standard introduces expanded quantitative and qualitative disclosure
requirements. Apart from providing more extensive disclosures on the Group’s revenue transactions,
the Group does not anticipate that the application of AASB 15 will have a material impact on the
financial position and/or financial performance of the Group.
(e)
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).
(f)
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.
2018 Annual Financial Report
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
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 are
provided.
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield
on the financial asset.
(h)
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.
(i)
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.
(j)
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 (i.e. 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.
2018 Annual Financial Report
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
(j)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments (continued)
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 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.
(k)
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.
2018 Annual Financial Report
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Intangible assets (continued)
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.
(l)
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:
•
•
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.
2018 Annual Financial Report
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
(l)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income tax (continued)
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.
(m) 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.
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.
(n)
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.
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.
2018 Annual Financial Report
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
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.
(p)
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.
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.
(q)
Share-based payment transactions
The Group provides benefits to employees (including senior executives) and consultants of the Group
in the form of share-based payments, whereby employees and consultants render services in exchange
for shares or rights over shares (equity-settled transactions).
The cost of these equity-settled transactions with employees and consultants are 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.
2018 Annual Financial Report
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Share based payments (continued)
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.
(r)
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.
(s)
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.
2018 Annual Financial Report
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s)
Fair value of assets and liabilities (continued)
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or
more valuation techniques to measure the fair value of the asset or liability, The Group selects a
valuation technique that is appropriate in the circumstances and for which sufficient data is available
to measure fair value. The availability of sufficient and relevant data primarily depends on the specific
characteristics of the asset or liability being measured.
(t)
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.
2.
SEGMENT REPORTING
The Group operates predominantly in the mobile banking, payment and remittance industry. For
management purposes, the Group is organised into business units based on its services and has three
reportable segments, as follows:
• mobile banking and payment services, presently operating in the Philippines;
•
•
international remittances, recently established from Australia; and
corporate and head office.
With the recent establishment of international remittances from Australia, the Group has introduced
the above three reportable segments for the first time for the year ended 30 June 2018.
No operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated
based on profit or loss and is measured consistently with profit or loss in the consolidated financial
statements.
Also, the Group’s financing (including finance costs and finance income) and income taxes are
managed on a Group basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to
transactions with third parties.
2018 Annual Financial Report
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2.
SEGMENT REPORTING (continued)
Peppermint Innovation Limited
Mobile
Banking
and
Payment
Services
887,981
-
887,981
56,458
Year Ended 30
June 2018
Revenue
External customers
Inter-segment
Total revenue
Income/(expenses)
Depreciation and
amortisation
International
Remittance
Head
Office
Total
Segments
Adjustments
and
Eliminations
Consolidated
-
-
-
-
-
-
-
-
887,981
-
887,981
56,458
-
-
-
-
887,981
-
887,981
56,458
Segment profit
Total assets
Total liabilities
(296,808)
135,229
1,068,755
(273,170)
24,079
536,361
(1,173,370)
1,758,548
331,806
(1,743,348)
1,917,856
1,939,922
-
(1,577,365)
(1,591,319)
(1,743,348)
340,500
345,603
Inter-segment revenues are eliminated upon consolidation and reflected in the ‘adjustments and
eliminations’ column. All other adjustments and eliminations are part of detailed reconciliations
presented further below.
Mobile
Banking
and
Payment
Services
International
Remittance
Head
Office
Total
Segments
Adjustments
and
Eliminations
Consolidated
1,007,474
-
1,007,474
-
-
-
-
-
-
1,007,474
-
1,007,474
-
-
-
1,007,474
-
1,007,474
56,458
-
- 56,458
-
56,458
Year Ended 30 June
2017
Revenue
External customers
Inter-segment
Total revenue
Income/(expenses)
Depreciation and
amortisation
Segment profit
Total assets
Total liabilities
(287,232)
295,971
932,689
(239,113)
(1,073,253)
- 1,221,458
44,641
239,113
(1,599,598)
1,517,429
1,216,443
-
(915,847)
(1,154,057)
(1,599,598)
601,582
62,386
Adjustments and eliminations
Finance income and costs, and fair value gains and losses on financial assets are not allocated to
individual segments as the underlying instruments are managed on a group basis. Current taxes and
certain financial assets and liabilities are not allocated to those segments as they are also managed on
a group basis. Inter-segment revenues are eliminated on consolidation.
Sales to customers which represent over 10% of revenue, all within the Mobile Banking and Payment
Services segment, were as follow:
-
-
-
Customer 1
Customer 2
Customer 3
2018
$
2017
$
614,483
134,973
102,118
914,436
-
57,320
2018 Annual Financial Report
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
3.
LOSS PER SHARE
Peppermint Innovation Limited
2018
$
2017
$
Basic and diluted loss per share (cents per share)
(0.2)
(0.2)
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
(1,599,598)
(1,743,348)
Weighted average number of shares outstanding during
the year used in the calculations of basic loss per share:
921,190,224 891,863,512
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.
4.
RESULT FOR THE YEAR
Revenue
-
-
Transaction revenue
Project revenue
Other income
-
-
-
Proceeds on the sale of assets
Security deposit refund
Interest income
Depreciation and amortisation
Directors' fees and consulting remuneration
Consulting fees
Administration costs
-
Audit fees
-
-
-
-
-
-
-
-
-
-
-
Employee expenses
Insurance
Investor relations
Licence fees and royalties
Share registry fees
Start-up expenses
Stock exchange fees
Sundry expenses
Finance costs
-
Other
766,886
121,095
887,981
996,346
11,128
1,007,474
20,000
-
454
20,454
26,795
5,779
8,503
41,077
34,500
148,255
56,458
725,775
508,988
23,105
94,629
60,000
14,077
33,627
24,881
258,458
1,982,753
32,000
139,532
56,459
679,338
400,792
18,200
165,209
60,000
15,470
11,071
29,064
214,718
1,821,853
93
93
797
797
Finance costs includes all interest-related expenses, other than those arising from financial assets at
fair value through profit or loss.
2018 Annual Financial Report
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5.
SHARE BASED PAYMENTS
(a) Shares Issued
2018:
Peppermint Innovation Limited
1,000,000 shares with a value of $8,000 were issued for a share based payment made on 18 July 2017
pursuant to an equity investment. The fair value was determined by reference to the share price at the
grant date, and the asset acquired was subsequently impaired.
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.
(b) Performance Options
2018:
40,000,000 performance options were granted to a consultant during the year (2017: nil) as follows:
Number
10,000,000
Exercise
Price
$0.03
10,000,000
$0.03
10,000,000
$0.05
10,000,000
$0.05
Vesting Condition
Options to acquire fully paid ordinary shares at 3 cents each, which shall vest
when the optionholder successfully raises between $2 million and $5 million for
the Company pursuant to an engagement letter (which either party may terminate
with 1 month notice) (Capital Raising), which are exercisable after the 30 day
volume weighted average price of fully paid ordinary shares exceeds 5 cents.
Options to acquire fully paid ordinary shares at 3 cents each, which shall vest 2
months after the Capital Raising, which are exercisable after the 30 day volume
weighted average price of fully paid ordinary shares exceeds 10 cents.
Options to acquire fully paid ordinary shares at 5 cents each, which shall vest 4
months after the Capital Raising, which are exercisable after the 30 day volume
weighted average price of fully paid ordinary shares share price exceeds 15 cents.
Options to acquire fully paid ordinary shares at 5 cents each, which shall vest 6
months after the Capital Raising, which are exercisable after the 30 day volume
weighted average price of fully paid ordinary shares share price exceeding 20
cents.
Options not exercised within 24 months of the capital raising will automatically lapse.
The Capital Raising has been completed subsequent to 30 June 2018, resulting in the vesting of
10,000,000 options subsequent to 30 June 2018 (see note 20).
2018 Annual Financial Report
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5.
SHARE BASED PAYMENTS (continued)
Peppermint Innovation Limited
The following table illustrates the number (No.) and weighted average exercise prices of and
movements in performance options issued as compensation during the year:
2018
No
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
-
40,000,000
-
-
-
40,000,000
-
(c) Valuation of Shares and Performance Options
2018
Weighted
average
exercise
price
nil
$0.04
-
-
-
$0.04
-
2017
No
-
-
-
-
-
-
-
2017
Weighted
average
exercise
price
-
-
-
-
-
-
-
Shares issued are valued at the value of a share in the Company as traded on ASX at the date of deemed
date of grant of the share plan shares.
The fair value of shares issued and performance options will be recognised as an expense if the
performance hurdle is achieved.
The amount recognised as part of employee benefits expense for shares issued during the year was nil
(2017: $16,250).
The amount recognised as a share issue expense for performance options issued during the year was
nil (2017: nil).
No share based payment expense was recognised in relation to the options issued during the year ended
30 June 2018. Option share-based payment expense will be recognised at the point the service is
delivered, being on date capital is raised by the consultant engaged.
The engagement letter for the capital raising may be terminated by either party by giving one month
written notice, however, options not exercised within 24 months of the capital raising will
automatically lapse.
The capital raising has been completed subsequent to 30 June 2018, resulting in the vesting of the
options subsequent to 30 June 2018.
2018 Annual Financial Report
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6.
INCOME TAX
(a)
Income tax recognised in profit/loss
Peppermint Innovation Limited
2018
$
2017
$
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
Income tax benefit at 27.5%
Unrecognised tax losses
Income tax expense
(c) Unrecognised deferred tax balances
Tax losses at 27.5%
Deferred tax asset not booked
Accrued liabilities
Provision for annual leave
Intangible assets
Blackhole deductions
Net unrecognised deferred tax assets at 27.5%
(1,743,348)
479,421
(479,421)
-
(1,599,598)
439,889
(439,889)
-
(1,546,614)
(1,025,513)
(6,298)
(19,544)
(7,763)
(70,233)
(1,650,452)
(6,600)
(6,885)
(23,289)
(131,658)
(1,193,945)
A deferred tax asset attributable to income tax losses has not been recognised at balance date as the
probability criteria disclosed in Note 1(l) is not satisfied and such benefit will only be available if the
conditions of deductibility also disclosed in Note 1(l) are satisfied.
7.
CASH AND CASH EQUIVALENTS
Cash at bank
241,793
241,793
428,439
428,439
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
241,793
428,439
2018 Annual Financial Report
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
2018
$
2017
$
7.
CASH AND CASH EQUIVALENTS (continued)
(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:
- Depreciation / assets written off
- Gain on sale of assets
- Proceeds on the sale of geological data
- Share based payment
-
Impairment
Changes in operating assets and liabilities:
-
(Increase) / decrease in trade and other receivables
- Decrease / (increase) in inventory
-
Increase / (decrease) in trade and other payables
-
Increase in provisions
Net cash used in operating activities
8.
TRADE AND OTHER RECEIVABLES
Current:
Trade receivables
GST receivable
Advance to supplier
9.
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
(1,743,348)
(1,599,598)
56,458
56,459
- (26,795)
(20,000)
-
-
16,250
8,000
-
(1,977)
(28,802)
19,955
(22,807)
32,185
(109,401)
46,032
25,037
(1,602,695)
(1,689,657)
34,494
13,166
19,966
67,626
62,002
3,647
-
65,649
84,687
-
141,145
-
(56,458)
28,229
(56,458)
84,687
169,375
(141,146)
28,229
169,375
(84,688)
84,687
10.
TRADE AND OTHER PAYABLES - current
Sundry payables and accrued expenses
114,534
37,349
Funds received in advance of the issue of shares (i)
160,000
-
(i) The shares were issued subsequent to year end (see Note 20).
2018 Annual Financial Report
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
11.
ISSUED CAPITAL
Paid up capital – ordinary shares
Capital raising costs
(a)
Ordinary shares
30 June 2018 movements in issued capital:
Balance at 1 July 2017
Shares issued
Share issue expenses
Share based payment (see note 5)
Balance at 30 June 2018
30 June 2017 movements in issued capital:
Balance at 1 July 2016
Share issue expenses
Share based payment (see note 5)
Balance at 30 June 2017
Peppermint Innovation Limited
2018
$
2017
$
12,902,513 11,594,513
(366,441)
(257,490)
12,536,072 11,337,023
Number of
shares
$
892,449,128 11,337,023
60,000,000 1,300,000
- (108,951)
1,000,000
8,000
953,449,128 12,536,072
891,199,128 11,327,233
-
(6,460)
1,250,000
16,250
892,449,128 11,337,023
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 2018, none of the milestones of the performance shares had been achieved.
2018 Annual Financial Report
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Peppermint Innovation Limited
12.
RELATED PARTIES
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
13: 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 2018 (2017: Nil).
(b)
Subsidiaries
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
Peppermint Technology Pty Ltd
Country of
Incorporation
Australia
Peppermint Payments Pty Ltd
Australia
Peppermint Technology, Inc
Philippines
Zambian Copper Pty Ltd (i)
Horizon Copper Zambia Limited
Sedgwick Resources Limited (i)
Australia
Zambia
Zambia
Principal Activity
Information
technology
International
remittance
Information
technology
Intermediate Holding
Company
Dormant
Mineral exploration
% Equity
interest
2018
100%
% Equity
interest
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(i)
The Group 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 on
4 December 2015.
2018 Annual Financial Report
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
13.
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.
14.
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 liability) / net assets
Issued capital
Accumulated losses
Total shareholders’ equity
Peppermint Innovation Limited
2018
$
2017
$
673,050
52,725
-
23,106
748,881
652,975
26,363
13,000
18,200
710,538
182,051
-
182,051
(331,806)
-
(331,806)
(149,755)
359,766
-
359,766
(51,672)
-
(51,672)
308,094
11,781,792
(11,931,547)
(149,755)
10,582,743
(10,274,649)
308,094
Loss for the parent entity
Total comprehensive income of the parent entity
(1,656,908)
(1,656,908)
(1,590,476)
(1,590,476)
(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 15 to the financial statements.
2018 Annual Financial Report
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15.
COMMITMENTS
(a)
Leases as lessee
Peppermint Innovation Limited
2018
$
2017
$
The Group leases an office. At 30 June, the future minimum lease payments under non-cancellable
leases were payable as follows:
Less than 1 year
Between 1 and 5 years
More than 5 years
1,686
-
-
1,686
-
-
-
-
(b)
The Group has agreed to provide funding of up to PHP 5,000,000 ($126,440) 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 2018.
16.
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.
17.
AUDITORS' REMUNERATION
Amounts received or due and receivable by the auditors for:
- Auditing or reviewing the financial report
- Other services
18.
FINANCIAL RISK MANAGEMENT
34,500
-
34,500
32,000
-
32,000
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.
2018 Annual Financial Report
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
19.
FINANCIAL RISK MANAGEMENT (continued)
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
Peppermint Innovation Limited
2018
$
2017
$
241,793
241,793
428,439
428,439
114,534
114,534
37,349
37,349
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.
2018 Annual Financial Report
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
19.
FINANCIAL RISK MANAGEMENT (continued)
Peppermint Innovation Limited
The Group‘s liabilities have contractual maturities which are summarised below:
Within 1 year
2018
$
2017
$
1 to 5 years
2018
$
2017
$
Total
2018
$
2017
$
Trade and other
payables
Total
114,534
37,349
114,534
37,349
-
-
-
-
114,534
37,349
114,534
37,349
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 2018, 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
2018
$
2017
$
68,614
34,494
2,852
105,960
72,164
62,001
22,807
156,972
-
-
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 11.
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.
2018 Annual Financial Report
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
20.
EVENTS AFTER THE BALANCE SHEET DATE
Peppermint Innovation Limited
Subsequent to reporting date 23,333,334 fully paid ordinary shares were issued at 3 cents per share
raising $700,000, inclusive of $160,000 recorded as a current liability at 30 June 2018, and 10,000,000
options vested.
Apart from the items 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.
2018 Annual Financial Report
55
Peppermint Innovation Limited
DIRECTORS’ DECLARATION
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
the attached financial statements and notes comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board as described in note 1 to the financial
statements;
the attached financial statements and notes give a true and fair view of the Group's financial position
as at 30 June 2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act
2001.
On behalf of the directors
Christopher Kain
Managing Director
30 August 2018
2018 Annual Financial Report
56
Level 32 Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
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 2018, the consolidated
statement of profit or loss and other 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 matter described in the Basis for Qualified Opinion section of our report, 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 2018 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 2018, the Group includes two controlled entities, being Horizon Copper Zambia Limited and
Sedgwick Resources Limited, in the Republic of Zambia, which had combined total unaudited assets of $Nil and
total unaudited liabilities of $Nil. We were unable to obtain sufficient appropriate evidence about the completeness
of liabilities and contingencies 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 2018. 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 Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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.
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
Material Uncertainty Related to Going Concern
Without further modifying our opinion, we draw attention to Note 1 in the financial report, which indicates that the
Group incurred a net loss of $1,743,348 and had net cash outflows from operating activities of $1,602,695 for the
year ended 30 June 2018. As of that date, the Group had net liabilities of $5,103. As stated in Note 1, these events
or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may
cast significant doubt about the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Key Audit Matters
Except for the matters described in the Basis for Qualified Opinion section, of our report and in the Material
Uncertainty Related to Going Concern section of our report, we have determined that there are no other key audit
matters to be communicated 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 2018, 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.
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
2018.
In our opinion, the Remuneration Report of Peppermint Innovation Limited, for the year ended 30 June 2018,
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: 30 August 2018
JAMES KOMNINOS
Partner
Peppermint Innovation Limited
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 2018.
(A) DISTRIBUTION OF EQUITY SECURITIES
(i)
Ordinary share capital
893,449,128 fully paid ordinary shares are held by 1,182 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 –
1,000
5,000
5,001 –
10,000
10,001 –
100,001
100,000
and over
Holding less than a marketable parcel
(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
Fully paid
ordinary shares
23
45
53
587
474
1,182
250
Fully paid
Number
Percentage
110,325,322
93,991,416
57,247,355
307,132,987
11.91
10.15
6.18
28.25
2018 Annual Financial Report
60
Peppermint Innovation Limited
ASX ADDITIONAL INFORMATION (continued)
(C)
TWENTY LARGEST SECURITY HOLDERS
Ordinary shareholders
Number
Percentage
Fully paid
OHKA PTY LTD
CICAK PTY LTD
EAGLE BRILLIANT HOLDINGS LTD
LEGAL TOOLBOX PTY LTD
ALLGREEN HOLDINGS PTY LTD
107,750,214
11.30
91,416,309
57,247,355
30,000,000
20,000,000
1
2
3
4
5
6
7
8
9
10
11
12
12
14
15
16
17
18
19
20
CASADA HOLDINGS PTY LTD
17,556,061
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
16,150,000
JUNEDAY PTY LTD
TIMRIKI PTY LTD
TIMRIKI PTY LTD
MR ROBERT ANTHONY ANGLEY + MS SUSAN JANE ARTHUR
PADSTOCK LIMITED
MR ADRIAN PAUL + MS NOELENE PAUL
MR ADRIAN STEPHEN PAUL
PEGG TWO PTY LTD
16,124,053
15,000,000
11,992,890
11,250,019
10,000,000
10,000,000
9,450,004
8,750,000
ICE COLD INVESTMENTS PTY LTD
8,100,000
ROGUE INVESTMENTS PTY LTD
GREATSIDE HOLDINGS PTY LTD
ANDKER PTY LTD
ENERGY US PTY LTD
8,000,000
7,900,000
7,500,000
7,492,017
9.59
6.00
3.15
2.10
1.84
1.69
1.69
1.57
1.26
1.18
1.05
1.05
0.99
0.92
0.85
0.84
0.83
0.79
0.79
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
471,678,922
481,770,207
49.47
50.53
2018 Annual Financial Report
61
Peppermint Innovation Limited
ASX ADDITIONAL INFORMATION (continued)
(D) HOLDERS OF OVER 20% OF UNLISTED SECURITIES
Performance Shares
OHKA PTY LTD
CICAK PTY LTD
HOLDERS OF LESS THAN 20% EACH
Number
30,785,776
26,118,945
43,095,279
100,000,000
Percentage
30.79
26.12
43.09
100.00
2018 Annual Financial Report
62