(ACN 125 931 964)
Annual Financial Report
for the Year Ended 30 June 2019
For personal use only
Index
Corporate Information
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
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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2019 Annual Financial Report
For personal use only
Company Directory
ABN 56 125 931 964
Directors
Mr Christopher Kain
Managing Director
Mr Anthony Kain
Executive Director
Mr Mathew Cahill
Non-executive Director
Mr Leigh Ryan
Non-executive Director
Mr Albert Cheok
Non-executive Director
Company Secretary
Mr Anthony Kain
Solicitors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6000
Peppermint Innovation Limited
Registered Office
Suite 8, 7 The Esplanade
Mt Pleasant WA 6153
Tel: +61 8 9316 9100
Fax: +61 8 9315 5475
Web Address: www.pepltd.com.au
ASX Code: PIL
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
Auditors
RSM Australia Partners
Level 32
2 The Esplanade
Perth WA 6000
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Peppermint Innovation Limited
Directors’ Report
Your Directors submit the financial report of Peppermint Innovation Limited (the Company or Peppermint), and
the entities it controlled (the Group), for the year ended 30 June 2019.
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 having held managing director roles
with Australian Stock Exchange listed companies operating foreign assets.
Mr Christopher Kain (B Comm,
MBA)
Managing Director and CEO
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.
Listed company 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.
Listed company 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.
Listed company directorships in the past 3 years: None
2019 Annual Financial Report
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Directors’ Report (continued)
Peppermint Innovation Limited
Name, qualifications,
independence status and
special responsibilities
Leigh Ryan, (BSc Geology,
MAIG)
Independent Non-executive
Director
From 4 December 2015,
Former CEO and Managing
Director of Chrysalis Resources
Limited to 3 December 2015
Albert Cheok, (B.Econ Hons,
FCPA)
Independent Non-executive
Director
From 29 April 2019
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.
Listed company directorships in the past 3 years:
- Alchemy Resources 1 January 2017 to present
Mr. Cheok is a banker with over 40 years of experience in banking in
the Asia-Pacific region, particularly in Australia, Hong Kong and
Malaysia. Mr Cheok was with the Reserve Bank of Australia from May
1983 and was the Chief Manager from October 1988 to September
1989. He was formerly the Deputy Commissioner of Banking of Hong
Kong and an executive director in charge of Banking Supervision at the
Hong Kong Monetary Authority. Mr Cheok was the Chairman of
Bangkok Bank Berhad in Malaysia from September 1995 to November
2005. Mr. Cheok is currently a member of the Board of Governors of
the Malaysian Institute of Corporate Governance in Malaysia.
Mr Cheok’s current other directorships in listed companies are:
- Chairman, 5G Networks Limited (Australia)
- Non-executive independent director, China Aircraft Leasing Group
Holdings Limited (Hong Kong)
- Chairman, Amplefield Limited (Singapore)
- Chairman, Supermax Corporation Berhad (Malaysia)
- Chairman, International Standard Resources Holding Limited
(Hong Kong)
Listed company directorships in the past 3 years:
- AcrossAsia Limited (Hong Kong), February 2006 to August 2016
- Hongkong Chinese Limited (Hong Kong), January 2002 to
December 2017
- Bowsprit Capital Corporation Limited (Singapore), from May
2006 to April 2017
- Lippo Malls Indonesia Retail Trust Management Limited
(Singapore), from July 2010 to September 2017
- Auric Pacific Group Limited (Singapore), from to July 2002 to
April 2017
- Adavale Resources Limited, from December 2012 to April 2017
2019 Annual Financial Report
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Directors’ Report (continued)
Peppermint Innovation Limited
Experience and special responsibilities
Rod consults in strategic management and innovative solution delivery
in the banking and finance industry, especially payment services and
electronic banking.
Name, qualifications,
independence status and
special responsibilities
Rod Tasker, (BA BSc Grad Dip
Banking and Finance)
Independent Non-executive
Director appointed 28 September
2016, retired 30 November 2018
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
Albert Cheok
Rod Tasker
4. Principal Activities
Number of meeting
eligible to attend
3
Number of meetings
attended
3
3
3
3
1
1
3
3
3
1
-
The principal activities of the Group during the year were the commercialisation, deployment and further
development of the Peppermint Platform, a mobile banking, payments and remittance technology designed for
banks, mobile money operators, money transfer and funds remittance companies, payment processors,
retailers/merchants, credit card companies and microfinance institutions which the Company is now
prosecuting through its own agent network BIZMOTO, as well as third party networks.
It has been another busy year with a number of key milestones achieved. Cash receipts for the last three
quarters of the year all showed significant growth while the Company has a continuing strategy to attract
network partners, including banking customers and business center franchises to vend BIZMOTO products via
API interconnections. In addition to the network partner on-boarding initiatives, the Company projects
significant growth in retail basis transactions as the Bizmoto Agent network continues to expand. Currently
we have circa 16,000 Filipinos registered with Bizmoto and are working daily on-boarding agents, while also
running new agent registration campaigns.
The BIZMOTO brand is emerging and we are firmly focused on the ongoing development and growth across
the four fundamental business sectors namely:
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Directors’ Report (continued)
• Payments;
• Delivery & Logistics;
• E-Commerce; and
• Financial Services;
all utilising the Peppermint technology platform.
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:
• Growth in cash receipts up 47.5% for the December 2018 Quarter, 92% for the March 2019 Quarter
and 14% for the 30 June 2019 quarter.
•
Increases in scale and reach of programs forecast in forward quarters.
• Over 15,000 registered Bizmoto agents.
• BizmoGo delivery riders now deployed in three key regions around metropolitan Manila.
• Over 100 merchants have subscribed for BizmoGo delivery program.
• Ongoing brand and content development of e-commerce site – BizmoTinda.
• Targeted Q3 marketing campaign to build on current momentum.
• Peppermint-developed mobile app launched by Cooperative Health Management Federation (CHMF)
providing medical-related information to its 41,000 members.
• Phase 2 of mobile app will introduce a wallet, QR code payments and other member-to-member
payment functionalities for CHMF’s members.
• Peppermint named one of 50 winning companies in 2019 global ‘Inclusive Fintech 50” competition.
• Peppermint progressing roll-out of mobile banking technology and services to BancNet member
outsourcing banks.
• $2 million placement secured from PEGG Capital (at 2.5cps), which is expected to be completed in
September 2019.
• Micro-business program Bizmoto Delivers commenced the first pilot stage in targeted regions of the
Philippines.
• Major social media campaign launched to profile the Bizmoto Delivers program and to secure new
BizmoGo riders.
• The largest interbank network of local and offshore banks in the Philippines BancNet teamed up with
Peppermint on the provision of mobile banking technology and services.
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Directors’ Report (continued)
• PEGG Capital committed to increase the placement at 2.5 cps to $2 million in total as an initial equity
investment (inclusive of $1.5 million to fill SDUT placement agreement), with capacity to increase
this support up to $5 million in total to assist Bizmoto mobile app and agent network rollout, develop
micro-finance lending programs and to add products and services to the Bizmoto Platform.
• Albert Cheok (PEGG Capital Limited Chair) appointed Non-Executive Director to Peppermint Board.
• Marketing campaign ongoing to continue to build the Bizmoto agent network.
• TVS MOU signed to start testing the sale and supply of TVS motorcycles to the Bizmoto network and
the Filipino public.
• MOU signed with Vleppo to explore potential of BlockChain based functionality to compliment
Peppermint’s established technology platform.
Bizmoto Operations, Development and Platform Progress:
Peppermint continued to expand its micro-business pilot program, called BizmoGo Delivers, throughout the
metropolitan Manila area following its launch in April this year. Last Saturday (27 July), the BizmoGo
Delivers program was launched to a group of riders in the eastern city of Antipolo, the third operational area
after the southern locale of Cavite (in April) and the northern Novaliches district of Quezon City (in June).
The BizmoGo Delivers program provides registered riders with accreditation and training on how to build their
own micro-business combining the Bizmoto mobile app (powered by Peppermint) and a motorcycle, allowing
them to deliver various products and services to Filipino people. To the end of June, almost 100 merchants had
subscribed to use the BizmoGo Delivers program, offering mobile bill payments, mobile eLoad and money
transfers as well as deliveries of food, rice, bottled water, LPG cylinders and other general store merchandise
from small businesses.
The fourth pilot area for the BizmoGo Delivers program will be launched on the western periphery of
metropolitan Manila in the Manila Bay area soon. At this time, approximately 60 active BizmoGo riders will
be delivering services or products to Filipino people utilising the Bizmoto mobile app, earning Peppermint a
fee from the rider’s wallet upon every delivered product or service.
To the end of June, more than 15,400 agents had registered with Bizmoto with the number of agents
downloading and using the mobile app increasing quarter on quarter. Females in their 30s were the
predominant demographic signing up as Bizmoto agents during the first quarter of 2019 but that changed to
males in their 20s with the introduction of the BizmoGo Delivers program.
BizmoTinda:
Testing of Bizmoto’s e-commerce platform “BizmoTinda” – which acts as a portal for sellers to offer a range
of products and services – continued throughout the June quarter.
The platform is open to three categories of sellers – i) strategic suppliers with both online and offline selling
models; ii) merchants who participate in the BizmoGo delivery programs, and iii) registered Bizmoto agents
who wish to sell their product to and through other agents.
Peppermint is securing supply agreements with established brands having been awarded authorised reseller
status for Globe and PLDT products – two of the largest telecommunication brands in the Philippines
Early-adopter BizmoGo merchant customers, mainly food establishments, have expressed strong interest
listing on BizmoTinda, with future deliveries likely to be accessible through in-app ordering facilities.
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Directors’ Report (continued)
Collaboration with BancNet on Mobile Banking Solution:
In February, Peppermint announced it was collaborating with BancNet after the Central Bank of Philippines
(Bangko Sentral ng Pilipinas (BSP) directed all commercial and rural banks to establish a safe, efficient,
affordable and reliable electronic payments system across the county.
BancNet is the Philippines single Automated Teller Machines (ATM) switch operator, connecting the networks
of local and offshore banks, and the largest interbank network in the Philippines with 114 members and
affiliates. Peppermint has been appointed as the service provider of Mobile Banking Solutions to BancNet
Outsourcing Banks, which are rural and thrift banks providing financials loans for rural and agricultural
development.
During the June Quarter, Peppermint held project “kick-off” meetings with three Outsourcing Banks, including
the Bank of Makati (ranked 8th among the top thrift banks with 19 branches, 24 loan centers, and 13
microfinance-orientated branches); UCPB Savings Bank (ranked 9th among the top thrift banks with 49
branches, 13 lending offices and soon 14 branch lite units) and Partner Rural Bank (Cotabato) (which has been
operating for more than 40 years providing countryside agricultural assistance in Mindanao).
Peppermint is also in ongoing discussions with other rural and thrift banks who want to implement their own
customized digital mobile banking solutions.
National QR Code for Person-to-Person Payments (P2P) and Person-to-Merchant Payments Transactions
(P2M):
BancNet also started discussions with Peppermint during the June quarter about developing a national QR
code for Person-to-Person payments (P2P) and person-to-merchant payments transactions (P2M). The P2P is
an enhanced version of InstaPay or PESONet, where users can transfer funds by merely scanning a QR code
instead of inputting their account details as required under the current InstaPay/PESONet set-up. The P2M will
form part of a broader payment stream in the future, which would have a significant impact on pushing cashless
payments to merchants.
The Bank of Philippines forecast that the use of national QR codes will raise the share of all e-payments to
20% of all transactions in the Philippines by 2020.
Co-Operative Business Partners Progress – CHMF:
During the quarter, Peppermint formally launched a mobile app that was developed for the Cooperative Health
Management Federation (CHMF). The CHMF has 116 member cooperatives and more than 41,000 members
across the Philippines, with access to an established network of 447 hospitals and clinics, including diagnostic
centers and dental clinics. Its core cooperative is the Cooperative Insurance System of the Philippines, which
specialises in providing insurance products to its members.
The first phase of the mobile app allows CHMF’s 41,088 members to locate accredited medical centers, make
appointments and review all of their medical insurance history online. The second phase will include
functionality for a mobile wallet, QR code payments, member to member payments and other transactional
capabilities.
CORPORATE:
In late April, PEGG Capital Limited agreed to increase its equity in Peppermint via a $2million placement at
a premium of 2.5 cents per share. Furthermore, it offered to make available an additional $3 million in funding
to Peppermint over time, increasing PEGG Capital’s funding offer to Peppermint to $5million in total.
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Directors’ Report (continued)
The receipt of PEGG Capital’s $2million is imminent with regulatory foreign exchange and banking
jurisdictional clearances currently being processed. The Company has been in daily contact with PEGG Capital
to complete delivery of the funding which is unanimously recognised as the best outcome for Peppermint’s
growth objectives and ultimately all of its shareholders.
In the interim Peppermint has drawn down a total of $1,012,500 from a $1.5 million convertible note facility
(placed at 2.5cps) with Melbourne-based sophisticated investor, Caason Group, to satisfy ongoing working
capital requirements.
In June, Peppermint was named one of the world’s 50 “Inclusive” Fintech companies for driving financial
inclusion and tailoring services and solutions for unbanked people in the Philippines. As an “Inclusive Fintech
50” company, judges of the global event said Peppermint “demonstrated the power of financial technology to
expand access, usage and quality of financial services in advanced and emerging markets.
Shareholder returns
2019
2018
2017
2016
2015
Net loss for the year
Earnings per share (cents)
Net (liabilities) / assets
Share price
(2,142,786)
(0.2)
(1,119,645)
$0.012
(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
Investments for future performance
The main expense item for the Company is its human resources, which have continued to focus on the four
business focuses that have emerged from the Company’s operations and evolution over the last year. They
are:
1. Payments and remittance;
2. Delivery & Logistics;
3. E-Commerce; and
4. Financial Services;
all utilising the Peppermint technology platform.
All areas are expected to grow with continued marketing, agent and merchant sign up and product development
over the year ahead.
Review of financial condition
The Company had $82k cash at bank as at 30 June 2019 with operations covered by the $1.5mm Caason
Convertible Note whilst the major fund raising with PEGG is completed.to allow the Company 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.
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Directors’ Report (continued)
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 a convertible note with a face value of $365,000 and 7,300,000 free attaching
options was issued under a $1,500,000 convertible note facility. See Note 12(b)(i) for details. This drawdown
takes the amount drawn on the convertible note facility to $1,012,500.
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.
8. Likely developments
The Group intends to continue to develop its four business divisions via organic growth and strategic
acquisitions.
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
Albert Cheok
11. Share options
Number of
fully paid
ordinary
shares
93,991,416
110,325,322
6,437,768
3,000,000
12,916,667
Number of
performance
shares
26,854,690
31,521,521
1,839,362
-
-
At the date of this report 60,250,000 unissued shares of the Company were under option.
12,950,000 share options with an exercise price of $0.014 on or before 20 May 2021 were issued during the
2019 year as part of the consideration for convertible notes with a face value of $647,500, 12% coupon and 30
April 2020 expiry.
7,300,000 share options with an exercise price of $0.014 on or before 20 May 2021 were issued subsequent to
year end as part of the consideration for convertible notes with a face value of $365,000, 12% coupon and 30
April 2020 expiry.
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Directors’ Report (continued)
During the 2018 year 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 expiring on 27 August 2020
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 expiring on 27 August 2020
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 expiring on 27 August 2020
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 expiring on 27 August 2020
which are exercisable after the 30 day volume weighted average price of fully paid
ordinary shares share price exceeds 20 cents.
Options not exercised by the expiry date will lapse.
No shares were issued as a result of the exercise of options.
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 2019, 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.
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Directors’ Report (continued)
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.
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 20 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.
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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
2019 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 2019
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
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Directors’ Report (continued)
Remuneration report (audited)
This remuneration report for the financial year ended 30 June 2019 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
Non-Executive Director, appointed 4 December 2015
Mr Albert Cheok
Non-Executive Director, appointed 29 April 2019
Mr Rod Tasker
Non-Executive Director, appointed 28 September 2016, retired 30
November 2018
(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
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Directors’ Report (continued)
Remuneration report (audited) (continued)
A.
Principles used to determine the nature and amount of remuneration
Remuneration philosophy
The performance of the Group depends upon the quality of its directors and executives. To prosper, the Group
must attract, motivate and retain highly skilled directors and executives.
To this end, the Group embodies the following principles in its compensation framework:
• Provide competitive rewards to attract high calibre executives;
• Link executive rewards to shareholder value; and
• Establish appropriate, demanding performance hurdles 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.
2019 Annual Financial Report
15
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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 2019 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.
2019 Annual Financial Report
16
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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 2018 Annual General Meeting
All resolutions at the 2018 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 2019
Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill
(i)
Mr Leigh Ryan
Mr Albert Cheok (ii)
Mr Rod Tasker (iii)
Totals
Salary &
Fees
200,000
265,000
47,419
Non-
monetary
benefits
(iv)
10,181
13,490
2,337
Post employ-
ment benefits
Share-
based
payments
Total
Performance
Related
19,000
25,175
2,850
-
-
-
229,181
303,665
52,606
30,000
5,000
20,000
567,419
1,527
255
985
28,775
2,850
475
1,188
51,538
-
-
-
-
34,377
5,730
22,173
647,732
-
-
-
-
-
-
-
Compensation is stated on an accruals basis.
(i)
Includes remuneration via Digital Domain Consulting, a business in which he holds a beneficial interest.
(ii) Appointed 29 April 2019
(iii) Includes remuneration via Adapts Pty Ltd, a business in which he holds a beneficial interest. Retired 30 November 2018.
(iv) Comprises of directors and officers’ insurance.
2019 Annual Financial Report
17
For personal use only
Directors’ Report (continued)
Remuneration report (audited) (continued)
Year ended 30 June 2018
Directors
Salary &
Fees
Non-
monetary
benefits (iii)
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill (i)
Mr Leigh Ryan
Mr Rod Tasker (ii)
Totals
200,000
265,000
65,550
30,000
112,500
673,050
Compensation is stated on an accruals basis.
Peppermint Innovation Limited
Share-
based
payments
Total
Performance
Related
-
-
-
-
-
-
225,972
299,413
70,578
33,896
119,022
748,881
-
-
-
-
-
-
Post
employ-
ment
benefits
19,000
25,175
2,850
2,850
2,850
6,972
9,238
2,178
1,046
3,672
23,106
52,725
(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.
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.
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.
2019 Annual Financial Report
18
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Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
(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, Rod Tasker and Albert Cheok. 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 paid Adaps IT Pty Ltd (an entity controlled by Rod Tasker) a monthly consulting
fee of $7,500 plus GST, adjusted when Mr Tasker was on holiday.
D.
Share-based compensation
Compensation shares, options – granted and vested during the financial year
2019
2018
No shares nor options were granted as compensation during the 2019 year.
No shares nor options were granted as compensation during the 2018 year.
E.
Performance Shares of key management personnel
30 June 2019
Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill
Mr Leigh Ryan
Mr Albert Cheok
Mr Rod Tasker
Totals
Balance at start
of the financial
year/ date of
appointment
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 / date of
retirement
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,854,690
31,521,521
1,839,362
-
-
-
60,215,573
2019 Annual Financial Report
19
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Peppermint Innovation Limited
Directors’ Report (continued)
Remuneration report (audited) (continued)
F.
Share holdings of key management personnel
30 June 2019
Directors
Mr Anthony Kain
Mr Christopher Kain
Mr Matthew Cahill
Mr Leigh Ryan
Mr Albert Cheok (i)
Mr Rod Tasker (ii)
Totals
Balance at start
of the financial
year / date of
appointment
93,991,416
110,325,322
6,437,768
3,000,000
12,916,667
1,000,000
227,671,173
(i)
(ii)
Appointed 29 April 2019
Retired 30 November 2018
Granted as
remuneration
On exercise of
options
Acquisitions
/(Disposals)
Balance at the
end of financial
year / date of
retirement
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
93,991,416
110,325,322
6,437,768
3,000,000
12,916,667
1,000,000
227,671,173
G.
Other transactions and balances with Key Management Personnel
$15,000 was advanced by Fich Pty Ltd, an entity controlled by Mr Christopher Kain, Managing Director of
the Company. The loan bears interest of 15% per annum, had a set-up fee of 4% and was repayable on 6 March
2019 and was extended to 30 September 2019. At 30 June 2019 the loan had a value of $17,098 (2018: nil).
Signifi Media Pty Ltd, and entity controlled by Mr Mathew Cahill, a director of the Company, provided
advertising services and office rental of $4,917 (2018: nil) at normal commercial rates.
Unpaid directors’ fees, salaries and superannuation totalling $99,887 (2018: nil) have been accrued.
Apart from the above items and 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 2019 (2018: Nil).
END OF THE REMUNERATION REPORT
Signed in accordance with a resolution of the Directors:
Christopher Kain
Managing Director
Perth, 30 August 2019
2019 Annual Financial Report
20
For personal use only
STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
Revenue
Cost of sales
Gross profit
Other income
Administration expenses
Finance costs
Fair value adjustments
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
Note
4
4
4
4
12(iii)
5(a)
5(a)
Consolidated
2019
$
2018
$
681,327
(572,001)
109,326
887,981
(660,937)
227,044
123
(2,096,856)
(99,776)
28,397
-
(84,000)
(2,142,786)
20,454
(1,982,753)
(93)
-
(8,000)
-
(1,743,348)
6
-
-
(2,142,786)
(1,743,348)
-
-
-
-
Total comprehensive (loss) for the year
(2,142,786)
(1,743,348)
(Loss) for the year attributable to members of the parent
entity
Total comprehensive (loss) for the year attributable to
members
(2,142,786)
(1,743,348)
(2,142,786)
(1,743,348)
Basic and diluted loss per share (cents per share)
3
(0.2)
(0.2)
The accompanying notes form part of these financial statements
2019 Annual Financial Report
21
For personal use only
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Peppermint Innovation Limited
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Total Current Assets
NON-CURRENT ASSETS
Intangible assets
Plant and equipment
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Funds received in advance of the issue of shares
Financial liabilities
Total Current Liabilities
TOTAL LIABILITIES
NET LIABILITIES
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
Note
Consolidated
2019
$
2018
$
7
8
9
10
11
10
12
13
82,379
98,050
6,747
187,176
241,793
67,626
2,852
312,271
-
3,200
3,200
28,229
-
28,229
190,376
340,500
445,070
103,451
-
761,500
1,310,021
114,534
71,069
160,000
-
345,603
1,310,021
345,603
(1,119,645)
(5,103)
13,145,875
(14,683,961)
418,441
12,536,072
(12,541,175)
-
(1,119,645)
(5,103)
The accompanying notes form part of these financial statements
2019 Annual Financial Report
22
For personal use only
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
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
Purchase of plant and equipment
Proceeds on the sale of geological data
Net cash (used in) / provided by investing activities
Cash Flows from Financing Activities
Issue of shares
Funds received in advance of the issue of shares
Share issue expenses
Proceeds from borrowings
Loan repayments
Net cash provided by financing activities
Consolidated
2019
$
2018
$
687,504
(2,243,091)
123
(1,555,464)
960,997
(2,564,146)
454
(1,602,695)
Note
7(b)
(3,753)
-
(3,753)
-
20,000
20,000
640,000
-
(35,197)
805,000
(10,000)
1,399,803
1,300,000
160,000
(63,951)
-
-
1,396,049
Net decrease in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
(159,414)
241,793
82,379
(186,646)
428,439
241,793
7(a)
The accompanying notes form part of these financial statements
2019 Annual Financial Report
23
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Peppermint Innovation Limited
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Issued Capital Convertible
Note Reserve
$
$
Share Based
Payment
Reserve
$
Accumulated
Losses
Total
$
$
Balance at 1 July 2018
12,536,072
Loss for the year
Total comprehensive loss for the year
-
-
-
-
-
-
(12,541,175)
(5,103)
-
-
(2,142,786)
(2,142,786)
(2,142,786)
(2,142,786)
Transactions with owners in their capacity
as owners
Shares issued
Share issue expenses
Share based payments
Value of conversion rights on convertible
notes
Balance at 30 June 2019
800,000
(394,197)
204,000
-
-
-
-
134,441
-
-
284,000
-
-
-
-
-
800,000
(394,197)
488,000
134,441
13,145,875
134,441
284,000
(14,683,961)
(1,119,645)
Issued Capital Convertible
Note Reserve
$
$
Share Based
Payment
Reserve
$
Accumulated
Losses
Total
$
$
Balance at 1 July 2017
11,337,023
Loss for the year
Total comprehensive loss for the year
-
-
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
-
-
-
-
-
-
-
-
(10,797,827)
539,196
-
-
-
-
-
-
(1,743,348)
(1,743,348)
(1,743,348)
(1,743,348)
-
-
-
(12,541,175)
1,300,000
(108,951)
8,000
(5,103)
The accompanying notes form part of these financial statements
2019 Annual Financial Report
24
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 2019.
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 $2,142,786 (2018: $1,743,348) and
had net cash outflows from operating activities of $1,555,464 (2018: $1,602,695) for the year ended 30 June
2019. As at that date, the Group had net liabilities of $1,119,645 (2018: $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 $365,000 from the issue of convertible notes subsequent to year end as disclosed in
Note 22;
• The Group has an agreement to issue 80,000,000 shares at 2.5 cents per share to raise $2,000,000 from a
sophisticated investor which has advised the funds are expected to be provided to the Group in September
2019; 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.
2019 Annual Financial Report
25
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (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 9 Financial Instruments
The Group has adopted AASB 9 from 1 July 2018. The standard introduced new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held
within a business model whose objective is to hold assets in order to collect contractual cash flows which arise
on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value
through other comprehensive income if it is held within a business model whose objective is to both hold assets
in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as
well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at
fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present
gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in
a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset
may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or
eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the
standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented
in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are
intended to more closely align the accounting treatment with the risk management activities of the entity. New
impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is
measured using a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a
simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for
revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the
transfer of promised goods or services to customers at an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-
based revenue recognition model with a measurement approach that is based on an allocation of the transaction
price. This is described further in the accounting policies below. Credit risk is presented separately as an
expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement
of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship
between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a
contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.
2019 Annual Financial Report
26
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impact of adoption
AASB 9 and AASB 15 (which make amendments to AASB 101) were adopted using the modified
retrospective approach and as such comparatives have not been restated. The impact of adoption was not
material and as such there is no impact to opening retained profits as at 1 July 2018. The change to significant
accounting policies and presentation of financial statements have been reflected in this report.
(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 2019. The
Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Group, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard
replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance
leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position,
measured at the present value of the unavoidable future lease payments to be made over the lease term. The
exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use'
asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to
the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial
direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line
operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included
in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the
earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortisation) results will be improved as the operating expense is replaced by interest expense and
depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease
payments will be separated into both a principal (financing activities) and interest (either operating or financing
activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts
for leases. The Group will adopt this standard from 1 July 2019 and its impact on adoption is not expected to
be material.
(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 or Trinomial Option Pricing Model.
2019 Annual Financial Report
27
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the
consolidated entity: identifies the contract with a customer; identifies the performance obligations in the
contract; determines the transaction price which takes into account estimates of variable consideration and the
time value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods
or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent
events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The
measurement of variable consideration is subject to a constraining principle whereby revenue will only be
recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur. The measurement constraint continues until the uncertainty associated with the
variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle
are initially recognised as deferred revenue in the form of a separate refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the
goods, which is generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on
either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(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 initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due
for settlement within 30 days.
2019 Annual Financial Report
28
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on
days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
(j)
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification
is determined based on both the business model within which such assets are held and the contractual cash
flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred
and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either:
(i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value
movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the Group
intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial
recognition.
Derivatives
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from
the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely
related to the host; a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded
derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment
only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows
that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or
loss category.
A derivative embedded within a hybrid contract containing a financial asset host is not accounted for
separately. The financial asset host together with the embedded derivative is required to be classified in its
entirety as a financial asset at fair value through profit or loss.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the consolidated entity's assessment at the end of each reporting period as to whether the
financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
2019 Annual Financial Report
29
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised
is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life
of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or
loss.
(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.
2019 Annual Financial Report
30
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (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.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
2019 Annual Financial Report
31
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(o)
Contract liabilities
Contract liabilities are recognised when a customer pays consideration, or when the Group recognises a
receivable to reflect its unconditional right to consideration (whichever is earlier), before the Group has
transferred the goods or services to the customer. The liability is the consolidated entity's obligation to transfer
goods or services to a customer from which it has received consideration.
2019 Annual Financial Report
32
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p)
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly
attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or
loss when the liabilities are de-recognised.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost or fair value. Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in profit or loss over the period of the borrowings using the effective
interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan
to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of
the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over
the period of the facility to which it relates.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of time that is required to prepare the asset for its intended
use or sale. Qualifying assets are assets that necessarily take a substantial period to get ready for their intended
use or sale. Borrowing costs cease to be capitalised upon the earlier of extinguishment of the liability or the
commencement of commercial production from the qualifying asset.
Borrowings are removed from the statement of financial position when the obligation specified in the contract
is discharged, cancelled or expired. Where the terms of a financial liability are renegotiated and the entity
issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or
loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the
financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date.
(q)
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.
2019 Annual Financial Report
33
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
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.
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.
(s)
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.
(t)
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.
2019 Annual Financial Report
34
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Peppermint Innovation Limited
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability
(ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such
a market, the most advantageous market available to the entity at the end of the reporting period (ie the market
that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability,
after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability to
use the asset in its highest and best use or to sell it to another market participant that would use the asset in its
highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based
payment arrangements) may be valued, where there is no observable market price in relation to the transfer of
such financial instruments, by reference to observable market information where such instruments are held as
assets. Where this information is not available, other valuation techniques are adopted and, where significant,
are detailed in the respective note to the financial statements.
Valuation techniques
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.
(u)
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.
2019 Annual Financial Report
35
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
SEGMENT REPORTING (continued)
Peppermint Innovation Limited
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.
Year Ended 30 June 2019
Mobile
Banking and
Payment
Services
International
Remittance
Head Office
Total
Segments
Adjustments
and
Eliminations
Consolidated
Revenue
External customers
Inter-segment
Total revenue
Income/(expenses)
Depreciation and
amortisation
Segment profit
Total assets
Total liabilities
681,113
-
681,113
214
-
214
-
-
-
681,327
-
681,327
28,229
-
553
28,782
-
-
-
-
681,327
-
681,327
28,782
(439,481) (78,696) (1,624,609) (2,142,786) - (2,142,786)
144,217 9,095 2,072,758 2,226,070 (2,035,694) 190,376
1,310,021
1,517,224 600,074 1,227,514 3,344,812
(2,034,791)
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.
Year Ended 30 June 2018
Revenue
External customers
Inter-segment
Total revenue
Income/(expenses)
Depreciation and amortisation
Segment profit
Total assets
Total liabilities
Mobile
Banking and
Payment
Services
887,981
-
887,981
56,458
(296,808)
135,229
1,068,755
International
Remittance
Head Office
Total
Segments
Adjustments
and
Eliminations
Consolidated
-
-
-
-
-
-
-
-
887,981
-
887,981
56,458
-
-
-
-
887,981
-
887,981
56,458
(273,170)
24,079
536,361
(1,173,370)
1,758,548
331,806
(1,743,348)
1,917,856
1,936,922
-
(1,577,356)
(1,591,319)
(1,743,348)
340,500
345,603
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.
2019 Annual Financial Report
36
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
SEGMENT REPORTING (continued)
Peppermint Innovation Limited
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
3.
LOSS PER SHARE
Basic and diluted loss per share (cents per share)
2019
$
2018
$
295
519,929
25,902
614,483
134,973
102,118
2019
$
(0.2)
2018
$
(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
Weighted average number of shares outstanding during the year used in the
calculations of basic loss per share:
(2,142,786)
(1,743,348)
981,885,292
921,190,224
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 from contracts with customers
Transaction revenue
Project revenue
Other income
Proceeds on the sale of assets
Interest income
2019
$
2018
$
607,953
73,374
681,327
766,886
121,095
887,981
-
123
123
20,000
454
20,454
2019 Annual Financial Report
37
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
4.
RESULT FOR THE YEAR (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Peppermint Innovation Limited
30 June 2019
Major product lines
ELoad sales
Software development services
System usage fees and commissions
Timing of revenue recognition
Goods transferred at a point in time
Services transferred at a point in time
Services transferred over time
30 June 2018
Major product lines
ELoad sales
Software development services
System usage fees and commissions
Timing of revenue recognition
Goods transferred at a point in time
Services transferred at a point in time
Services transferred over time
Finance costs
Notional and accrued interest on convertible notes
Interest on related party loans
Other
International
Remittance
Total
Mobile
Banking
and
Payment
Services
591,080
73,374
16,659
681,113
-
591,080
- 73,374
16,873
214
681,327
214
591,080
16,659
73,374
681,113
-
214
-
214
591,080
16,873
73,374
681,327
660,476
120,497
107,008
887,981
- 660,476
- 120,497
- 107,008
- 887,981
660,476
107,008
120,497
887,981
- 660,476
- 107,008
-
120,497
- 887,981
2019
$
94,994
2,098
2,684
99,776
2018
$
-
-
93
93
Finance costs includes all interest-related expenses, other than those arising from financial assets at fair value
through profit or loss.
2019 Annual Financial Report
38
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
4.
RESULT FOR THE YEAR (continued)
Administration costs
Audit fees
Bad debts
Consulting fees
Depreciation and amortisation
Directors' fees and consulting remuneration
Employee expenses
Insurance
Investor relations
Legal fees
Licence fees and royalties
Rent
Share registry fees
Start-up expenses
Stock exchange fees
Sundry expenses
Travel
5.
SHARE BASED PAYMENTS
(a) Shares Issued
2019:
Peppermint Innovation Limited
2019
$
2018
$
37,100
40,686
374,392
28,782
615,981
493,010
11,660
70,725
44,716
-
50,939
13,696
-
36,469
197,040
81,660
2,096,856
34,500
-
148,255
56,458
725,775
508,988
23,105
94,629
9,772
60,000
23,934
14,077
33,627
24,881
143,786
80,966
1,982,753
6,800,000 shares were issued to a consultant for corporate consultancy services and assistance in raising capital
at the fair value of the services received. Corporate consultancy services in the amount of $84,000 were
recognised through profit and loss as share-based payment expense. The remaining $120,000 was recognised
as share issue expenses within equity for assistance in raising capital.
2018:
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.
(b) Options Issued
2019:
12,950,000 unlisted options with a $0.014 exercise price on or before 20 May 2021 were issued as part of the
consideration of convertible notes with a face value of $647,500 (see note 13(b)(i)).
40,000,000 performance options issued in 2018 vested. See Note 5(c) for details.
2018:
Nil.
2019 Annual Financial Report
39
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
SHARE BASED PAYMENTS (continued)
(c) Performance Options
2019:
Peppermint Innovation Limited
40,000,000 performance options issued in 2018 were measured on 28 August 2018.
2018:
40,000,000 performance options were granted to a consultant during the year as follows:
Number
10,000,000
10,000,000
10,000,000
10,000,000
Exercise
Price
$0.03 Options to acquire fully paid ordinary shares at 3 cents each expiring on 27 August 2020 which
are exercisable after the 30 day volume weighted average price of fully paid ordinary shares
exceeds 5 cents.
Condition
$0.03 Options to acquire fully paid ordinary shares at 3 cents each expiring on 27 August 2020 which
are exercisable after the 30 day volume weighted average price of fully paid ordinary shares
exceeds 10 cents.
$0.05 Options to acquire fully paid ordinary shares at 5 cents each expiring on 27 August 2020 which
are exercisable after the 30 day volume weighted average price of fully paid ordinary shares
share price exceeds 15 cents.
$0.05 Options to acquire fully paid ordinary shares at 5 cents each expiring on 27 August 2020 which
are exercisable after the 30 day volume weighted average price of fully paid ordinary shares
share price exceeding 20 cents.
The following table illustrates the number (No.) and weighted average exercise prices of and movements in
options and performance options issued as compensation during the year:
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
2019
No
40,000,000
12,950,000
-
-
-
52,950,000
52,950,000
2019 Weighted
average
exercise price
$0.040
$0.014
-
-
-
$0.034
$0.034
2018
No
-
40,000,000
-
-
-
40,000,000
-
2018 Weighted
average
exercise price
-
$0.04
-
-
-
$0.04
-
(d) Valuation of Shares, Options and Performance Options
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.
Options and performance options are valued using a Black-Scholes or Trinomial Option Pricing Model.
The fair value of performance options was recognised as an expense when the performance hurdle was
achieved.
The amount recognised as part of employee benefits expense for shares issued during the year was nil (2018:
nil).
The amount recognised as part of employee benefits expense for options issued during the year was nil (2018:
nil).
2019 Annual Financial Report
40
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
SHARE BASED PAYMENTS (continued)
Peppermint Innovation Limited
The amount recognised as a share issue expense for performance options issued during the year was $284,000
(2018: nil). 40,000,000 performance options were issued to a consultant in 2018 for corporate consultancy
services and assistance in raising capital which were valued at the fair value of the services received.
The valuation of the performance options was determined on the measurement date being the date on which
the Capital Raising occurred (28 August 2018). The trinomial option valuation model inputs used to determine
the fair value at the measurement date are as follows:
Grant Date Number
Issued
Exercise
Price
(cents)
28/8/18
28/8/18
28/8/18
28/8/18
Total
10,000,000
10,000,000
10,000,000
10,000,000
40,000,000
3
3
5
5
6.
INCOME TAX
Assumed
Stock Price
at Grant
Date
(cents)
1.8
1.8
1.8
1.8
(a)
Income tax recognised in profit/loss
Issue Price
(cents)
Interest
Rate
Volatility Value Per
nil
nil
nil
nil
1.99%
1.99%
1.99%
1.99%
120%
120%
120%
120%
Option
(cents)
0.90
0.79
0.61
0.54
Total Value
(dollars)
90,000
79,000
61,000
54,000
284,000
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
Prepayments
Intangible assets
Blackhole deductions
Net unrecognised deferred tax assets at 27.5%
2019
$
(2,142,786)
589,266
(589,266)
-
2018
$
(1,743,348)
479,421
(479,421)
-
2019
$
(2,122,794)
2018
$
(1,546,614)
(33,766)
(25,944)
4,701
-
(28,109)
(2,205,912)
(6,298)
(19,544)
-
(7,763)
(70,233)
(1,650,452)
2019 Annual Financial Report
41
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
6.
INCOME TAX (continued)
Peppermint Innovation Limited
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
2019
$
82,379
2018
$
241,793
82,379
241,793
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
2019
$
2018
$
82,379
241,793
(b)
Reconciliation of loss after income tax to net cash flows from operating activities:
Loss for the year
Non cash-flow items in loss for the year:
-
Interest accrued on convertible notes
- Depreciation / assets written off
- Proceeds on the sale of geological data
- Share based payment
- Fair value adjustment
- Legal fees paid by noteholder
-
Impairment
Changes in operating assets and liabilities:
-
(Increase) in trade and other receivables
-
-
-
(Increase) in inventory
Increase in trade and other payables
Increase in provisions
Net cash used in operating activities
2019
$
2018
$
(2,142,786)
(1,743,348)
97,092
-
28,782
56,458
-
(20,000)
84,000
(28,397)
17,500
-
-
-
-
8,000
(15,678)
(1,977)
(3,895)
19,955
375,536
32,185
32,382
46,032
(1,555,464)
(1,602,695)
2019 Annual Financial Report
42
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
8.
TRADE AND OTHER RECEIVABLES
Current:
Trade receivables
GST receivable
Prepayments
Advance to supplier
Other
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
10.
TRADE AND OTHER PAYABLES – current
Sundry payables and accrued expenses
Funds received in advance of the issue of shares (i)
(i) The shares were issued during 2019 (see Note 13(a)(i)).
11.
PROVISIONS – current
Unused annual leave
Peppermint Innovation Limited
2019
$
2018
$
42,671
-
31,082
-
24,297
34,494
13,166
-
19,966
-
98,050
67,626
2019
$
28,229
2018
$
84,687
-
-
(28,229)
-
(56,458)
28,229
169,375
(169,375)
-
169,375
(141,146)
28,229
2019
$
2018
$
445,070
114,534
-
160,000
2019
$
2018
$
103,451
71,069
2019 Annual Financial Report
43
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
12.
FINANCIAL LIABILITIES
Current
Financial liabilities
Related party loan (a)
Convertible notes and accrued interest (b)
Derivative liability (b)(iii)
Premium funding (c)
(a)
Related party loan
Peppermint Innovation Limited
2019
$
2018
$
17,098
664,012
65,644
14,746
761,500
-
-
-
-
-
$15,000 was advanced by Fich Pty Ltd, an entity controlled by Mr Christopher Kain, Managing Director of
the Company. The loan bears interest of 15% per annum, had a set-up fee of 4% and was repayable on 6 March
2019 and was extended to 30 September 2019.
(b)
Convertible notes
(i)
$1,500,000 convertible note facility maturing on 30 April 2020
The convertible notes mature on 30 April 2020, or as the parties otherwise agree in writing, bear 12% interest
per annum from the date of receipt of funds unless redeemed or converted earlier, and are convertible into fully
paid ordinary shares at 2.5 cps ($0.025).
The convertible notes provide the holder with 20 unlisted options with an exercise price of $0.014 on or before
20 May 2021 for every dollar drawn under the convertible note facility.
The convertible notes are secured by the Company’s 100% owned subsidiary Zambian Copper Pty Ltd, which
holds the Company’s mineral exploration project in Zambia.
The $1,500,000 convertible note facility replaced an earlier facility of $250,000 maturing on 21 December
2019 (see Note 12(b)(ii)) by increasing the convertible note face value to $1,500,000 and extending the
maturity date to 30 April 2020.
$647,500 has been drawn under the facility.
The convertible notes have a face value of $647,500, which has been valued and has a carrying amount of
$559,412 as at 30 June 2019.
The value of conversion rights on convertible notes of $53,712 was recognised in the convertible note reserve
(see note 14) and is amortised as notional interest over the term of the convertible notes.
12,950,000 options were issued as part of the consideration on convertible notes and a value of $80,720 was
recognised in the convertible note reserve (see note 15). This value is amortised as notional interest over the
term of the convertible notes.
2019 Annual Financial Report
44
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
12.
FINANCIAL ASSETS AND LIABILITIES (continued)
(ii)
Convertible notes maturing on 21 December 2019
Peppermint Innovation Limited
Convertible notes maturing on 21 December 2019 bearing 12% interest per annum, from the date of receipt of
funds, payable within 5 days of maturity unless redeemed or converted earlier, and convertible into fully paid
ordinary shares at $0.025 per share were issued during the year. The Company was entitled to convert all (but
not some) of the convertible notes at any time after the first anniversary of the issue of the convertible notes if
the VWAP for each of the 30 trading days ending not less than 5 trading days before the date of issue of the
Issuer Conversion Notice is at $0.0325.
The convertible notes were secured by the Company’s 100% owned subsidiary Zambian Copper Pty Ltd,
which holds the Company’s mineral exploration project in Zambia.
These convertible notes were replaced and extended by the convertible note facility referred to in Note 12(b)(i).
(iii)
Convertible notes maturing on 26 November 2019
Convertible notes maturing on 26 November 2019 bearing 12% interest per annum, from the date of receipt of
funds, with quarterly interest payable unless the parties agree otherwise and unless redeemed or converted
earlier, and convertible into fully paid ordinary shares at the lower of 1 cent ($0.01) per share and an amount
equal to a 20% discount on the VWAP per share for the 10 days immediately preceding the date of the
Conversion Notice were issued during the year.
The convertible notes have a face value of $150,000, which has been valued and has a carrying amount of
$104,580 and a derivative liability $65,644 of as at 30 June 2019.
The conversion option is not fixed for fixed and it is treated as a financial liability. On inception the value of
conversion rights on convertible notes of $94,041 was recognised as a derivative liability which is revalued at
each reporting date through fair value adjustment in Statement of Profit and Loss and Other Comprehensive
Income. A fair value gain of $28,397 was recognised on the derivative and interest expense of $42,526.
(c)
Premium funding
The Company financed an insurance policy premium. The loan is payable over a 10 month period and bears
interest of 12% per annum.
(d)
Other short-term loan
During the 2019 year an interest free, unsecured short-term loan of $10,000 was provided to the Company and
repaid by the Company.
13.
ISSUED CAPITAL
Paid up capital – ordinary shares
Capital raising costs
2019
$
13,906,513
(760,638)
13,145,875
2018
$
12,902,513
(366,441)
12,536,072
2019 Annual Financial Report
45
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
13.
ISSUED CAPITAL (continued)
(a)
Ordinary shares
30 June 2019 movements in issued capital:
Balance at 1 July 2018
Issue of shares – private placements at 3 cents per share (i)
Issue of shares – private placements at 2.5 cents per share
Costs relating to issue of shares
Share-based payment (ii)
Balance at 30 June 2019
Peppermint Innovation Limited
Number of
shares
$
953,449,128
23,333,333
12,536,072
700,000
4,000,000
100,000
-
(394,197)
6,800,000
204,000
987,582,461
13,145,875
i.
ii.
23,333,333 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 (see Note 10).
Issued to a consultant for corporate consultancy services and assistance in raising capital at the fair value of the
services received. Corporate consultancy services in the amount of $84,000 were recognised through profit and
loss as share-based payment expense. The remaining $120,000 was recognised as share issue expenses within
equity for assistance in raising capital.
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
892,449,128
60,000,000
11,337,023
1,300,000
-
(108,951)
1,000,000
8,000
953,449,128
12,536,072
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 2019, none of the milestones of the performance shares had been achieved.
2019 Annual Financial Report
46
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
13.
ISSUED CAPITAL (continued)
(c)
Options
Peppermint Innovation Limited
The following unlisted options to acquire fully paid ordinary shares were on issue:
Number
10,000,000
Exercise
Price
$0.03
Expiry
Date
Exercise Condition
27 Aug 2020 After the 30 day volume weighted average price of fully paid ordinary shares
exceeds 5 cents.
10,000,000
$0.03
27 Aug 2020 After the 30 day volume weighted average price of fully paid ordinary shares
exceeds 10 cents.
10,000,000
$0.05
27 Aug 2020 After the 30 day volume weighted average price of fully paid ordinary shares
share price exceeds 15 cents.
10,000,000
$0.05
27 Aug 2020 After the 30 day volume weighted average price of fully paid ordinary shares
share price exceeding 20 cents.
12,950,000
$0.014
20 May 2021 None
52,950,000
14.
CONVERTIBLE NOTE RESERVE
The convertible note reserve arises from bifurcating the derivatives embedded in the convertible notes (see
Note 12(b) for further details). A value of $134,441was recognised, as follows:
• The value of conversion rights on convertible notes of $53,712 was recognised in the convertible note
reserve and is amortised as notional interest over the term of the convertible notes.
• 12,950,000 options were issued as part of the consideration on convertible notes and a value of $80,720
was recognised in the convertible note reserve. This value is amortised as notional interest over the
term of the convertible notes.
15.
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 16: 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.
2019 Annual Financial Report
47
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
15.
RELATED PARTIES (continued)
(iii)
Other transactions with related parties,
Peppermint Innovation Limited
$15,000 was advanced by Fich Pty Ltd, an entity controlled by Mr Christopher Kain, Managing Director of
the Company. The loan bears interest of 15% per annum, had a set-up fee of 4% and was repayable on 6 March
2019 and was extended to 30 September 2019. At 30 June 2019 the loan had a value of $17,098 (2018: nil).
Signifi Media Pty Ltd, and entity controlled by Mr Mathew Cahill, a director of the Company, provided
advertising services and office rental of $4,917 (2018: nil) at normal commercial rates.
Unpaid directors’ fees, salaries and superannuation totalling $99,887 (2018: nil) have been accrued.
Apart from the above items and 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 2019 (2018: 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
Peppermint Payments Pty Ltd
Peppermint Technology, Inc
Country of
Incorporation
Australia
Australia
Philippines
Principal Activity
Information technology
International remittance
Information technology
Zambian Copper Pty Ltd (i)
Australia
Intermediate Holding Company
Horizon Copper Zambia Limited
Sedgwick Resources Limited (i)
Zambia
Zambia
Dormant
Mineral exploration
% Equity interest
2019
100%
% Equity interest
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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.
16.
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.
2019
$
2018
$
567,419
51,538
-
28,775
647,732
673,050
52,725
-
23,106
748,881
2019 Annual Financial Report
48
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
17.
PARENT ENTITY INFORMATION
(a)
Information relating to Peppermint Innovation Limited
Peppermint Innovation Limited
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
(Net liabilities)
Issued capital
Accumulated losses
Reserves
Total shareholders’ equity
2019
$
34,768
3,200
37,968
2018
$
182,051
-
182,051
(1,227,514) (331,806)
-
(1,227,514) (331,806)
(149,755)
(1,189,546)
-
12,391,595
11,781,792
(13,999,582) (11,931,547)
-
(149,755)
418,441
(1,189,546)
Loss for the parent entity
Total comprehensive income of the parent entity
(2,068,035) (1,656,908)
(2,068,035) (1,656,908)
(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 18 to the financial statements.
18.
COMMITMENTS
(a)
Leases as lessee
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
2019
$
22,448
1,871
-
24,319
2018
$
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 2019.
2019 Annual Financial Report
49
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
19.
CONTINGENT LIABILITIES
Peppermint Innovation Limited
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.
20.
AUDITORS’ REMUNERATION
Amounts received or due and receivable by the auditors for:
- Auditing or reviewing the financial report (RSM Australia Partners)
- Auditing of one of the subsidiary companies (Reyes Tacandong & Co)
- Other services
2019
$
2018
$
35,000
5,000
-
40,000
34,500
-
-
34,500
21.
FINANCIAL RISK MANAGEMENT
The Group’s financial situation is not complex. Its activities may expose it to a variety of financial risks in the
future: market risk (including currency risk and fair value interest rate risk), credit risk, liquidity risk and cash
flow interest rate risk. At that stage the Group’s overall risk management program will focus on the
unpredictability of the financial markets and seek to minimise potential adverse effects on the financial
performance of the Group.
Risk management is carried out under an approved framework covering a risk management policy and internal
compliance and control by management. The Board identifies, evaluates and approves measures to address
financial risks.
The Group holds the following financial instruments:
Financial Assets:
Cash and cash equivalents
Trade and other receivables
Financial Liabilities:
Financial liabilities at amortised cost:
- Trade and other payables
- Convertible notes and loans
Financial risk management policies
2019
$
2018
$
82,379
42,671
125,050
241,793
47,660
289,453
445,070
761,500
1,206,570
114,534
-
114,534
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.
2019 Annual Financial Report
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
21.
FINANCIAL RISK MANAGEMENT (continued)
Specific financial risk exposures and management
Peppermint Innovation Limited
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.
The Group’s liabilities have contractual maturities which are summarised below:
Within 1 year
2019
$
2018
$
1 to 5 years
2019
$
2018
$
Total
2019
$
2018
$
Trade and other payables
445,070
Convertible notes and loans 761,500
1,206,570
Total
114,534
-
114,534
-
-
-
-
445,070
- 761,500
- 1,206,570
114,534
-
114,534
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 2019, the Group had the following exposure to PHP foreign currency expressed in A$ equivalents,
which are not designated as cash flow hedges:
2019 Annual Financial Report
51
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
21.
FINANCIAL RISK MANAGEMENT (continued)
Financial Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Financial Liabilities:
Trade and other payables
Capital Risk Management
Peppermint Innovation Limited
2019
$
2018
$
59,952
76,488
6,747
143,187
68,614
34,494
2,852
105,960
81,352
81,352
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 13.
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.
22.
EVENTS AFTER THE BALANCE SHEET DATE
Subsequent to reporting date a convertible note with a face value of $365,000 and 7,300,000 free attaching
options was issued under a $1,500,000 convertible note facility. See Note 12(b)(i) for details. This drawdown
takes the amount drawn on the convertible note facility to $1,012,500.
Apart from the item above, there has not arisen in the interval between the end of the financial year and the
date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Group, to affect significantly the operations of the Group, the results of those operations, or
the state of affairs of the Group in future.
2019 Annual Financial Report
52
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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 2019 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 2019
2019 Annual Financial Report
53
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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
Disclaimer of Opinion
We were engaged to audit 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 2019,
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.
We do not express an opinion on the accompanying financial report of the Group. Because of the significance of
the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion on this financial report.
Basis for Disclaimer of Opinion
Going Concern
We draw attention to Note 1 in the financial statements, which indicates the Group incurred a net loss of
$2,142,786 and had net cash outflows from operating activities of $1,555,464 for the year ended 30 June 2019.
As of that date, the Group had net liabilities of $1,119,645. The ability of the Group to continue as a going concern
is contingent on a number of future events, the most significant of which is the ability of the Group to obtain
additional funding to continue its activities and to pay its debts as and when they fall due. We have been unable
to obtain sufficient appropriate evidence as to whether the Group will be able to obtain such funding. As a result,
we have been unable to determine whether the going concern basis of preparation is appropriate, and therefore
whether the assets and liabilities of the Group can be realised at the amounts stated in the financial report.
Carrying Amount of Liabilities
As at 30 June 2019, the Group includes two controlled entities, Horizon Copper Zambia Limited and Sedgwick
Resources Limited, in the Republic of Zambia, which had combined total assets of $Nil and total liabilities of $Nil.
We were unable to obtain sufficient appropriate evidence about the completeness of liabilities and contingences
within those two controlled entities because the directors of the company have been unable to obtain audited
financial statements for the year ended 30 June 2019. Consequently, we were unable to determine whether any
adjustments to these amounts were necessary.
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.
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
For personal use only 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 responsibility is to conduct an audit of the financial report in accordance with Australian Auditing Standards
and to issue an auditor's report. However, because of the matter described in the Basis for Disclaimer of Opinion
section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an
audit opinion on the financial report.
We are independent of the Group in accordance with the ethical requirements of the Corporations Act 2001 and
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.
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
2019.
In our opinion, the Remuneration Report of Peppermint Innovation Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 August 2019
JAMES KOMNINOS
Partner
For personal use only ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current as at 31 July 2019.
Peppermint Innovation Limited
(A)
DISTRIBUTION OF EQUITY SECURITIES
(i)
Ordinary share capital
987,582,463 fully paid ordinary shares are held by 1,095 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:
Fully paid
ordinary shares
22
46
49
510
468
1,095
342
1
–
1,001 –
5,001 –
10,001 –
100,001
1,000
5,000
10,000
100,000
and over
Holding less than a marketable parcel
(B)
SUBSTANTIAL SHAREHOLDERS
Ordinary shareholders
CHRISTOPHER KAIN
ANTHONY KAIN
EAGLE BRILLIANT HOLDINGS LTD
LEGAL TOOLBOX PTY LTD
Number
Percentage
110,325,322
93,991,416
57,247,355
50,000,000
311,564,093
11.17
9.50
5.80
5.08
31.55
2019 Annual Financial Report
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Peppermint Innovation Limited
ASX ADDITIONAL INFORMATION (continued)
(C)
TWENTY LARGEST SECURITY HOLDERS
Fully paid ordinary shares
Rank Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
OHKA PTY LTD
CICAK PTY LTD
EAGLE BRILLIANT HOLDINGS LTD
LEGAL TOOLBOX PTY LTD
MR ADRIAN STEPHEN PAUL + MRS NOELENE FAYE PAUL
CASADA HOLDINGS PTY LTD
JUNEDAY PTY LTD
TIMRIKI PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
10.
TIMRIKI PTY LTD
11. MR ROBERT ANTHONY ANGLEY + MS SUSAN JANE ARTHUR
12.
13.
ROGUE INVESTMENTS PTY LTD
PADSTOCK LIMITED
14. MR ADRIAN PAUL + MS NOELENE PAUL
15.
SUNSHORE HOLDINGS PTY LTD
16. MR ADRIAN STEPHEN PAUL
17.
PEGG TWO PTY LTD
18. MR MICHAEL RYAN
19.
20.
ICE COLD INVESTMENTS PTY LTD
ANDKER PTY LTD
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
10,500,000
10,000,000
10,000,000
9,892,422
9,450,004
9,050,000
8,487,768
8,100,000
7,500,000
505,823,320
481,759,143
Units
% of Units
107,250,214
10.86
88,566,309
57,247,355
50,000,000
24,866,856
24,822,728
18,124,053
15,000,000
13,722,702
11,992,890
8.97
5.80
5.06
2.52
2.51
1.84
1.52
1.39
1.21
1.14
1.06
1.01
1.01
1.00
0.96
0.92
0.86
0.82
0.76
51.22
48.78
(D) HOLDERS OF OVER 20% OF UNLISTED SECURITIES
Options with exercise conditions
LEGAL TOOLBOX PTY LTD
40,000,000
100%
Number
Percentage
Options exercisable at $0.014 on or before 20 May 2012
CAASON INVESTMENTS PTY LTD
12,950,000
100%
Performance Shares
OHKA PTY LTD
CICAK PTY LTD
HOLDERS OF LESS THAN 20% EACH
30,785,776
26,118,945
43,095,279
30.79
26.12
43.09
100,000,000
100.00
2019 Annual Financial Report
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Peppermint Innovation Limited
ASX ADDITIONAL INFORMATION (continued)
(E)
CURRENT ON-MARKET BUYBACKS
The Company does not have a current on-market buyback of its shares.
2019 Annual Financial Report
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