Rent.com.au Limited
ABN 25 062 063 692
Financial Report
for the year ended
30 June 2018
Rent.com.au Limited
Contents
30 June 2018
Contents
Corporate Information
Director’s Report
Auditor's Independence Declaration
Independent Auditor’s Report
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to The Financial Statements
Directors’ Declaration
3
4
18
19
22
23
24
25
26
61
2
Rent.com.au Limited
Corporate Information
30 June 2018
Corporate Information
This financial report includes the financial statements and notes of Rent.com.au Limited (‘the
Company’) and its controlled entities (‘the Group’). The Group’s functional presentation currency
is AUD ($).
A description of the Group’s operations and of its principal activities is included in the Review of
Operations and Activities in the Directors’ Report on pages 4 to 17. The Directors’ Report is not
part of the financial report.
Directors
Auditors
Dr. Garry Garside
Mr. John Wood
Mr. Sam McDonagh
Mr. Philip Warren
(Non-Executive Chairman)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
Perth WA 6000
Joint Company Secretaries
Bankers
Mr. Jan Ferreira
Mr. Steven Wood
Registered Office
945 Wellington Street
West Perth WA 6005
Commonwealth Bank of Australia
150 St Georges Terrace
Perth WA 6000
Solicitors
GTP Legal
68 Aberdeen Street
Northbridge WA 6003
Principal place of business
Stock Exchange
3 Craig Street
Burswood
WA 6100
Share Registry
Automic Registry Services
267 St Georges Terrace
Perth WA 6000
Australian Securities Exchange Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6000
ASX Code:
RNT
Website
http://investors.rent.com.au
3
Rent.com.au Limited
Director’s Report
30 June 2018
Directors Report
The directors present their report, together with the financial statements, on the consolidated
entity (referred to hereafter as the 'the Group') consisting of Rent.com.au Limited (referred to
hereafter as the 'Company' or 'parent entity') and the entities it controlled for the year ended 30
June 2018.
Directors
The following persons were directors of Rent.com.au Limited during the whole of the financial year
and up to the date of this report, unless otherwise stated:
Dr. Garry Garside
Mr. John Wood
Mr. Sam McDonagh
Mr. Philip Warren
Principal Activities
(Non-Executive Chairman)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
The Group operates real estate websites focusing on the rental property market. The primary
website operated by the Group is www.rent.com.au.
Review of Operations
The Consolidated Statement of Profit or Loss and Other Comprehensive Income shows a net
operating loss after tax of $2,822,539 for the year ended 30 June 2018 (for year ended 30 June
2017: $8,513,631). The net operating loss for the year ended 30 June 2018 included a non-cash
share-based payments expense of $191,759 (30 June 2017: $2,243,418) associated with
performance based convertible securities issued to advisors, shareholders and employees.
Earnings Before Interest, Tax, Depreciation, and Amortisation (and excluding non-cash share-
based payments) (“EBITDA”) for the year ended 30 June 2018 was a loss of $2,322,710 (30 June
2017: $5,822,425).
Strong growth in Product and Service revenue saw the Group’s revenue for the year ended 30 June
2018 grow by 41% from $1,654,395 to $2,324,880.
Revenue
($'000s)
$1,654
FY17
4
$2,325
FY18
$748
FY16
Rent.com.au Limited
Director’s Report
30 June 2018
The Product and Service revenue growth of 115% from $521,536 to $1,118,957 was mainly driven
by continued strong uptake of the Renter Resume feature and an increasing range of applicable
products and services offered to renters. As at 30 June 2018 over 300,000 renters had created a
Renter Resume, continuing to grow at a rate of over 500 new Renter Resumes per day. New
products and services aimed at renters during their tenancy rather than merely while searching
for property were launched during the year, including the acquisition of RentPay in the final part
of the year.
Growing awareness of rent.com.au resulted in advertising revenue growing by a further 32% over
the prior year despite maintaining consistent levels of unique visitors relative to the prior year.
This growing awareness also enabled the Group to reduce its marketing expenditure by a further
39% compared with the prior year.
EBITDA
($'000s)
($2,323)
($7,218)
($5,822)
FY16
FY17
FY18
Despite focussing on revenue, the Group has continued to maintain an efficient cost base.
Overhead costs were reduced by a further 41% compared with the prior year.
Significant changes in the state of affairs
On 1 May 2018 the Company successfully completed the placement (“Placement”) of 29,975,714
of shares to both new and existing shareholders under its capacity under ASX Listing Rule 7.1 to
raise $2,308,129.98 (before costs). In addition, the Company completed a Share Purchase Plan
(“SPP”) on 22 May 2018, raising a further $500,000 (before costs) from existing shareholders,
issuing a further 6,493,498 shares.
Proceeds of both the Placement and SPP were and will be used to fund:
• The acquisition of the rental payments system, RentPay, from MYOB;
• Development of additional new products – e.g. landlord portal, adjacent websites; and
• Marketing of new products.
Dividends
No dividend has been paid or recommended by the Directors since the commencement of the
financial period.
5
Rent.com.au Limited
Director’s Report
30 June 2018
Matters Subsequent to the end of the Financial Year
No other matters or circumstances have arisen since the end of the financial period which
significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent financial years.
Likely Developments and Expected Results
The Group remains focussed on its short-term goal of cashflow break even, however it is also
expanding its product and service offerings deeper into the tenancy period as well as across
adjacent websites.
The Group expects that these additional activities will see it achieve its cashflow break even goal
in the short term while also setting the Group on the course to greater profitability in the future.
Financial Position
The net assets of the Group have increased from $3,592,578 at 30 June 2017 to $3,619,688 at 30
June 2018. Cash reserves decreased from $3,254,380 at 30 June 2017 to $2,289,603 at 30 June
2018.
Information on Directors
Dr. Garry Garside
– Chairman (Non-Executive), appointed 15 June 2015
Age
Qualifications
Experience
– 61
– MBA (UWA)
– Dr. Garside has extensive corporate experience,
successfully establishing and operated a variety of
significant businesses.
He
currently manages an emerging property
development company and chairs a range of unlisted
investment syndicates and companies.
Special responsibilities
– Chairman
Member of the Audit & Risk Committee
Member of the Nomination & Remuneration Committee.
Interest in shares & options held in
Rent.com.au Limited
– 5,582,995 Ordinary shares (indirect)
111,413 Ordinary shares
581,382 Performance shares (indirect)
950,000 Employee options
222,826 Performance rights
Directorships held in other listed
entities
– None
Mr. Sam McDonagh
– Director (Non-Executive), appointed 15 June 2015
Age
Qualifications
– 47
– Chartered Accountant
6
Rent.com.au Limited
Director’s Report
30 June 2018
Experience
– Mr. McDonagh has over 20 years’ experience in senior
management roles at companies including General
Manager of eBay in Southeast Asia and Chief Sales and
Marketing Officer for iiNet Limited. Mr. McDonagh and is
currently the Country Manager of Airbnb Australia and
New Zealand
Special responsibilities
Interest in shares & options held in
Rent.com.au Limited
– Member of the Audit & Risk Committee.
– 818,237 Ordinary shares
37,606 Performance shares
1,600,000 Employee options
375,284 Performance rights
Directorships held in other listed
entities
– None
Mr. Philip Warren
– Director (Non-Executive), appointed 18 September 2014
Age
Qualifications
Experience
– 44
– B. Com, Chartered Accountant
– Mr. Warren is the Managing Director of Grange
Consulting Group Pty Ltd. He has over 20 years of
experience in finance and corporate roles in Australia and
Europe, establishing a number of ASX listed companies
during that time.
Special responsibilities
– Chair of the Audit & Risk Committee
Member of the Nomination & Remuneration Committee
Interest in shares & options held in
Rent.com.au Limited
– 222,321 Ordinary shares (indirect)
1,012,500 options (indirect)
Directorships held in other listed
entities
Mr. John Wood
Age
Qualifications
Experience
– Non-Executive Director of Cassini Resources Limited,
Jupiter Energy Limited and Family Zone Cyber Safety
Limited
– Director (Non-Executive) appointed 15 June 2015
– 52
– N/A
– Mr. Wood was most recently the Managing Director of
National Lifestyle Villages (NLV) a company he founded in
1999. He was awarded the prestigious Telstra WA
Business of the Year award in 2007 and the Rothwell’s
Young Entrepreneur Award and the West Australian
Young Achievers Award.
Special responsibilities
– Chair of the Nomination & Remuneration Committee.
Interest in shares & options held in
Rent.com.au Limited
– 933,764 Ordinary shares
11,809,321 Ordinary shares (indirect)
6,068,082 Performance shares (indirect)
500,000 Employee options
117,276 Performance rights
Directorships held in other listed
entities
– None
7
Rent.com.au Limited
Director’s Report
30 June 2018
Directors’ Meetings
The number of directors’ meetings held and the number of meetings attended by each of the
directors of the Group for the time the director held office for the period ended 30 June 2018:
Board Meetings
Audit & Risk
Management
Committee Meetings
Nomination &
Remuneration
Committee Meetings
11
10
10
10
2
2
2
2
2
2
n/a
n/a
1
n/a
1
1
1
n/a
1
1
Garry Garside
Sam McDonagh
Philip Warren
John Wood
11
11
11
11
A – meetings eligible to attend
B – meetings attended
Company Secretaries
Jan Ferreira was appointed as company secretary from 15 June 2015. Jan is a CPA (Australia) and
has a Certificate in Governance Practice from the Governance Institute of Australia. He has more
than 13 years’ experience within ASX listed businesses, having previously been Chief Financial
Officer and Company Secretary at ThinkSmart Limited and a Financial Controller at Alinta Limited.
Steven Wood was appointed as a company secretary effective 18 September 2014. Steven
specialises in corporate advisory, company secretarial and financial management services. Steven
is a Chartered Accountant and has previously been involved in various private and seed capital
raisings as well as successful ASX listings, whilst also providing company secretarial and financial
management services to both ASX and unlisted public and private companies.
Performance Shares
The terms and conditions of the Performance shares have been previously outlined in the
Company’s prospectus dated 7 April 2015. Please refer to section 6.9 Capital Structure of the
Prospectus dated 7 April 2015 for any additional information that is not outlined in this report.
Upon the achievement of the applicable performance milestone, the Performance Shares convert
into Ordinary Shares at a ratio of 1 Ordinary Share for every 1 Performance Share held. No
payment is necessary to exercise a Performance Share. As at the date of this report, Performance
Shares on issue are as follows:
Class
Date Granted
Expiry Date
B
C
17 June 2015
14 days after the release of the audited financial reports for
period ended 31 December 2018
17 June 2015
14 days after the release of the audited financial reports for
period ended 31 December 2019
Number
8,160,771
8,160,771
The vesting conditions of the two classes of performance shares on issue are outlined below:
•
Class B – will convert on achievement of greater than $10,000,000 in revenue by the Group in any 12 month period
on or before 31 December 2018.
Class C – will convert on achievement of greater than $3,000,000 EBITDA by the Group in any 12 month period on or
before 31 December 2019.
•
8
Rent.com.au Limited
Director’s Report
30 June 2018
Performance Rights
Upon the achievement of the applicable performance milestone, the Performance Rights convert
into Ordinary Shares at a ratio of 1 Ordinary Share for every 1 Performance Right held. No
payment is necessary to exercise a Performance Right. As at the date of this report, Performance
Rights on issue are as follows:
Tranche Date Granted
Expiry Date
Number
2
3
5
5
5
5
6
6
6
6
17 June 2015
17 June 2015
17 June 2015
14 days after the release of the audited financial reports for
the period ended 31 December 2018.
14 days after the release of the audited financial reports for
the period ended 31 December 2019.
14 days after the release of the audited financial reports for
the period ended 31 December 2018.
13 August 2015
14 days after the release of the audited financial reports for
the period ended 31 December 2018.
22 February 2016
14 days after the release of the audited financial reports for
the period ended 31 December 2018.
117,277
117,277
678,443
46,667
80,000
9 September 2016
14 days after the release of the audited financial reports for
the period ended 31 December 2018.
3,283,741
17 June 2015
14 days after the release of the audited financial reports for
the period ended 31 December 2019.
13 August 2015
14 days after the release of the audited financial reports for
the period ended 31 December 2019.
22 February 2016
14 days after the release of the audited financial reports for
the period ended 31 December 2019.
678,443
46,666
80,000
9 September 2016
14 days after the release of the audited financial reports for
the period ended 31 December 2019.
3,283,741
The vesting conditions of the various tranches of performance shares on issue are outlined below:
•
Tranche 2 - will vest upon achievement of greater than $10,000,000 in revenue by the Group in any 12 month period
on or before 31 December 2018.
Tranche 3 – will vest upon achievement of greater than $3,000,000 EBITDA by the Group in any 12 month period on
or before 31 December 2019.
Tranche 4 – will vest upon achievement of greater than 500,000 unique visitors to the website www.rent.com.au in
each of 3 consecutive months, on or before 31 December 2018.
Tranche 5 – will vest upon achievement of greater than $10,000,000 in revenue by the Group in any 12 month period
on or before 31 December 2018.
Tranche 6 – will vest upon achievement of greater than $3,000,000 EBITDA by the Group in any 12 month period on
or before 31 December 2019.
•
•
•
•
Shares under Option
Unissued ordinary shares of Rent.com.au Limited under option as at 30 June 2018 are as follows:
Date Options Granted
Expiry Date
Tranche
Issue Price of Share Number Under Option
17 June 2015
17 June 2020
Advisor
17 June 2015
17 June 2020
1,2
17 June 2015
17 June 2020
17 June 2015
17 June 2020
17 June 2015
17 June 2020
17 June 2015
17 June 2020
3
4
5
6
9
$0.30
$0.25
$0.25
$0.30
$0.30
$0.30
7,000,0001
14,500,0002
4,500,0003
4,728,3342
4,728,3342
4,728,3323
Rent.com.au Limited
Director’s Report
30 June 2018
13 August 2015
13 August 2020
13 August 2015
13 August 2020
13 August 2015
13 August 2020
22 February 2016
22 February 2021
22 February 2016
22 February 2021
22 February 2016
22 February 2021
9 September 2016
9 September 2021
9 September 2016
9 September 2021
9 September 2016
9 September 2021
Total
4
5
6
4
5
6
7
8
9
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
$0.25
$0.35
$0.50
133,3332
133,3332
133,3343
610,0004
610,0004
610,0004
1,250,0002
1,250,0002
1,250,0002
46,165,000
1. Advisor options have vested and are exercisable.
2. Employee options have vested and are exercisable.
3. Employee options vest upon the VWAP of shares trading at greater than $0.60 over 20 consecutive trading days.
4. Employee options vest upon:
•
•
•
Tranche 4 – vest upon the VWAP of shares trading at greater than $0.30 over 20 consecutive trading days.
Tranche 5 – vest upon the VWAP of shares trading at greater than $0.40 over 20 consecutive trading days.
Tranche 6 – vest upon the VWAP of shares trading at greater than $0.60 over 20 consecutive trading days.
Shares issued on the exercise of options
There were no ordinary shares of Rent.com.au Limited issued during the year ended 30 June 2018,
and up to the date of this report, on the exercise of options.
Indemnification of officers
During the financial period, the Group entered into a policy to indemnify directors and officers
against certain liabilities incurred as a director or officer, including costs and expenses associated
in successfully defending legal proceedings. The contract of insurance prohibits disclosure of the
nature of the liability and the amount of the premium. The Group has not otherwise, during or
since the financial year, indemnified or agreed to indemnify an officer or an auditor of the Group
or of any related body corporate against a liability incurred as such an officer or auditor.
Proceedings on behalf of the Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group
is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those
proceedings.
Officers of the Group who are former partners of RSM Australia Partners
There are no officers of the Group who are former partners of RSM Australia Partners.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act
2001.
Non-Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided by the
auditor are outlined in Note 27 to the financial statements.
10
Rent.com.au Limited
Director’s Report
30 June 2018
The Board is satisfied that the provision of non-audit services during the financial year, by the
auditor (or by another person or firm on the auditor’s behalf), is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001
The Board is of the opinion that the services as disclosed in note 27 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.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the
Corporations Act 2001 is set out immediately after this directors' report.
Audited Remuneration Report
The remuneration report details the key management personnel remuneration arrangements for
the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Share-based compensation
D. Additional information
A. Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The Board has elected to establish a
Nomination and Remuneration Committee in accordance with its Corporate Governance Policy.
The Nomination and Remuneration Committee is responsible for determining and reviewing
remuneration arrangements for its directors and executives and for developing and facilitating a
process for Board and Director evaluation.
The key management personnel of the Group consisted of the following directors:
• Dr. Garry Garside (Non-Executive Chairman)
• Mr. John Wood (Non-Executive Director)
• Mr. Sam McDonagh (Non-Executive Director)
• Mr. Philip Warren (Non-Executive Director)
And the following executives:
• Mr Greg Bader (Chief Executive Officer)
• Mr. Jan Ferreira (Chief Financial Officer and Company Secretary)
11
Rent.com.au Limited
Director’s Report
30 June 2018
In accordance with best practice corporate governance, the structure of non-executive director
and executive remuneration is separate.
Non-Executive Director Remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the
responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed
annually by the Nomination and Remuneration Committee.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which
is periodically recommended for approval by shareholders. The maximum currently stands at
$350,000 per annum and was approved at a previous annual general meeting.
Executive Remuneration
The executive remuneration framework has the following components:
▪
▪
▪
base pay and benefits, including superannuation;
short-term performance incentives; and
long-term incentives provided as share-based payments.
The combination of these comprises the executive’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are
reviewed annually by the Nomination and Remuneration Committee based on individual and
business unit performance, the overall performance of the Group and comparable market
remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for
example motor vehicle benefits) where it does not create any additional costs to the Group and
provides additional value to the executive.
The short-term incentives ('STI') program is designed to align the targets of the Group with the
performance hurdles of executives. STI payments are granted to executives based on specific
annual targets and key performance indicators ('KPI's') being achieved.
Long term incentives have been provided to directors and employees through the issue of
performance shares, employee options and performance rights pursuant to the Long-Term
Incentive Plan (‘LTIP’) approved by shareholders at the May 2015 Annual General Meeting.
Voting and comments made at the Group's 2017 Annual General Meeting ('AGM')
At the 2017 AGM, 99.6% of the eligible votes received supported the adoption of the
remuneration report for the year ended 30 June 2017. The Group did not receive any specific
feedback at the AGM regarding its remuneration practices.
B. Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the
following tables.
12
Rent.com.au Limited
Director’s Report
30 June 2018
Details of remuneration for the year ended 30 June 2018
KMP
Garry Garside
Sam McDonagh
Phillip Warren
John Wood
Greg Bader
Jan Ferreira
Total
Base Fee
$
Super-
annuation
$
Long Service
Leave
$
Performance
Rights
$
Options1
$
Total
$
29,792
21,667
21,667
21,667
222,308
215,769
532,870
-
-
-
-
21,119
20,498
41,617
-
-
-
-
-
-
-
126
211
-
66
1,835
6,523
-
-
31,753
28,401
21,667
21,733
2,901
103,029
349,357
119
3,669
240,055
3,423
115,056
692,966
1. Options include both share based payments and advisor options.
Details of remuneration for the year ended 30 June 2017
KMP
Garry Garside
Sam McDonagh
Phillip Warren
John Wood
Mark Woschnak2
Greg Bader
Jan Ferreira
Maya William3
Scott Waters3
Base Fee
$
Super-
annuation
$
Long Service
Leave
$
Performance
Rights
$
Options1
$
Total
$
55,000
40,000
40,000
40,000
255,913
232,692
225,000
23,562
21,205
-
-
-
-
28,602
22,106
21,375
2,238
2,015
-
-
-
-
22,594
38,053
-
43,557
21,749
-
11,891
21,808
121,151
99,802
40,000
73,699
45,161
656,748
921,032
1,907,456
-
-
-
-
9,176
24,426
144
144
83,960
10,874
801
801
347,934
281,675
26,745
24,165
Total
933,372
76,336
45,161
763,176
1,104,582
2,922,627
1. Options include both share based payments and advisor options.
2. Mr Woschnak resigned as Managing Director on 22 July 2016.
3. Ms William and Mr Waters ceased to be a KMP upon restructure of the business on 12 August 2016.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
2018
2017
2018
2017
2018
2017
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
Garry Garside
Sam McDonagh
Phillip Warren
John Wood
94%
76%
100%
100%
Other Key Management Personnel:
Greg Bader
Jan Ferreira
70%
98%
54%
57%
100%
61%
73%
88%
-
-
-
-
-
-
13
-
-
-
-
-
-
6%
24%
0%
0%
30%
2%
46%
43%
0%
39%
27%
12%
Rent.com.au Limited
Director’s Report
30 June 2018
Service Agreements
Remuneration and other terms of employment for the Chief Executive Officer and other Key
Management Personnel are formalised in employment contracts. The major provisions of the
agreements relating to remuneration are set out below:
Greg Bader, Chief Executive Officer (commenced 23 August 2016)
• Mr. Bader’s Executive Services Agreement for the position of Chief Executive Officer has no
fixed period and may be terminated by provision of six months’ prior written notice by either
party.
• Mr. Bader receives a base salary of $220,000 per annum, plus statutory superannuation
entitlements.
• Mr. Bader is eligible to participate in the Long-Term Incentive Plan and has been issued
3,750,000 Employee Options and 6,567,482 Performance Rights.
• Mr. Bader will also be eligible to participate in a Short-Term Incentive scheme which the Group
is proposing to implement. The Board will determine a percentage of base salary that may be
payable to Mr. Bader on the achievement of key performance indicators to be set having
regard to the financial position and performance of the Group.
Jan Ferreira, Chief Financial Officer and Company Secretary (commenced 28 April 2014)
• Mr. Ferreira’s Executive Services Agreement for the position of Chief Financial Officer and
Company Secretary has no fixed period and may be terminated by provision of six months’
prior written notice by either party.
• Mr. Ferreira receives a base salary of $215,000 per annum, plus statutory superannuation
entitlements.
• Mr. Ferreira is eligible to participate in the Long-Term Incentive Plan and has been issued
900,000 Employee Options and 211,098 Performance Rights.
• Mr. Ferreira will also be eligible to participate in a Short-Term Incentive scheme which the
Group is proposing to implement. The Board will determine a percentage of base salary that
may be payable to Mr. Ferreira on the achievement of key performance indicators to be set
having regard to the financial position and performance of the Group.
The non-executive directors are subject to service agreements which cover relevant provisions
including term, fees, independence, re-election and the role requirements.
C. Share based compensation
Other than outlined above, Rent.com.au Limited paid no share-based compensation to KMP
during the year and there were no new performance rights or options granted to KMP for the year
ended 30 June 2018.
D. Additional Information
Financial Performance Information
The earnings of the Group for the five years to 30 June 2018 are summarised below:
2018
$
2017
$
2016
$
2015
$
2014*
$
Sales revenue
2,324,880
1,654,395
748,495
171,197
454,289
EBITDA**
(2,322,710)
(5,822,425)
(7,216,670)
(927,249)
(1,442,099)
Loss after income tax
(2,822,539)
(8,513,631)
(12,820,585)
(3,655,771)
(1,647,509)
14
Rent.com.au Limited
Director’s Report
30 June 2018
* relates to Select Exploration Ltd prior to 100% acquisition of Rent.com.au (Operations) Pty Ltd and renaming to
Rent.com.au Ltd.
** excluding non-cash share-based payments, R&D income and loss on disposal of asset.
† The 2015 financial year was an abridged, 6-month financial year.
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
2018
0.086
-
2017
0.065
-
2016
0.160
-
2015
0.180
-
2014*
0.010
-
Basic earnings per share (cents per share)
(1.38)
(4.72)
(12.42)
(6.62)
(3.75)
* relates to Select Exploration Ltd prior to 100% acquisition of Rent.com.au (Operations) Pty Ltd and renaming to
Rent.com.au Ltd.
Equity instruments held by Key Management Personnel
1. Ordinary Shares
The number of ordinary shares in Rent.com.au Limited held by each KMP of the Group during the
year ended 30 June 2018 is as follows:
30 June 2018
Garry Garside
Sam McDonagh
Philip Warren
John Wood
Greg Bader
Jan Ferreira
Total
Balance at
beginning of the
year
Granted as
remuneration
during the year
Issued on
exercise of
options during
the year
Other changes
during the year
Balance at
30 June 2018
4,499,603
818,237
157,386
13,361,697
5,686,693
105,549
24,629,165
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,194,805
5,694,408
-
64,935
(618,612)*
818,237
222,321
12,743,085
4,481,868
10,168,561
628,978
734,527
5,751,974
30,381,139
* Mr Wood’s holding decreased because of the disaggregation of a trust of which he was director. His ultimate
shareholding increased by 1,753,089 shares during the financial year.
2. Options
The number of options over ordinary shares in Rent.com.au Limited held by each KMP of the
Group during the year ended 30 June 2018 is as follows:
30 June 2018
Garry Garside
Sam McDonagh
Philip Warren
John Wood
Greg Bader
Jan Ferreira
Total
Balance at start
of the year
Granted as
remuneration
during the year
Exercised
during the year
Other changes
during the year
Balance at 30
June 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
950,000
1,600,000
1,012,500
500,000
3,750,000
900,000
8,712,500
950,000
1,600,000
1,012,500
500,000
3,750,000
900,000
8,712,500
-
-
-
-
-
-
-
15
Rent.com.au Limited
Director’s Report
30 June 2018
3. Performance Rights
The number of performance rights in Rent.com.au Limited held by each KMP of the Group during
the year ended 30 June 2018 is as follows:
30 June 2018
Balance at
start of the
year
Received as
Remuneration
Performance
Rights
Converted
Other
Movements
Balance at
30 June
2018
Vested and
Exercisable
at 30 June
2018
Unvested
at 30 June
2018
Garry Garside
222,826
Sam McDonagh
375,284
John Wood
117,276
Greg Bader
6,567,482
Jan Ferreira
211,098
Total
7,493,966
4. Performance Shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
222,826
375,284
117,276
6,567,482
211,098
7,493,966
-
-
-
-
-
-
222,826
375,284
117,276
6,567,482
211,098
7,493,966
Performance shares were
issued as consideration to the shareholders of Rent.com.au
(Operations) Pty Ltd who were shareholders prior to the acquisition by Select Exploration Limited
(renamed Rent.com.au Limited). The number of performance shares in Rent.com.au Limited held
by each KMP of the Group during the year ended 30 June 2018 is as follows:
30 June 2018
Balance at
start of
the year
Received as
Remuneration
Performance
Shares
Converted
Other
Movements
Balance at
30 June
2018
Vested and
Exercisable
at 30 June
2018
Unvested at
30 June 2018
Garry Garside
581,382
Sam McDonagh
37,606
John Wood
6,068,082
Jan Ferreira
9,077
Total
6,696,147
Other KMP Transactions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
581,382
37,606
6,068,082
9,077
6,696,147
-
-
-
-
-
581,382
37,606
6,068,082
9,077
6,696,147
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated. The following
transactions occurred with related parties:
Transactions:
Office rent and outgoings – Watersun Property Pty Ltd[1]
Cleaning expenses – Servco Pty Ltd[1]
[1] Garry Garside is a director and shareholder of both Watersun Property Pty Ltd & Servco Pty Ltd
2018
$
68,786
5,438
As at 30 June 2018, there was an outstanding balance of $8,135 owing to Watersun Property Pty
Ltd and $660 to Servco Pty Ltd. All transactions were made on normal commercial terms and
conditions and at market rates.
This concludes the remuneration report, which has been audited.
16
Rent.com.au Limited
Director’s Report
30 June 2018
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of
the Corporations Act 2001.
On behalf of the directors
_________________________
Dr. Garry Garside
Non-executive Chairman
Perth, 17 August 2018
17
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Rent.com.au Limited for the year ended 30 June 2018, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 17 August 2018
TUTU PHONG
Partner
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
RENT.COM.AU LIMITED
Opinion
We have audited the financial report of Rent.com.au Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed this matter
Recognition of Revenue
Refer to Note 1 and 3 in the financial statements
The Group earns revenue through its role as an
operator of a real estate website focusing on the rental
property market. The major revenue streams are:
- Fees from agents and landlords;
- Rental products revenue;
- Advertising sales; and
- Other revenue.
Revenue was considered a key audit matter because
it is the most significant account balance in the
consolidated statement of profit or loss and other
comprehensive income and the process of revenue
recognition is complex due to multiple revenue
streams for services rendered. Furthermore, the
revenue transactions are high volume and of low
value. The revenue recognition of each revenue
stream is subject to management judgements. These
include:
• Determination of the Group’s accounting policy in
relation to each revenue stream; and
• Determining the amount of revenue that can be
measured reliably and whether it is probable that
the
the economic benefits associated with
transaction will flow to the Group.
Other Information
•
the Group’s
Our audit procedures in relation to revenue recognition
included:
• Obtained a detailed understanding of each of the
revenue streams and the process for calculating
and recording revenue;
revenue
Assessing whether
recognition policies were in compliance with
Australian Accounting Standards;
Performing substantive testing on each revenue
stream on a sample basis. The substantive
testing
to
approved pricing used by the Group, agreeing
the receipt of cash to bank statements and
agreeing the delivery of services to source
documentation;
included agreeing
transactions
•
• Reviewing the deferred revenue calculation for
agent listing fees received in advance by the
Group; and
• Review of sales transactions before and after
year-end to ensure that revenue is recognised in
the correct financial period.
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2018, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Rent.com.au Limited, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 17 August 2018
TUTU PHONG
Partner
Rent.com.au Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
Note
Consolidated
Revenue
Other income
Total Income
3
4
Administration charges
Consulting & business development costs
Depreciation and amortisation expense
8,9
2018
$
2,324,880
146,936
2,471,816
(450,899)
(17,355)
(441,818)
2017
$
1,654,395
71,377
1,725,772
(843,565)
(74,787)
(447,433)
Employee benefit expenses
Finance costs
Information technology costs
Share based payment expenses
Sales and marketing expenses
Others
(2,303,135)
(3,748,562)
(3,288)
(345,920)
(191,760)
(1,165,984)
(374,197)
(6,731)
(390,401)
(2,243,418)
(2,287,882)
(196,624)
15
Loss before income tax expense
(2,822,540)
(8,513,631)
Income tax expense
5
-
-
Loss after income tax expense for the year
(2,822,540)
(8,513,631)
Other comprehensive income
-
-
Total comprehensive loss for the year attributable
to the owners of Rent.com.au Limited
(2,822,540)
(8,513,631)
Earnings Per Share
Cents
Cents
Basic and diluted (loss) per share
17
(1.38)
(4.72)
The above consolidated statement of profit or loss and other comprehensive income should be
read in conjunction with the accompanying notes.
22
Rent.com.au Limited
Consolidated Statement of Financial Position
As at 30 June 2018
Note
Consolidated
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2018
$
2,289,603
434,935
2,724,538
22,149
1,656,648
1,678,797
2017
$
3,254,380
246,049
3,500,429
72,028
993,186
1,065,214
4,403,335
4,565,643
517,845
21,606
244,196
783,647
-
-
675,685
48,226
227,548
951,459
21,606
21,606
783,647
973,065
3,619,688
3,592,578
34,912,935
6,426,905
32,239,412
6,250,779
(37,720,152)
(34,897,613)
3,619,688
3,592,578
6
7
8
9
10
11
12
11
13
14
16
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
23
Rent.com.au Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Consolidated
Issued
capital
$
Share based
payment
reserves
$
Accumulated
loss
Total
equity
$
$
Balance at 1 July 2017
32,239,412
6,250,779
(34,897,613)
3,592,578
Loss after income tax expense for
the year
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Shares issued
Share issue costs
Share based payments
-
-
-
-
(2,822,539)
(2,822,539)
(2,822,539)
(2,822,539)
2,808,130
(150,240)
15,633
-
-
176,126
-
-
-
2,808,130
(150,240)
191,759
Balance at 30 June 2018
34,912,935
6,426,905
(37,720,152)
3,619,688
Consolidated
Issued
capital
$
Share based
payment
reserves
$
Accumulated
loss
Total
equity
$
$
Balance at 1 July 2016
26,777,938
4,823,253
(26,383,982)
5,217,209
Loss after income tax expense for
the year
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Share issues
Share issue costs
Share based payments
-
-
-
-
(8,513,631)
(8,513,631)
(8,513,631)
(8,513,631)
5,835,646
(374,172)
-
-
-
1,427,526
-
-
-
5,835,646
(374,172)
1,427,526
Balance at 30 June 2017
32,239,412
6,250,779
(34,897,613)
3,592,578
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
24
Rent.com.au Limited
Consolidated Statement of Cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Note
Consolidated
2018
$
2017
$
Receipts from customers (inclusive of GST)
2,389,851
1,736,000
Payments to suppliers and employees (inclusive of GST)
(5,042,640)
(8,557,827)
Other income
Interest received
Interest and other finance costs paid
(2,652,789)
(6,821,827)
124,361
12,575
(3,288)
25,039
31,339
(6,731)
Net cash used in operating activities
25
(2,519,141)
(6,772,180)
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets (net)
Proceeds from disposal of investment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash provided by financing activities
(12,169)
(19,016)
(1,043,231)
(655,272)
100
-
(1,055,300)
(674,288)
2,808,130
5,019,754
(150,240)
(364,052)
-
(48,226)
9,721
(44,784)
2,609,664
4,620,639
Net decrease in cash and cash equivalents
(964,777)
(2,825,829)
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at the end of the financial
year
3,254,380
6,080,209
2,289,603
3,254,380
The above consolidated statement of cash flows should be read in conjunction with the
accompanying notes.
25
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
This financial report of Rent.com.au Limited (‘the Company’) and its controlled entities (‘the Group’)
for the year ended 30 June 2018 was authorised for issue in accordance with a resolution of the
Directors on 17 August 2018.
Rent.com.au Limited is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange.
Note 1. Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial statements are set
out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory
for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory
have not been early adopted.
Basis of Preparation
These general-purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These
financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for,
where applicable, the revaluation of available-for-sale financial assets, financial assets and
liabilities at fair value through profit or loss, investment properties, certain classes of property,
plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the
Group's accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements, are disclosed
in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of
the Group only. Supplementary information about the parent entity is disclosed within these
financial statements.
The presentation currency is Australian dollars.
26
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Rent.com.au Limited as at 30 June 2018 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power to direct the activities of the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
Group are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A
change in ownership interest, without the loss of control, is accounted for as an equity transaction,
where the difference between the consideration transferred and the book value of the share of
the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the
statement of profit or loss and other comprehensive income, statement of financial position and
statement of changes in equity of the Group. Losses incurred by the Group are attributed to the
non-controlling interest in full, even if that results in a deficit balance.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary together with any cumulative translation
differences recognised in equity. The Group recognises the fair value of the consideration received
and the fair value of any investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information
presented is on the same basis as the internal reports provided to the Board (the Chief Operating
Decision Makers ('CODM') of the business). The Board is responsible for the allocation of resources
to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Rent.com.au Limited's
functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at financial year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
27
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Revenue Recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and
the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received or receivable.
Subscription services
Subscription revenues are recognised on a straight-line basis over the contract period.
Listing fees
Listing fees are recognised when the Group has an enforceable claim against the customer arising
from a property listing advertisement. Listing fees arise either from the completion of the online
rental application process (renter placement/SmartPlan), or from the customer purchasing one of
the Group’s paid for advertising products.
Products and services revenue
Products and services revenue is recognised at the point of sale or when the service is provided.
Amounts disclosed are net of returns and discounts.
Advertising revenue
Revenues from site display advertising are recognised when the advertisements are displayed.
Where the Group has utilised the services of an external sales agency to sell advertising services
on behalf of the Group, the revenues and the sales commissions paid to the sales agency are
recorded separately. Revenues from referrals and database advertising are recognised when the
obligations under the relevant contract are fulfilled.
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.
All revenue is stated net of the amount of goods and services tax (GST).
Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income
based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred
tax assets and liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates
expected to be applied when the assets are recovered or liabilities are settled, based on those tax
rates that are enacted or substantively enacted, except for:
28
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Income Tax (continued)
• When the deferred income tax asset or liability arises from the initial recognition of
goodwill or an asset or liability in a transaction that is not a business combination and that,
at the time of the transaction, affects neither the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries,
associates or joint ventures, and the timing of the reversal can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses
only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each
reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer
probable that future taxable profits will be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are recognised to the extent that it is probable that
there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax
liabilities; and they relate to the same taxable authority on either the same taxable entity or
different taxable entities which intend to settle simultaneously.
Rent.com.au Limited and its wholly-owned Australian subsidiaries have formed an income tax
Group under the tax consolidation regime. The head entity and each subsidiary in the tax Group
continue to account for their own current and deferred tax amounts. The tax Group has applied
the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to
allocate to members of the tax Group.
In addition to its own current and deferred tax amounts, the head entity also recognises the
current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and
unused tax credits assumed from each subsidiary in the tax Group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts receivable from or payable to other entities in the tax consolidated group.
The tax funding arrangement ensures that the intercompany charge equals the current tax liability
or benefit of each tax Group member, resulting in neither a contribution by the head entity to the
subsidiaries nor a distribution by the subsidiaries to the head entity.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and
non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the entity's normal operating cycle; it is held primarily for the purpose of trading; it
is expected to be realised within 12 months after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a liability for at least 12
months after the reporting period. All other assets are classified as non-current.
29
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Income Tax (continued)
A liability is classified as current when: it is either expected to be settled in the entity's normal
operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12
months after the reporting period; or there is no unconditional right to defer the settlement of the
liability for at least 12 months after the reporting period. All other liabilities are classified as non-
current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. For the statement of cash flows presentation purposes, cash and cash
equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities
on the statement of financial position.
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 provision for impairment. Trade receivables are
generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectable are written off by reducing the carrying amount directly. A provision for impairment
of trade receivables is raised when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 90 days overdue) are
considered indicators that the trade receivable may be impaired. The amount of the impairment
allowance is the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Cash flows relating
to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Associates
Associates are entities over which the Group has significant influence but not control or joint
control. Investments in associates are accounted for using the equity method. Under the equity
method, the share of the profits or losses of the associate is recognised in profit or loss and the
share of the movements in equity is recognised in other comprehensive income. Investments in
associates are carried in the statement of financial position at cost plus post-acquisition changes
in the Group's share of net assets of the associate. Goodwill relating to the associate is included
in the carrying amount of the investment and is neither amortised nor individually tested for
impairment. Dividends received or receivable from associates reduce the carrying amount of the
investment.
30
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Associates (continued)
When the Group's share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured long-term receivables, the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the associate.
The Group discontinues the use of the equity method upon the loss of significant influence over
the associate and recognises any retained investment at its fair value. Any difference between the
associate's carrying amount, fair value of the retained investment and proceeds from disposal is
recognised in profit or loss.
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and
equipment over their expected useful lives as follows:
• Computer equipment
•
Furniture and fittings
2-4 years
4 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated
useful life of the assets, whichever is shorter.
An item of plant and equipment is derecognised upon disposal or when there is no future
economic benefit to the Group. Gains and losses between the carrying amount and the disposal
proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of
the arrangement and requires an assessment of whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the
lessee substantially all the risks and benefits incidental to the ownership of leased assets, and
operating leases, under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the
leased assets, or if lower, the present value of minimum lease payments. Lease payments are
allocated between the principal component of the lease liability and the finance costs, so as to
achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over
the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the
Group will obtain ownership at the end of the lease term.
31
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Leases (continued)
Operating lease payments, net of any incentives received from the lessor, are charged to profit or
loss on a straight-line basis over the term of the lease.
Intangible assets
IT development and software
Costs incurred in developing products or systems and costs incurred in acquiring software and
licenses that will contribute to future period financial benefits through revenue generation and/or
cost reduction are capitalised to software and systems.
These intangible assets have finite lives and are subject to amortisation on a straight-line basis.
The useful lives for these assets are as follows:
• Software
4 years
Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development
projects (relating to the design and testing of new or improved services) are recognised as
intangible assets when it is probable that the project will, after considering its commercial and
technical feasibility, be completed and generate future economic benefits and its costs can be
measured reliably. The expenditure capitalised comprises all directly attributable costs, including
costs of materials, services, direct labour and an appropriate proportion of direct overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset
in a subsequent period. Capitalised development costs are recorded as an intangible asset and
amortised from the point at which the asset is ready for use on a straight-line basis over its useful
life of 4 years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use.
The value-in-use is the present value of the estimated future cash flows relating to the asset using
a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a cash-generating
unit.
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of the financial year and which are unpaid. Due to their short-term nature they are measured at
amortised cost and are not discounted. The amounts are unsecured and are usually paid within
30 days of recognition.
32
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net
of transaction costs. They are subsequently measured at amortised cost using the effective
interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance
costs are expensed in the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a
result of a past event, it is probable the Group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. The amount recognised as a
provision is the best estimate of the consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties surrounding the obligation. If the
time value of money is material, provisions are discounted using a current pre-tax rate specific to
the liability. The increase in the provision resulting from the passage of time is recognised as a
finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service
leave expected to be settled wholly within 12 months of the reporting date are measured at the
amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months
of the reporting date are measured as the present value of expected future payments to be made
in respect of services provided by employees up to the reporting date using the projected unit
credit method.
Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields
at the reporting date on corporate bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which
they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to
employees in exchange for the rendering of services. Cash-settled transactions are awards of cash
for the exchange of services, where the amount of cash is determined by reference to the share
price.
33
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Employee benefits (continued)
Share-based payments (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using either the Binomial or Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Group receives the services that entitle the employees to receive
payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding
increase in equity over the vesting period. The cumulative charge to profit or loss is calculated
based on the grant date fair value of the award, the best estimate of the number of awards that
are likely to vest and the expired portion of the vesting period. The amount recognised in profit or
loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested,
determined by applying either the Binomial or Black-Scholes option pricing model, taking into
consideration the terms and conditions on which the award was granted. The cumulative charge
to profit or loss until settlement of the liability is calculated as follows:
• during the vesting period, the liability at each reporting date is the fair value of the award
•
at that date multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair
value of the liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled
transactions is the cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards
subject to market conditions are considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the
modification has not been made. An additional expense is recognised, over the remaining vesting
period, for any modification that increases the total fair value of the share-based compensation
benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition is not within the control of the Group or
employee and is not satisfied during the vesting period, any remaining expense for the award is
recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation,
and any remaining expense is recognised immediately. If a new replacement award is substituted
for the cancelled award, the cancelled and new award is treated as if they were a modification.
34
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming they act in their economic best interests. For non-financial assets,
the fair value measurement is based on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient data are available to measure fair value,
are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value
hierarchy that reflects the significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers between levels are determined
based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when
internal expertise is either not available or when the valuation is deemed to be significant. External
valuers are selected based on market knowledge and reputation. Where there is a significant
change in fair value of an asset or liability from one period to another, an analysis is undertaken,
which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion
of the Group.
Business Combinations
The acquisition method of accounting is used to account for business combinations regardless of
whether equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets
transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of
the acquiree and the amount of any non-controlling interest in the acquiree.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms,
35
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Business Combinations (continued)
economic conditions, the Group's operating or accounting policies and other pertinent conditions
in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held
equity interest in the acquiree at the acquisition-date fair value and the difference between the
fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date
fair value. Subsequent changes in the fair value of the contingent consideration classified as an
asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and
any non-controlling interest in the acquiree and the fair value of the consideration transferred and
the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is
recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after
a reassessment of the identification and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer
retrospectively adjusts the provisional amounts recognised and also recognises additional assets
or liabilities during the measurement period, based on new information obtained about the facts
and circumstances that existed at the acquisition-date. The measurement period ends on either
the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all
the information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the
Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
36
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Goods and Services Tax (continued)
Receivables and payables in the statement of financial position are shown inclusive of GST. The
net amount of GST recoverable from, or payable to, the tax authority is included in other
receivables or other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the tax authority, are
presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the tax authority.
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. They are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on the purpose of the acquisition and subsequent
reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the consolidated entity has transferred substantially
all the risks and rewards of ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are 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 (ii)
designated as such upon initial recognition, where they are managed on a fair value basis or to
eliminate or significantly reduce an accounting mismatch. Except for effective hedging
instruments, derivatives are also categorised as fair value through profit or loss. Fair value
movements are recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities,
that are either designated as available-for-sale or not classified as any other category. After initial
recognition, fair value movements are recognised in other comprehensive income through the
available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-
for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective
evidence that a financial asset or group of financial assets is impaired. Objective evidence includes
significant financial difficulty of the issuer or obligor; a breach of contract such as default or
delinquency in payments; the lender granting to a borrower concessions due to economic or legal
reasons that the lender would not otherwise do; it becomes probable that the borrower will enter
bankruptcy or other financial reorganisation; the disappearance of an active market for the
financial asset; or observable data indicating that there is a measurable decrease in estimated
future cash flows.
37
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
Investments and other financial assets (continued)
The amount of the impairment allowance for financial assets carried at cost is the difference
between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the current market rate of return for similar financial assets.
Available-for-sale financial assets are considered impaired when there has been a significant or
prolonged decline in value below initial cost. Subsequent increments in value are recognised in
other comprehensive income through the available-for-sale reserve.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet mandatory, have not been early adopted by the Group for the annual reporting
period ended 30 June 2018. The Group's assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost,
if it is held within a business model whose objective is to hold assets in order to collect contractual
cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the
entity makes an irrevocable election on initial recognition to present gains and losses on equity
instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial
liabilities, the standard requires the portion of the change in fair value that relates to the entity's
own credit risk to be presented in OCI (unless it would create an accounting mismatch). New
simpler hedge accounting requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity. New impairment requirements will
use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured
under a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. The
standard introduces additional new disclosures. The Group will adopt this standard from 1 July
2018 but the impact of its adoption is currently being assessed by the Group and yet to be
finalised.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. The core principle of the standard is
that an entity will recognise revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. The standard will require: contracts (either written, verbal
or implied) to be identified, together with the separate performance obligations within the
contract; determine the transaction price, adjusted for the time value of money excluding credit
38
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 1. Significant Accounting Policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted
(continued)
AASB 15 Revenue from Contracts with Customers (continued)
risk; allocation of the transaction price to the separate performance obligations on a basis of
relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is
satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue.
For goods, the performance obligation would be satisfied when the customer obtains control of
the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate measure of progress to determine how
much revenue should be recognised as the performance obligation is satisfied. Contracts with
customers will be presented in an entity's statement of financial position as a contract liability, a
contract asset, or a receivable, depending on the relationship between the entity's performance
and the customer's payment. Sufficient quantitative and qualitative disclosure is required to
enable users to understand the contracts with customers; the significant judgments made in
applying the guidance to those contracts; and any assets recognised from the costs to obtain or
fulfil a contract with a customer. The Group will adopt this standard from 1 July 2018 and the
impact is not expected to be material.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating
leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the
statement of financial position, measured as the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term leases of 12 months
or less and leases of low-value assets (such as personal computers and small office furniture)
where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or
lease payments are expensed to profit or loss as incurred. A liability corresponding to the
capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a
depreciation charge for the leased asset (included in operating costs) and an interest expense on
the recognised lease liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. 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 but
there is no material impact to the Group.
39
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions
on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is
determined by using either the Binomial or Black-Scholes model taking into account the terms and
conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share- based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact statement of profit
or loss and other comprehensive income and equity.
Note 3. Revenue
Consolidated
Fees from agents and landlords
Renter Products Revenue
Advertising Sales
Other revenue
2018
$
227,484
1,118,957
957,984
20,455
2017
$
406,881
521,536
725,978
-
2,324,880
1,654,395
Note 4. Other Income
Consolidated
R&D Incentive recognised in income
Interest income
Sundry income
2018
$
124,361
12,575
10,000
146,936
2017
$
25,038
31,339
15,000
71,377
40
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 5. Income Tax
a)
The components of tax expense comprise:
Current tax
Deferred tax
Total income tax expense
Consolidated
2018
$
2017
$
-
-
-
-
-
-
b)
The prima facie tax on loss from ordinary activities before income tax is reconciled to the
income tax as follows:
Prima facie tax payable on loss from ordinary
activities before income tax at 27.5% (30 June 2017:
27.5%)
(776,198)
(2,341,249)
Tax effect of:
Share based payments
Tax losses not recognised
Timing differences not recognised
Other
Total income tax expense
The applicable weighted average effective
tax rates were:
52,734
831,648
(69,574)
(38,610)
-
0%
616,940
1,900,790
(165,518)
(10,963)
-
0%
c) Deferred tax assets at 30 June 2018 not brought to account are:
Carried forward tax losses
Other
Total Deferred tax asset not recognised
4,577,672
252,481
4,830,153
3,866,010
390,588
4,256,598
The benefit for tax losses will only be obtained if:
•
•
•
the Group derives future assessable income of a nature and of an amount sufficient to
enable the benefit from the deductions for the losses to be realised; and
the losses are transferred to an eligible entity in the Group; and
the Group continues to comply with the conditions for deductibility imposed by tax
legislation; and
• no changes in tax legislation adversely affect the consolidated in realising the benefit from
the deduction for the losses.
41
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 6. Cash and Cash Equivalents
Cash at bank and in hand
Term Deposits
Total cash and cash equivalents
Consolidated
2018
$
1,289,603
1,000,000
2,289,603
2017
$
3,050,298
204,082*
3,254,380
* In 2017 Commonwealth Bank of Australia had a charge over this term deposit as security for a bank guarantee that it
had provided on behalf of Rent.com.au (Operations) Pty Ltd, to Amelia Correia Holdings the lessor under the lease for the
office at Level 2, 7 Ventnor Avenue West Perth. This had since been released since the lease termination.
Cash at bank and in hand earns interest at floating rates based on daily bank rates. The effective
interest rate on short-term bank deposits was 1.14% (2017:1.5%).
Reconciliation to cash and cash equivalents at the end of the financial year
Balances as above
2,289,603
3,254,380
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of
each class of cash and cash equivalents mentioned above.
Note 7. Trade and Other Receivables
Trade debtors
Less: Provision for impairment of receivables
Prepayments
GST receivable
Total trade and other receivables
Consolidated
2018
$
337,991
(13,706)
324,285
68,658
41,992
434,935
2017
$
171,317
(5,000)
166,317
70,043
9,689
246,049
Impairment of receivables
The Group has recognised a loss of $13,706 (2017: $5,000) in profit or loss in respect of impairment
of receivables for the year ended 30 June 2018.
The ageing of the impaired receivables provided for above are as follows:
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
42
Consolidated
2018
$
-
7,106
6,600
13,706
2017
$
-
-
5,000
5,000
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 7. Trade and Other Receivables (continued)
Movement in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing Balance
Consolidated
2018
$
5,000
13,706
(5,000)
-
13,706
2017
$
-
5,000
-
-
5,000
As at 30 June 2018 there were no customers with balances past due but without provision for
impairment.
Credit Risk – Trade and Other Receivables
The Group has no significant concentration of credit risk with respect to any single counter party
other than Australian Taxation Office. The class of assets described as trade and other receivables
is considered to be the main source of credit risk related to the Group.
Other than as noted above, all trade and other receivables are within initial trade terms and
considered to be of high credit quality.
Note 8. Plant and Equipment
Plant and equipment at cost
Less: accumulated depreciation
Consolidated
2018
$
244,375
(222,226)
22,149
2017
$
232,205
(160,177)
72,028
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Balance at the beginning of the year
Additions
Depreciation
Disposals
Written down balance at end of year
43
Consolidated
2018
$
72,028
12,169
(62,048)
-
22,149
2017
$
122,060
19,016
(69,048)
-
72,028
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 9. Intangible Assets
Consolidated
2018
$
2017
$
Software and website development at cost
4,287,828
3,244,597
Less: accumulated depreciation
(2,631,180)
(2,251,411)
1,656,648
993,186
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Balance at the beginning of the year
Additions
Depreciation
Disposals
Consolidated
2018
$
993,185
1,043,233
(379,770)
-
2017
$
754,799
616,772
(378,385)
-
Written down balance at end of year
1,656,648
993,186
Note 10. Trade and Other Payables
Trade creditors
Other payables
Total Trade and Other Payables
Consolidated
2018
$
350,004
167,841
517,845
2017
$
352,717
322,968
675,685
Trade payables are non-interest bearing and are normally settled on 30 to 60-day terms.
Note 11. Borrowings
Finance lease liability – current
Finance lease liability – non-current
Total Borrowings
Consolidated
2018
$
21,606
-
21,606
2017
$
48,226
21,606
69,832
These are finance leases for computer equipment with an average remaining term of 6.5 months.
The interest rates and repayments are fixed.
44
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 12. Employee Benefits
Annual leave
Long service leave
Total Employee Benefits
Expected to be settled within 12 months
Expected to be settled after 12 months
Consolidated
2018
$
182,195
62,001
244,196
244,196
-
2017
$
202,303
25,245
227,548
202,303
25,245
The Group encourages employees to take leave when due and accordingly expects that the leave
accruals above will be utilised during the next 12 months.
Note 13. Issued Capital
Consolidated
2018
$
2017
$
Ordinary shares fully paid
34,912,935
32,239,412
Ordinary shares fully paid
Movements in ordinary share capital
Shares
Shares
236,339,309
199,783,430
Details
Shares
Issue price
$
Opening Balance – 1 July 2016
145,506,427
26,777,938
Issue of shares – placement 26 October 2016
13,000,000
$0.10
1,300,000
Issue of shares – rights issue 16 November 2016
37,197,542
Conversion of performance rights during year
4,079,461
Share issue transaction costs
-
$0.10
$0.20
Closing Balance – 30 June 2017
199,783,430
3,719,754
815,892
(374,172)
32,239,412
Details
Shares
Issue price
$
Opening Balance – 1 July 2017
199,783,430
32,239,412
Issue of shares – placement 1 May 2018
29,975,714
$0.077
2,308,130
Issue of shares – share purchase plan 22 May 2018
6,493,498
$0.077
Conversion of performance rights during year
86,667
$0.18
Share issue transaction costs
-
500,000
15,633
(150,240)
Closing Balance – 30 June 2018
236,339,309
34,912,935
45
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 13. Issued Capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up
of the Group in proportion to the number of and amounts paid on the shares held. The fully paid
ordinary shares have no par value and the Group does not have a limited amount of authorised
capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital management
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and
to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net
debt. Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce
debt.
The Group would look to raise capital when an opportunity to invest in a business or company was
seen as value adding relative to the current company's share price at the time of the investment.
The Group is not actively pursuing additional investments in the short term as it continues to
integrate and grow its existing businesses in order to maximise synergies.
The Group is subject to certain financing arrangements covenants and meeting these is given
priority in all capital risk management decisions. There have been no events of default on the
financing arrangements during the financial year.
The capital risk management policy remains unchanged from the prior financial year.
Note 14. Reserves
Consolidated
2018
$
2017
$
Share based payment reserve
6,426,905
6,250,779
Share Based Payment Reserve
The share-based payment reserve recognises options, performance rights and performance
shares that have been issued as share based payments.
46
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 15. Share Based Payments
The Rent.com.au Limited Long-Term Incentive Plan (“LTIP”) was established following approval by
shareholders on 20 May 2015. All employees, directors and consultants are eligible to participate
in the LTIP.
The LTIP provides for the issue of:
• Performance Rights which, upon a determination by the Board that the performance
conditions attached to the Performance Rights have been met, will result in the issue of
one ordinary Share in the Company for each Performance Right; and
• Plan Options which, upon a determination by the Board that the vesting conditions
attached to the Plan Options have been met, will result in the Plan Options vesting and
being able to be exercised into Shares by payment of the exercise price.
The key features of the Plan are as follows:
• The Board will determine the number of Performance Rights and Plan Options (Plan
Securities) to be granted to Eligible Employees (or their Affiliates) and the vesting
conditions, expiry date of the Plan Securities and the exercise price of the Plan Options in
its sole discretion.
• The Plan Securities are not transferable unless the Board determines otherwise or the
transfer is required by law and provided that the transfer complies with the Corporations
Act.
• Subject to the Corporations Act and the Listing Rules and restrictions on reducing the
rights of a holder of Plan Securities, the Board will have the power to amend the Plan as it
sees fit.
a) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were
as follows:
Performance rights issued/(reversed) under LTIP
Performance shares issued to shareholders
Option issued under LTIP
Total share-based payments expense
Consolidated
2018
$
21,809
-
169,950
191,759
2017
$
(215,329)
815,892
1,642,855
2,243,418
b) Options
All options granted to key employees, consultants and advisors of the Group are for ordinary
shares in Rent.com.au Limited which confer a right of one ordinary share for every option held.
47
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 15. Share Based Payments (continued)
b) Options (continued)
Grant Date Expiry Date Exercise
Price
Balance at
start of
year
Granted
during the
year
Exercised
during the
year
Expired/
forfeited/
other
Balance at
end of the
year
Vested &
exercisable
at end of
the year
Number
Number
Number
Number
Number
Number
2018
17 Jun 2015 17 Jun 2020
$0.25 19,000,000
17 Jun 2015 17 Jun 2020
$0.30 14,185,000
23 Jun 2015 22 Jun 2020
$0.30
7,000,000
13 Aug 2015 13 Aug 2020
$0.30
400,000
22 Feb 2016 22 Feb 2021
$0.30
1,830,000
09 Sep 2016 09 Sep 2021
$0.25
1,250,000
09 Sep 2016 09 Sep 2021
$0.35
1,250,000
09 Sep 2016 09 Sep 2021
$0.50
1,250,000
46,165,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 19,000,000
14,500,000
- 14,185,000
9,456,668
-
-
-
-
-
-
7,000,000
7,000,000
400,000
266,666
1,830,000
-
1,250,000
1,250,000
1,250,000
1,250,000
1,250,000
1,250,000
- 46,165,000
34,973,334
Weighted average exercise price
$0.28
n/a
n/a
n/a
$0.28
$0.29
There were no new options granted during the financial year ending on 30 June 2018.
Grant Date
Expiry Date Exercise
Price
Balance at
start of
year
Granted
during the
year
Exercised
during the
year
Expired/
forfeited/
other
Balance at
end of the
year
Vested &
exercisable
at end of
the year
Number
Number
Number
Number
Number
Number
2017
17 Jun 2015 17 Jun 2020
$0.25 19,000,000
17 Jun 2015 17 Jun 2020
$0.30 14,185,000
23 Jun 2015 22 Jun 2020
$0.30
7,000,000
13 Aug 2015 13 Aug 2020
$0.30
400,000
22 Feb 2016 22 Feb 2021
$0.30
2,100,000
19 May 2016 19 Aug 2016
$0.15 10,000,000
-
-
-
-
-
-
09 Sep 2016 09 Sep 2021
09 Sep 2016 09 Sep 2021
09 Sep 2016 09 Sep 2021
$0.25
$0.35
$0.50
-
-
-
1,250,000
1,250,000
1,250,000
-
-
-
-
-
-
-
-
- 19,000,000
14,500,000
- 14,185,000
9,456,668
-
-
7,000,000
7,000,000
400,000
266,666
(270,000)
1,830,000
(10,000,000)
-
-
-
-
1,250,000
1,250,000
1,250,000
-
-
-
-
-
Weighted average exercise price
$0.26
$0.37
n/a
$0.15
$0.28
$0.28
52,685,000
3,750,000
- (10,270,000) 46,165,000
31,223,334
48
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 15. Share Based Payments (continued)
b) Options (continued)
The following table sets out the assumptions made in determining the fair value of the options
granted during the prior year:
Options
Granted
Options
Granted
Options
Granted
9 September 2016
9 September 2016
9 September 2016
Expected volatility (%)
Risk free interest rate (%)
Weighted average expected life of options
(years)
Expected dividends
Option exercise price (cents)
Share price at grant date (cents)
Fair value of option (cents)
90
1.49
5
Nil
25
10.3
5.6
90
1.49
5
Nil
35
10.3
5.0
90
1.49
5
Nil
50
10.3
4.4
Number of options*
1,250,000
1,250,000
1,250,000
Expiry date
Grant date
*Employee options:
9 September 2021
9 September 2021
9 September 2021
9 September 2016
9 September 2016
9 September 2016
Vest upon continuous employment with the Group until 30 June 2018.
The weighted average remaining contractual life of options outstanding at year-end was 3 years.
The exercise price of outstanding shares at the end of the reporting period was $0.28.
c) Performance Shares/Rights
Performance shares and performance rights do not have an exercise price. Upon satisfaction of
the relevant performance vesting condition they convert to ordinary shares in the ratio of one
ordinary share for every one performance share / performance right.
49
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 15. Share Based Payments (continued)
c) Performance Shares/Rights (continued)
Grant Date
Expiry Date Balance at
start of
year
Granted
during the
year
Exercised
during the
year
Expired/
forfeited/
other
Balance at
end of the
year
Vested &
exercisable
at end of the
year
Number
Number
Number
Number
Number
Number
2018
Performance Shares
17 Jun 20152
31 Dec 2018
8,160,771
17 Jun 20153
31 Dec 2019
8,160,771
Performance Rights
17 Jun 20152
31 Dec 2018
17 Jun 20153
31 Dec 2019
13 Aug 20151 31 Jan 2019
13 Aug 20152 31 Dec 2018
13 Aug 20153 31 Dec 2019
22 Feb 20161 31 Jan 2019
22 Feb 20162 31 Dec 2018
22 Feb 20163 31 Dec 2019
795,720
795,720
46,667
46,667
46,666
40,000
80,000
80,000
09 Sep 20162 31 Dec 2018
3,283,741
09 Sep 20163 31 Dec 2019
3,283,741
24,820,464
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(46,667)
-
-
(40,000)
-
-
-
-
(86,667)
-
-
-
-
-
-
-
-
-
-
-
-
-
8,160,771
8,160,771
795,720
795,720
-
46,667
46,666
-
80,000
80,000
3,283,741
3,283,741
24,733,797
-
-
-
-
-
-
-
-
-
-
-
-
-
Grant Date
Expiry Date Balance at
start of
year
Granted
during the
year
Exercised
during the
year
Expired/
forfeited/
other
Balance at
end of the
year
Vested &
exercisable
at end of the
year
Number
Number
Number
Number
Number
Number
2017
Performance Shares
17 Jun 20152
31 Dec 2018
8,160,771
17 Jun 20153
31 Dec 2019
8,160,771
Performance Rights
17 Jun 20151
31 Jan 2019
4,079,461
17 Jun 20152
31 Dec 2018
4,079,461
17 Jun 20153
31 Dec 2019
4,079,461
13 Aug 20151 31 Jan 2019
13 Aug 20152 31 Dec 2018
13 Aug 20153 31 Dec 2019
22 Feb 20161 31 Jan 2019
22 Feb 20162 31 Dec 2018
22 Feb 20163 31 Dec 2019
09 Sep 20162 31 Dec 2018
09 Sep 20163 31 Dec 2019
46,667
46,667
46,666
40,000
80,000
80,000
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,079,461)
-
-
-
-
-
-
-
-
-
-
-
-
-
8,160,771
8,160,771
-
(3,283,741)
795,720
(3,283,741)
795,720
-
-
-
-
-
-
-
-
46,667
46,667
46,666
40,000
80,000
80,000
3,283,741
3,283,741
-
-
-
-
-
-
46,667
-
-
-
-
-
-
-
-
3,283,741
3,283,741
28,899,925
6,567,482
(4,079,461)
(6,567,482)
24,820,464
46,667
50
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 15. Share Based Payments (continued)
c) Performance Shares/Rights (continued)
1 Class A Performance Shares/rights – these performance shares will vest on the achievement of greater than 500,000
unique visitors to the website, Rent.com.au in each of 3 consecutive months on or before 31 December 2018. Expire 31
January 2019.
2 Class B Performance Shares/rights – these performance shares will vest on the achievement of greater than $10,000,000
in revenue by the Group in any 12 month period on or before 31 December 2018. Expire 14 days after the release of the
audited financial report for the period ended 31 December 2018.
3 Class C Performance Shares/rights – these performance shares will vest upon the achievement of greater than
$3,000,000 in EBITDA by the Group in any 12 month period on or before 31 December 2019. Expire 14 days after the
release of the audited financial report for the period ended 31 December 2019.
For the performance rights granted during prior financial year, the valuation model inputs used to
determine the fair value at the grant date, are as follows:
Grant date
Number of performance
rights
Share price at
grant date
Fair value
at grant date
9 September 2016
6,567,482
$0.103
$676,451
Type
Class B
Class C
Rights
Underlying share price
Probability %*
Value ($)
3,283,741
3,283,741
6,567,482
$0.103
$0.103
$0.103
2%
0%
-
6,765
-
6,765
* The probability estimated by the management is over the expiry date of the performance shares/rights.
Note 16. Accumulated Losses
Consolidated
2018
$
2017
$
Accumulated losses at the beginning of the financial year
(34,897,613)
(26,383,982)
(Loss) after income tax for the year
(2,822,539)
(8,513,631)
Accumulated losses at the end of the financial year
(37,720,152)
(34,897,613)
Note 17. Auditor’s Remuneration
The Group’s sole auditor is RSM Australia Partners. The following amounts were paid or payable
to RSM Australia Partners for the services set out below:
Auditing or reviewing the financial reports
Taxation and corporate services
Research & Development Grant services
Total auditor’s remuneration
51
Consolidated
2018
$
46,000
8,250
24,545
78,795
2017
$
41,500
18,050
-
59,550
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 18. Earnings per Share
Loss after income tax attributable to the Group’s
owners
Weighted average number of ordinary shares
used in calculating basic loss per share
Basic and diluted (loss) per share
Consolidated
2018
$
2017
$
(2,822,539)
(8,513,631)
Number
Number
204,967,270
180,245,365
Cents
(1.38)
Cents
(4.72)
Options have not been included in the calculation of dilutive loss per share as the options are anti-
dilutive.
Note 19. Dividends Paid or Proposed
The directors do not recommend the payment of a dividend and no amount has been paid or
declared by way of a dividend to the date of this report.
Note 20. Operating Segments
Identification of reportable operating segments
The Group operates as a single operating segment with different revenue streams. The Board (the
Chief Operating Decision Makers ('CODM') of the business) reviews performance of the Group as
a whole.
The Board evaluates Group performance by reference to revenue and profit and loss which are
measured consistently with these consolidated financial statements. In addition, the Board
evaluates EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting
policies adopted for internal reporting to the Board are consistent with those adopted in the
financial statements.
The information is reported to the Board on a monthly basis.
Note 21. Commitments
Operating lease commitments
Future minimum rentals payable under non-cancellable office leases are as follows:
Consolidated
2018
$
46,600
-
46,600
2017
$
78,163
-
78,163
Within one year
After one year but not more than five years
Total operating lease commitments
There are no non-cancellable office leases as at 30 June 2018.
52
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 21. Commitments (continued)
Finance lease commitments
Future minimum payments payable under non-cancellable finance leases are as follows:
Consolidated
Within one year
After one year but not more than five years
Total finance lease commitments
Total commitment
Less: future finance charges
Net commitment recognised as Borrowings
2018
$
22,061
-
22,061
22,061
(455)
21,606
2017
$
51,515
22,061
73,576
73,576
(3,744)
69,832
Finance lease commitments includes contracted amounts for various plant and equipment with a
written down value of $8,805 (2017: $48,112) secured under finance leases expiring within one to
five years. Under the terms of the leases, the Group has the option to acquire the leased assets
for predetermined residual values on the expiry of the leases.
Note 22. Events After the Reporting Period
No other matters or circumstances have arisen since the end of the financial period which
significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent financial years.
Note 23. Controlled Entities
All controlled entities are included in the consolidated financial statements. The Company does
not guarantee to pay the deficiency of its controlled entities in the event of a winding up of any
controlled entity. The financial year ends of the controlled entities are the same as that of the
Company, being 30 June.
Country of
Incorporation
Principal Activity
Percentage
Owned
2018
2017
Parent Entity
Rent.com.au Limited
Australia
Investment/Parent
Name of controlled entity
Rent.com.au (Operations) Pty Ltd
Australia
Information Technology
100%
100%
Lease.com.au Pty Ltd*
Australia
Information Technology
100%
n/a
*Lease.com.au Pty Ltd was incorporated on 31 May 2018 and owns the website lease.com.au and
associated intellectual property. It had not commenced trading as at 30 June 2018.
53
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 24. Associated Entity Investments
The Group’s investment in the following entity was disposed on 15th September 2017. It has no
other associated entity investments as at 30 June 2018.
Country of
Incorporation
Principal Activity
Percentage
Owned
2018
2017
Time Finance and Homeloans Pty Ltd
Australia
Dormant
-%
25%
The Group’s investment in the associate had been accounted for using the equity method.
Investment in associate
Impairment
Consolidated
2018
$
-
-
-
2017
$
200,000
(200,000)
-
Summarised financial information for the investment in associate is not disclosed as the entity
was dormant during both the prior year and the current year up until the point that the Group
disposed of its investment.
Note 25. Cashflow Information
a) Reconciliation of Cash Flow from Operations with Loss after Income Tax
(Loss) after income tax
- Share based payments
- Depreciation and amortisation
- Provision for doubtful debts
Changes in assets and liabilities:
- trade and other receivables
- trade payables and accruals
- employee benefits
Consolidated
2018
$
2017
$
(2,822,539)
(8,513,631)
191,759
441,818
29,784
(218,670)
(157,941)
16,648
2,243,418
447,433
5,000
(80,619)
(737,417)
(136,364)
Cash flows used in operations
(2,519,141)
(6,772,180)
54
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 26. Related Party Transactions
The Group’s main related parties are as follows:
(i)
Entities exercising control over the Group:
The ultimate parent entity that exercises control over the Group is Rent.com.au Limited, which
is incorporated in Australia.
(ii) Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any director (whether executive or
otherwise) of that entity, are considered key management personnel.
For details of disclosures relating to key management personnel, refer to Note 26.
(iii) Entities subject to significant influence by the Group:
An entity that has the power to participate in the financial and operating policy decisions of
an entity, but does not have control over those policies, is an entity which holds significant
influence. Significant influence may be gained by share ownership, statute or agreement.
(iv) Other related parties:
Other related parties include entities controlled by the ultimate parent entity and entities over
which key management personnel have joint control.
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Consolidated
Transactions:
Company secretarial fee - Grange Consulting1
Advisory and capital issue costs - Grange Capital Partners2
Rent and Outgoings – Watersun Property Pty Ltd3
Cleaning – Servco Pty Ltd3
Other revenue4
Total Related Party Transactions
Balances owing to/(owed by) related parties at 30 June 2018:
Watersun Property Pty Ltd3
Servco Pty Ltd3
2018
$
2017
$
-
-
(6,300)
(335,037)
(68,786)
(5,438)
-
-
-
15,000
(74,224)
(326,337)
8,135
660
8,795
-
-
-
1
2
3
4
Philip Warren is a director and shareholder of Grange Consulting Group Pty Ltd.
Grange Capital Partners Pty Ltd is an entity associated with Grange Consulting Group Pty Ltd, although Mr Warren
is not a shareholder or director of Grange Capital Partners Pty Ltd.
Garry Garside is a director of Watersun Property Pty Ltd and Servco Pty Ltd.
Greg Bader was a director of Trident Subsea Cable Pty Ltd.
55
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 27. Interests of Key Management Personnel
Compensation of Key Management Personnel (KMP)
Refer to the remuneration report contained in the directors’ report for details of the remuneration
paid or payable to each member of the Group’s key management personnel for the period ended
30 June 2018.
The aggregate compensation made to key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Total KMP remuneration
Note 28. Financial Risk Management
Consolidated
2018
$
532,870
41,617
118,479
692,966
2017
$
978,533
76,336
1,867,758
2,922,627
The Group’s financial instruments consist mainly of deposits with banks and accounts payable.
The totals for each category of financial instruments, measured in accordance with AASB 139 as
detailed in the accounting policies to these financial statements, are as follows:
Consolidated
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Trade and other payables
Borrowings
Total Financial Liabilities
Note
6
7
10
11
2018
$
2,289,603
434,935
2,724,538
517,845
21,606
539,451
2017
$
3,254,380
236,360
3,490,740
675,685
69,832
745,517
Financial Risk Management Policies
The Board of Directors is responsible for monitoring and managing financial risk exposures of the
Group. The Board monitors the Group’s financial risk management policies and approves financial
transactions. It also reviews the effectiveness of internal controls relating to counterparty credit
risk, financing risk and interest rate risk.
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial
targets, while minimising potential adverse effects on financial performance. Its functions include
the review of the credit risk policies and future cash flow requirements.
56
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 28. Financial Risk Management (continued)
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity
risk and market risk consisting of interest rate risk and foreign currency risk.
a) Credit Risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by
counterparties of contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the
utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of
exposures against such limits and monitoring of the financial stability of significant customers and
counterparties), ensuring to the extent possible, that customers and counterparties to
transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for
impairment. Credit terms are generally 30 days from the invoice date.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high
credit rating.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at reporting date is
equivalent to the carrying value and classification of those financial assets (net of any provisions)
as presented in the statement of financial position.
The Group has no significant concentration of credit risk with any single counterparty or group of
counterparties, except the Australian Taxation Office.
Trade and other receivables that are neither past due nor impaired are considered to be of high
credit quality.
Credit risk related to balances with banks and other financial institutions is managed by the board
in accordance with approved board policy. The following table provides information regarding the
credit risk relating to cash and money market securities based on Standard & Poor’s counterparty
credit ratings.
Cash and cash equivalents
Note
AA- Rated
A+ Rated
Unrated
Consolidated
2018
$
2017
$
2,289,603
3,254,380
-
-
-
-
6
2,289,603
3,254,380
57
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 28. Financial Risk Management (continued)
b) Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its
debts or otherwise meeting its obligations related to financial liabilities. The Group manages this
risk through the following mechanisms:
• preparing forward looking cash flow analysis in relation to its operational, investing and
financing activities;
• obtaining funding from a variety of sources;
• maintaining a reputable credit profile;
• managing credit risk related to financial assets;
• only investing surplus cash with major financial institutions; and
•
comparing the maturity profile of financial liabilities with the realisation profile of financial
assets.
The tables below reflect an undiscounted contractual maturity analysis for financial liabilities.
Cash flows realised from financial assets reflect management’s expectation as to the timing of
realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows
presented in the table to settle financial liabilities reflects the earliest contractual settlement dates
and does not reflect management’s expectations that banking facilities will be rolled forward.
Within 1 year
1 to 5 Years
Total
Weighted
average
effective
interest
rate
2018
2017
2018
2017
2018
2017
%
$
$
$
Financial liabilities due for payment
Trade and other
payables
-
517,845
675,685
Borrowings
6.8%
21,606
48,226
Financial assets realisable cash flows
Cash and cash
equivalents
Trade and other
receivables
c) Market Risk
2%
2,289,603
3,254,380
-
392,942
236,360
-
-
-
-
$
-
$
$
517,845
675,685
21,606
21,606
69,832
-
-
2,289,603
3,254,380
392,942
236,360
Interest rate risk
(i)
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the
end of the reporting period whereby a future change in interest rates will affect future cash flows
or the fair value of fixed rate financial instruments. The Group does not have material exposure
to interest rate risk at reporting date.
58
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Note 28. Financial Risk Management (continued)
(ii) Price risk
The Group currently has no exposure to equity securities price risk arising from investments held
by the Group and classified in the statement of financial position as fair value through profit or
loss.
(iii) Foreign Currency Risk
Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities denominated in a currency that is not the entity’s functional currency and net
investments in foreign operations.
The Group does not have any foreign currency exposure.
(iv) Fair value measurement
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 29. Contingent Liabilities
There are no contingent liabilities for the year ended 30 June 2018 (30 June 2017: nil).
Note 30. Parent Information
The following information has been extracted from the book and records of the parent and has
been prepared in accordance with the accounting standards.
Statement of profit or loss and other comprehensive
income
(Loss) for the year
Total comprehensive (loss) for the year
(2,822,540)
(2,822,540)
(8,513,631)
(8,513,631)
2018
$
2017
$
Statement of Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Share-Based Payment Reserve
Accumulated losses
Total equity
95
3,648,485
3,648,580
-
3,632,417
3,632,417
(28,892)
(28,892)
(39,839)
(39,839)
72,917,175
9,813,742
(79,111,229)
3,619,688
70,243,651
9,637,616
(76,288,689)
3,592,578
59
Rent.com.au Limited
Notes to the Financial Statements
30 June 2018
Contingent Liabilities and Capital expenditure
There are no contingent liabilities for the parent entity for both financial periods ended 30 June
2018 and 30 June 2017.
The parent entity did not have capital expenditure commitments for the acquisition of property,
plant and equipment contracted but not provided for.
Guarantees
During the reporting period, Rent.com.au Limited had not entered into any guarantees in
relation to the debts of its subsidiaries.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed
in note 1, except for the following:
•
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent
entity.
Investments in associates are accounted for at cost, less any impairment, in the parent
entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity
and its receipt may be an indicator of an impairment of the investment.
60
Rent.com.au Limited
Directors Declaration
30 June 2018
In the directors' opinion:
•
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
the attached financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 1
to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial
position as at 30 June 2018 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable; and
the directors have been given the declarations required by 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
_________________________
Dr. Garry Garside
Non-executive Chairman
Perth, 17 August 2018
61
Rent.com.au Limited
Additional ASX Information
Annual Report for the year ended 30 June 2018
Corporate Governance
Corporate Governance Statement
The Company’s corporate governance statement can be found at the following URL:
http://investors.rent.com.au/irm/content/governance.aspx
The Board of Directors (“the Board”) is responsible for the corporate governance of the Company.
The Board guides and monitors the business and affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
This statement outlines the main Corporate Governance practices in place throughout the
financial year, which comply with the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations with the 2014 Amendments 3rd edition unless otherwise stated.
62
Rent.com.au Limited
Additional ASX Information
Annual Report for the year ended 30 June 2018
ASX Additional Information
Additional information required by the ASX Limited Listing Rules not disclosed elsewhere in this
Annual Report is set out below.
1. Holdings
The issued capital of the Company as at 25 September 2018 includes the following securities:
Equity Class
Fully paid ordinary shares
Unlisted Options ($0.30, 23 June 2020)
Performance Shares
Performance Rights
Employee Options
Number of holders
Total on issue
1,102
236,339,309
20
69
13
24
7,000,000
16,321,542
8,412,255
39,165,000
All issued fully paid ordinary shares carry one vote per share.
2. Distribution of Ordinary Shares as at 25 September 2018
Range
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-and over
Total
Holders
119
34
155
517
277
1,102
Units
6,844
104,114
1,341,658
20,701,056
214,185,637
236,339,309
%
0.00%
0.04%
0.57%
8.76%
90.63%
100.00%
There were 103 holders of less than a marketable parcel of ordinary share, and 22 holders from
overseas holding 1,789,173 shares.
3. Substantial shareholder notice lodged with the Company
Name
JASON ALAN CARROLL
MARK WOSCHNAK
JOHN WOOD
MARTIN GREHAN & PENELOPE SPRING
4. Voting Rights
See note 14 of the financial statements.
Number
18,925,000
13,389,439
12,743,085
10,343,792
%
8.01
5.67
5.39
5.10
5. Restricted securities subject to escrow period
There are currently no securities that are subject to escrow periods.
6. On-market buy back
There is currently no on-market buyback program for any of Rent.com.au Limited’s listed
securities.
63
Rent.com.au Limited
Additional ASX Information
Annual Report for the year ended 30 June 2018
7. Top 20 Largest Holders of Ordinary Shares as at 25 September 2018
Name
1 MR JASON ALAN CARROLL
2 MR MARK WOSCHNAK
3 BADER SMSF PTY LTD
4 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5 AUSTCORP NO 214 PTY LTD
6 MR MARK DANIEL NEEDHAM & MRS PIENGJAI NEEDHAM
7 TEFIG PTY LTD
8 MARTIN PENNY PTY LIMITED
9 NEPEAN GI NO 3 PTY LIMITED
10 KERIMI INVESTMENTS PTY LTD
11 MR PETER FRANCIS
12 REEFBAY HOLDINGS PTY LTD
13 MARKIT SYSTEMS PTY LTD
14 BT PORTFOLIO SERVICES LIMITED
15 CORNELA PTY LTD
Number
%
18,925,000
8.01%
10,105,698
4.28%
9,820,338
4.16%
9,624,849
4.07%
6,531,036
2.76%
6,400,000
2.71%
5,779,544
2.45%
5,623,569
2.38%
4,771,191
2.02%
3,595,287
1.52%
3,500,000
1.48%
3,443,833
1.46%
3,283,741
1.39%
3,056,348
1.29%
2,990,195
1.27%
16 DR GARRY DESMOND GARSIDE & MRS FRANCES SAMBRAILO GARSIDE
2,877,549
1.22%
17 TREASURE ISLAND HIRE BOAT COMPANY PTY LTD
18 RLS SUPER INVESTMENTS PTY LTD
19 GARRY DESMOND & FRANCES GARSIDE
20 REEFBAY HOLDINGS PTY LTD
Totals
Others
Total Issued Capital
8. Unquoted Securities
2,430,000
1.03%
2,400,000
1.02%
2,160,228
0.91%
2,151,168
0.91%
109,469,574 46.32%
126,869,735 53.68%
236,339,309 100.00%
The names of the security holders holding more than 20% of an unlisted class of security are listed
below:
Unlisted Options
$0.30 23 June 2020
Performance Shares
Performance
Rights
Employee
Options
-
-
-
6,567,482
5,874,900
-
10,446,642
16,321,542
1
68
-
-
1,844,773
8,412,255
1
12
-
-
-
28,000,000
11,165,000
39,165,000
1
23
GMP SECURITIES AUSTRALIA
2,000,000
MR GREG BADER
RENT INVESTMENT PTY LTD < RENT
INVESTMENT UNIT A/C>
MARKIT SYSTEMS PTY LTD
Total other holders
Total
Total holdings over 20%
Other holders
-
-
-
5,000,000
7,000,000
1
19
64