Rent.com.au Limited
Annual Report 2021

Plain-text annual report

Rent.com.au Limited Contents 30 June 2021 Contents Corporate Information Director’s Report Auditor's Independence Declaration Independent Auditor’s Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to The Financial Statements Directors’ Declaration 3 4 16 17 20 21 22 23 24 58 2 Rent.com.au Limited Corporate Information 30 June 2021 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 15. The Directors’ Report is not part of the financial report. Directors Bankers Dr. Garry Garside Mr. John Wood Mr. Sam McDonagh Mr. Philip Warren (Non-Executive Chairman) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) Commonwealth Bank of Australia 150 St Georges Terrace Perth WA 6000 Joint Company Secretaries Mr. Jan Ferreira Mr. Steven Wood Registered Office 3 Craig Street Burswood WA 6100 Principal place of business 3 Craig Street Burswood WA 6100 Share Registry Automic Registry Services 267 St Georges Terrace Perth WA 6000 Auditors RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 Australia and New Zealand Bank 833 Collins St Docklands VIC 3008 Solicitors GTP Legal 68 Aberdeen Street Northbridge WA 6003 K&L Gates Level 25 South Tower 525 Collins Street Melbourne VIC 3000 Stock Exchange 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 2021 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 2021. 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 $1,294,013 for the year ended 30 June 2021 (for year ended 30 June 2020: $1,665,215). The net operating loss for the year ended 30 June 2021 included non-cash share-based payments of $279,649 (30 June 2020 share-based payment reversal: $4,372) associated with the issue of performance based convertible securities to employees and options issued to directors as outlined in Note 17. Earnings Before Interest, Tax, Depreciation, and Amortisation (and excluding non-cash share-based payments) (“EBITDA”) for the year ended 30 June 2021 was a loss of $689,055 (30 June 2020: $1,133,541) an improvement of 39%. The Group achieved overall revenue of $3,094,402 for the year ended 30 June 2021 which represents growth of 26% compared with the previous year ($2,452,239). Both of its key revenue streams grew strongly. Renter Products grew 40% to $1,552,237 and Advertising Sales grew by 28% to $1,263,450. 4 Rent.com.au Limited Director’s Report 30 June 2021 Review of Operations (continued) During the year the Group’s original rent.com.au business (defined as Group results less RentPay impact) achieved its goal of EBITDA profitability off the back of strong revenue growth, earning an EBITDA profit of $117,468. The new RentPay business incurred an EBITDA loss of $806,524 as resources were allocated to building a new rental payments system which is the primary product via which the Group seeks to gain market share within the tenancy period. Operationally, the Groups renter app on the Apple and Android platforms continues to achieve higher customer ratings than other leading real estate sector apps. While all three existing Renter Products grew, especially the RentConnect utility connection service offered under an exclusive arrangement with AGL. The Group’s research indicates that this now accounts for greater than 10% of AGL’s net new utility service connections nationally. Advertising Sales also grew strongly off the back of the Group’s efforts to drive greater repeat business. During the year ended 30 June 2021, greater than 50% of advertising campaigns ran continuously for 6 months or longer. The Group also completed the first iteration (beta release) of the development of RentPay, its first product aimed at renters during their tenancy. $1,230,862 of labour costs and $440,697 of external costs were incurred in this development during the year. Significant changes in the state of affairs On 15 September 2020, the Group announced that it had completed the placement under ASX Listing Rule 7.1 of 33,333,333 new fully paid ordinary shares at an issue price of $0.045 per share with existing shareholders to raise $1.5 million (before costs). On 5 February 2021, the Group issued 55 million new fully paid ordinary shares at an issue price of $0.05 per share to sophisticated, professional and other exempt investors pursuant to section 708 of the Corporations Act 2001 (Cth) to raise $2,750,000 (before costs). The funds will be applied towards the upcoming RentPay launch and to provide additional working capital for marketing and product development. Dividends No dividend has been paid or recommended by the Directors since the commencement of the financial period. Matters Subsequent to the end of the Financial Year On 30 July 2021, the Group issued 538,461 ordinary shares on conversion of 538,461 performance rights. Apart from the performance rights conversion above, no other matter or circumstance has been arisen since 30 June 2021 that has significantly affected, or maybe significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. Likely Developments and Expected Results The Group is currently optimising the RentPay rental payments platform prior to full market launch. RentPay is the platform via which the Group seeks to gain market share within the tenancy period. The Group’s addressable market in Australia is estimated at more than 2.5 million rental households which, in the director’s opinion, provides ample scope for further commercialisation of the group’s products and for the Group to achieve profitability. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. 5 Rent.com.au Limited Director’s Report 30 June 2021 Financial Position The net assets of the Group have increased to $4,910,847 at 30 June 2021 (30 June 2020: $1,795,125). Cash reserves increased to $2,918,306 at 30 June 2021 (30 June 2020: $631,771). Information on Directors Dr. Garry Garside – Chairman (Non-Executive), appointed 15 June 2015 Age Qualifications Experience – 64 – 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 – 8,000,499 Ordinary shares (indirect) 916,667 Ordinary shares 2,700,000 options Directorships held in other listed entities – None Mr. Sam McDonagh Age Qualifications Experience – Director (Non-Executive), appointed 15 June 2015 – 50 – Chartered Accountant – Mr. McDonagh has over 20 years’ experience in senior management roles at companies including eBay in Southeast Asia, iiNet Limited and most recently Airbnb Australia and New Zealand Special responsibilities – Member of the Audit & Risk Committee. Interest in shares & options held in Rent.com.au Limited – 1,484,906 Ordinary shares 1,500,000 options Directorships held in other listed entities – None Mr. Philip Warren Age Qualifications Experience – Director (Non-Executive), appointed 18 September 2014 – 47 – B. Com, Chartered Accountant – Mr. Warren is 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 several 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 – 1,146,206 Ordinary shares (indirect) 1,500,000 options Directorships held in other listed entities – Non-Executive Director of Family Zone Cyber Safety Limited and Anax Metals Limited. 6 Rent.com.au Limited Director’s Report 30 June 2021 Information on Directors (continued) Mr. John Wood Age Qualifications Experience – Director (Non-Executive) appointed 15 June 2015 – 55 – N/A – Mr. Wood is the founder of National Lifestyle Villages (NLV). He was awarded the 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 – 1,756,058 Ordinary shares 13,590,307 Ordinary shares (indirect) 1,500,000 options Directorships held in other listed entities – None 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 2021: Board Meetings Audit & Risk Management Committee Meetings Nomination & Remuneration Committee Meetings Garry Garside Sam McDonagh Philip Warren John Wood A 12 12 12 12 B 12 12 12 12 A 2 2 2 B 2 2 2 n/a n/a A 1 n/a 1 1 B 1 n/a 1 1 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 15 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. 7 Rent.com.au Limited Director’s Report 30 June 2021 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 9 10 02 December 2020 31 August 2023 02 December 2020 31 July 2021 Number 13,500,000 538,461 The vesting conditions of the various tranches of performance rights on issue are outlined below: • Tranche 9 – will vest upon continuous employment with the Group until 30 June 2023 • Tranche 10 – have vested and converted to ordinary shares subsequent to year end. Shares under Option Unissued ordinary shares of Rent.com.au Limited under option at the date of this report are as follows: Date Options Granted Expiry Date Tranche Issue Price of Share Number Under Option 9 September 2016 9 September 2021 9 September 2016 9 September 2021 9 September 2016 9 September 2021 2 December 2020 1 December 2025 2 December 2020 1 December 2025 2 December 2020 1 December 2025 Total 7 8 9 10 11 12 1. Employee options have vested and are exercisable. 2. Director options will vest upon 3 year service condition. Shares issued on the exercise of options $0.25 $0.35 $0.50 $0.10 $0.125 $0.15 1,250,0001 1,250,0001 1,250,0001 2,400,0002 2,400,0002 2,400,0002 10,950,000 There were no ordinary shares of Rent.com.au Limited issued on the exercise of options during the year ended 30 June 2021 and up to the date of this report. 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. 8 Rent.com.au Limited Director’s Report 30 June 2021 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 20 to the financial statements. 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 20 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the Group 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. 9 Rent.com.au Limited Director’s Report 30 June 2021 A. Principles used to determine the nature and amount of remuneration (continued) 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 / Chief Operating Officer) 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 through the issue of director options as approved by shareholders at the November 2020 Annual General Meeting. Long term incentives have been provided to employees through the issue of performance rights pursuant to the Employee Long-Term Incentive Plan (‘LTIP’) approved by shareholders at the November 2019 Annual General Meeting. Voting and comments made at the Group's 2020 Annual General Meeting ('AGM') At the 2020 AGM, 99.5% of the eligible votes received supported the adoption of the remuneration report for the year ended 30 June 2020. The Group did not receive any specific feedback at the AGM regarding its remuneration practices. 10 Rent.com.au Limited Director’s Report 30 June 2021 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. Details of remuneration for the year ended 30 June 2021. KMP Base Fee $ STI Payment $ Super- annuation $ Long service leave $ Performance Rights $ Options $ Total $ Garry Garside 55,000 Sam McDonagh Phillip Warren John Wood Greg Bader Jan Ferreira Total 40,000 40,000 40,000 249,552 223,253 647,805 - - - - - - - - 2,500 3,750 6,250 20,756 20,409 41,165 - - - - - 24,875 24,875 - - - - 13,264 13,264 9,949 64,949 5,527 45,527 5,527 45,527 5,527 45,527 - - 286,072 285,551 26,528 26,530 773,153 Details of remuneration for the year ended 30 June 2020 KMP Base Fee $ STI Payment $ Super- annuation $ Performance Rights $ Options1 $ Total $ Garry Garside Sam McDonagh Phillip Warren John Wood Greg Bader Jan Ferreira Total 32,083 23,333 23,333 23,333 220,000 215,000 537,082 - - - - - - - - 1,250 2,500 3,750 21,019 20,741 41,760 - - - - - - - - - - 32,083 23,333 23,333 - 23,333 - - - 242,269 238,241 582,592 1. Options include both share based payments and advisor options. The proportion of remuneration linked to performance and the fixed proportion are as follows: Name 2021 2020 2021 2020 2021 2020 Fixed remuneration At risk - STI At risk - LTI Non-Executive Directors: Garry Garside Sam McDonagh Phillip Warren John Wood 84.7% 87.9% 87.9% 87.9% 100.0% 100.0% 100.0% 100.0% - - - - - - - - 15.3% 12.1% 12.1% 12.1% Other Key Management Personnel: Greg Bader Jan Ferreira 94.5% 94% 99.5% 99.0% 0.9% 1.35% 0.5% 1.0% 4.6% 4.65% -% -% -% -% -% -% 11 Rent.com.au Limited Director’s Report 30 June 2021 B. Details of remuneration – continued 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 is entitled to a base salary of $250,000 per annum, plus statutory superannuation entitlements. He has elected to receive $30,000 of this in the form of equity securities. 1,600,001 performance rights issued in May 2020 in lieu of salary were converted to shares during the year ended 30 June 2021. 403,846 performance rights issued on 2 Dec 2020 in lieu of salary were converted to ordinary shares subsequent to year end. • Mr. Bader is eligible to participate in the Long-Term Incentive Plan and has been issued 3,750,000 Employee Options (expire 30 September 2021) and 4,500,000 performance rights (expire 31 August 2023). • Mr. Bader is also eligible to participate in a Short-Term Incentive (“STI”) scheme which the Group has implemented. A maximum of $10,000 per annum 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 / Chief Operating Officer (commenced 28 April 2014) • Mr. Ferreira’s Executive Services Agreement for the position of Chief Financial Officer / Chief Operating Officer has no fixed period and may be terminated by provision of six months’ prior written notice by either party. • Mr. Ferreira is entitled to a base salary of $225,000 per annum, plus statutory superannuation entitlements. He has however elected to receive $10,000 of this in the form of equity securities. 883,334 performance rights issued in May 2020 in lieu of salary were converted to shares during the year ended 30 June 2021. 134,615 performance rights issued on 2 Dec 2020 in lieu of salary were converted to ordinary shares subsequent to year end. • Mr. Ferreira is eligible to participate in the Long-Term Incentive Plan and has been issued 4,500,000 performance rights (expire 31 August 2023). • Mr. Ferreira is also eligible to participate in a Short-Term Incentive scheme which the Group has implemented. A maximum of $10,000 per annum 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 2021. During the year ended 30 June 2021, 6,750,000 performance rights (expire 31 August 2023) were issued to employees of the Group who are not KMP as outlined in Note 17. 12 Rent.com.au Limited Director’s Report 30 June 2021 D. Additional Information Financial Performance Information The earnings of the Group for the five years to 30 June 2021 are summarised below: 2021 $ 2020 $ 2019 $ 2018 $ 2017 $ Sales revenue 3,094,402 2,452,239 2,164,192 2,324,880 1,654,395 EBITDA* (689,055) (1,133,540) (2,121,568) (2,322,710) (5,822,425) Loss after income tax (1,294,013) (1,665,215) (2,497,183) (2,822,539) (8,513,631) * excluding non-cash share-based payments, R&D income, government grant and loss on disposal of asset. 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) Basic loss per share (cents per share) 2021 0.120 - 2020 0.033 2019 0.035 2018 0.086 2017 0.065 - - - - (0.36) (0.57) (1.05) (1.38) (4.72) 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 2021 is as follows: Balance at beginning of the year Granted as remuneration during the year Performance rights converted during the year Other changes during the year Balance at 30 June 2021 7,000,499 818,239 479,539 15,229,696 16,400,711 1,000,080 40,928,764 - - - - - - - 916,667 1,000,000 8,917,166 666,667 666,667 - - 1,484,906 1,146,206 666,667 (549,998) 15,346,365 1,600,001 555,000 18,555,712 883,334 (983,414) 900,000 5,400,003 21,588 46,350,355 30 June 2021 Garry Garside Sam McDonagh Philip Warren John Wood Greg Bader Jan Ferreira Total 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 2021 is as follows: 30 June 2021 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 2021 - - - - 3,750,000 - 3,750,000 - - - - - - - 13 - - - - - - - 2,700,000 2,700,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 - - 3,750,000 - 7,200,000 10,950,000 Rent.com.au Limited Director’s Report 30 June 2021 Equity instruments held by Key Management Personnel (continued) 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 2021 is as follows: 30 June 2021 Balance at start of the year Received as Remuneration Performance Rights Converted Other Movements Balance at 30 June 2021 Vested and Exercisable at 30 June 2021 Unvested at 30 June 2021 Garry Garside Sam McDonagh Philip Warren John Wood - - - 916,667 (916,667) 666,667 (666,667) 666,667 (666,667) 666,667 (666,667) - - - - - - Greg Bader 1,600,001 403,846 (1,600,001) 4,500,000 4,903,846 Jan Ferreira 883,334 134,615 (883,334) 4,500,000 4,634,615 Total 2,483,335 3,455,129 (5,400,003) 9,000,000 9,538,461 - - - - - - - - - 4,903,846 4,634,615 9,538,461 4. Performance Shares 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). There are no outstanding performance shares in Rent.com.au Limited held by each KMP of the Group during the year ended 30 June 2021. Other KMP Transactions 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 outgoings and others – Watersun Property Pty Ltd[1] Cleaning expenses – Servco Pty Ltd[1] Interest expense[1] Depreciation expense[1] Software Development, Technology Hosting and AFSL – Novatti Pty Ltd[2] Balances: Amount owing to Watersun Property Pty Ltd[1] Amount owing to Servco Pty Ltd[1] Right of use asset[1] Lease liability[1] Amount owing to Novatti Pty Ltd[2] 2021 $ 85,505 7,933 5,663 84,215 176,600 34,700 630 20,150 22,511 51,600 [1] [2] Garry Garside is a director and shareholder of both Watersun Property Pty Ltd & Servco Pty Ltd Novatti Pty Ltd is the minority shareholder of RentPay Technology 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. 14 Rent.com.au Limited Director’s Report 30 June 2021 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, 27 August 2021 15 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 2021, 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: 27 August 2021 ALASDAIR WHYTE 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 2021, 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 2021 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 Our audit procedures included: • Obtaining a detailed understanding of each of the revenue streams and the process for calculating and recording revenue; Assessing whether the revenue recognition policies comply with Australian Accounting Standards; Performing substantive testing on each revenue stream on a sample basis; Reviewing the deferred revenue calculation for revenue received in advance; Reviewing revenue transactions before and after year-end to ensure that revenue is recognised in the correct financial period; and Reviewing the appropriateness of disclosure in the financial statements. • • • • • Revenue Recognition Refer to Note 1 and 3 in the financial statements The Group generates 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; and • Advertising sales. 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 rendered. for services or products Furthermore, transactions are high volume and of low value. The revenue recognition of each revenue stream is subject to management judgements. These include: • Determining the appropriate accounting policy in the revenue relation to each revenue stream; and • Determining the revenue recognised is for an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2021, 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: https://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 2021. In our opinion, the Remuneration Report of Rent.com.au Limited, for the year ended 30 June 2021, 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: 27 August 2021 ALASDAIR WHYTE Partner Rent.com.au Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2021 Revenue Other income Total Income Note Consolidated 2021 $ 2020 $ 3 4 3,094,402 2,452,239 567,505 357,390 3,661,907 2,809,629 Administration charges Consulting & business development costs (534,642) (94,225) Depreciation and amortisation expense 8,9,10 (870,939) (404,657) (22,595) (882,943) Employee benefit expenses Finance costs Information technology costs Share based payment expenses Sales and marketing expenses Others (1,583,305) (1,859,402) (9,401) (326,609) (279,649) (481,866) (762,084) (10,593) (385,610) 4,372 (398,092) (515,324) 17 Loss before income tax expense (1,280,813) (1,665,215) Income tax expense 5 (13,200) - Loss after income tax expense for the year (1,294,013) (1,665,215) Other comprehensive income - - Total comprehensive loss for the year (1,294,013) (1,665,215) Total comprehensive income for the year is attributable to: Non-controlling interest Owners of Rent.com.au Limited (22,409) (230) (1,271,604) (1,664,985) Total comprehensive loss for the year (1,294,013) (1,665,215) Earnings Per Share Cents Cents Basic and diluted (loss) per share 21 (0.36) (0.57) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 20 Rent.com.au Limited Consolidated Statement of Financial Position As at 30 June 2021 Note Consolidated Assets Current assets Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Plant and equipment Right-of-use assets Intangible assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings Lease liabilities Employee benefits Total current liabilities Non-current liabilities Borrowings Lease Liabilities Total non-current liabilities Total liabilities Net Assets Equity Issued capital Share based payments reserve Other reserve Accumulated losses Equity attributable to the owners of Rent.com.au Ltd Non-controlling interest Total equity 2021 $ 2,918,306 503,685 3,421,991 43,467 20,149 2,426,630 2,490,249 2020 $ 631,771 381,542 1,013,313 19,400 96,970 1,523,357 1,639,727 5,912,237 2,653,040 736,796 13,018 22,511 218,934 991,259 10,131 - 10,131 556,823 8,602 80,988 184,403 830,816 5,734 21,365 27,099 1,001,390 857,915 4,910,847 1,795,125 41,468,040 6,370,618 243,726 37,114,067 6,314,856 243,726 (43,155,138) (41,883,534) 4,927,246 1,789,115 (16,399) 6,010 4,910,847 1,795,125 6 7 8 9 10 11 12 13 14 12 13 15 16 16 18 19 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 21 Rent.com.au Limited Consolidated Statement of Changes in Equity For the year ended 30 June 2021 Issued capital Share based payment reserves Other Reserve Accumulated Loss Non Controlling Interest Total equity Consolidated $ $ $ $ $ $ Balance at 1 July 2020 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 based payments Balance at 30 June 2021 37,114,067 6,314,856 243,726 (41,883,534) 6,010 1,795,125 - - - - 4,503,054 (223,887) - 279,649 - - - - - (1,271,604) (22,409) (1,294,013) (1,271,604) (22,409) (1,294,013) - - - - - - 4,279,167 (149,081) 279,649 41,468,040 6,370,618 243,726 (43,155,138) (16,399) 4,910,847 Share issue costs (149,081) - Issued capital Consolidated $ Share based payment reserves $ Other Reserve Accumulated loss $ $ Non Controlling Interest $ Total Equity $ Balance at 1 July 2019 Adjustment for Impact of AASB 16 [note 1] Restated Balance Loss after income tax expense for the year Total comprehensive loss for the year - Transactions with owners in their capacity as owners: Shares issued Changes in ownership Share issue costs 35,313,752 6,319,226 - - 35,313,752 6,319,226 - 2,016,984 - - - - - - (4,370) Share based payments (216,669) - - - - - - - 243,726 - - (40,217,335) (1,214) (40,218,549) - - - 1,415,643 (1,214) 1,414,429 (1,664,985) (230) (1,665,215) (1,664,985) (230) (1,665,215) - - - - - 2,016,984 6,240 249,966 - - (4,370) (216,669) Balance at 30 June 2020 37,114,067 6,314,856 243,726 (41,883,534) 6,010 1,795,125 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 22 Rent.com.au Limited Consolidated Statement of Cash flows For the year ended 30 June 2021 Cash flows from operating activities Note Consolidated 2021 $ 2020 $ Receipts from customers (inclusive of GST) 3,250,625 2,704,473 Payments to suppliers and employees (inclusive of GST) (3,846,622) (3,810,099) Other income Interest received Interest and other finance costs paid Income taxes paid (595,997) (1,105,626) 567,052 355,437 453 (9,401) (13,200) 1,952 (10,593) - Net cash used in operating activities 27 (51,093) (758,830) Cash flows from investing activities Payments for plant and equipment Payments for intangible assets (net) Proceeds from disposal of plant and equipment 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 (49,512) (3,354) (1,619,052) (477,163) 727 100 (1,667,837) (480,417) 4,249,997 2,016,981 (149,079) (216,703) 26,510 2,850 (121,963) (83,644) Net cash provided by financing activities 4,005,465 1,719,484 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 2,286,535 480,237 631,771 151,534 2,918,306 631,771 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 23 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 This financial report of Rent.com.au Limited (‘the Company’) and its controlled entities (‘the Group’) for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the Directors on 27 August 2021. 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. Going concern These financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the Group incurred a loss of $1,294,013 and had net cash outflows from operating and investing activities of $51,093 and $1,667,837 respectively for the year ended 30 June 2021. As at that date the Group had net current assets of $2,430,732 including cash and cash equivalents of $2,918,306. The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors: • The ability to issue additional shares under the Corporations Act 2001 to raise further working capital; and • The Group has the ability to scale down its operations in order to curtail expenditure, in the event cash available is insufficient to meet projected expenditure. New or amended 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. The following Accounting Standards and Interpretations are most relevant to the Group: Conceptual Framework for Financial Reporting (Conceptual Framework) The Group has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the Group’s financial statements. 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'). 24 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Basis of Preparation (continued) Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivatives 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. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Rent.com.au Limited as at 30 June 2021 and the results of all subsidiaries for the year then ended. Rent.com.au Limited and its subsidiaries together are referred to in these financial statements as the “Group”. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of 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. 25 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) 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. Revenue Recognition The Group recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Sale of goods Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. Rendering of services Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate. Interest Interest revenue is recognised as interest accrues using the effective interest method. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. 26 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Government Grants Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Income Tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. 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. 27 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 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. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Plant and equipment 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 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. 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. 28 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred or dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the lease asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subjected to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. 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. 29 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Trade and Other Payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. 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. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 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 at 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 30 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Employee benefits (continued) 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. The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. 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. 31 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Employee benefits (continued) 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. 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. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. 32 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) Business Combinations (continued) 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. 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. 33 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 1. Significant Accounting Policies (continued) 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 Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it’s carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. 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 2021. The Group's has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. 34 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 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 various other factors, including expectations of future events which 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. Revenue from contracts with customers involving sale of products When recognising revenue in relation to the sale of products to customers, the key performance obligation of the Group is considered to be the point of delivery of the products to the customer, as this is deemed to be the time that the customer obtains control of the promised products and therefore the benefits of the unimpeded access. Allowance for expected credit losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected credit losses, as disclosed in note 10, is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower. Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does not appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. 35 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 3. Revenue Consolidated 30 June 2021 Timing of revenue recognition Consolidated 30 June 2021 Goods transferred at a point in time Services transferred over a period of time Fees from agents and landlords 19,802 110,001 $ $ Renter Products Revenue Advertising Sales Payments Revenue Total 1,548,841 321,559 11,058 3,396 941,891 137,854 Total $ 129,803 1,552,237 1,263,450 148,912 1,900,336 1,194,066 3,094,402 Consolidated 30 June 2020 Timing of revenue recognition Consolidated 30 June 2020 Goods transferred at a point in time Services transferred over a period of time Total $ $ $ Fees from agents and landlords 28,996 124,986 153,982 Renter Products Revenue 1,097,797 6,923 1,104,720 Advertising Sales Payments Revenue Total 228,707 756,639 13,087 195,104 985,346 208,191 1,368,587 1,083,652 2,452,239 Consolidated 30 June 2021 Geographical regions Australia Consolidated 2021 $ 2020 $ 3,094,402 2,452,239 Note 4. Other Income Consolidated R&D Incentive recognised in income Interest income Government grants 2021 $ 263,052 453 304,000 567,505 2020 $ 193,438 1,952 162,000 357,390 36 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 5. Income Tax Consolidated a) The components of tax expense comprise: Current tax Deferred tax under provision in prior year Total income tax expense 2021 $ - - 13,200 13,200 2020 $ - - - - 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 26% (2020:27.5%) (333,011) (457,934) Consolidated 2021 $ 2020 $ Tax effect of: Share based payments Tax losses not recognised Timing differences not recognised R&D Tax Rebate Other Under provision in prior period Total income tax expense 72,709 355,103 (3,925) (76,089) (14,787) 13,200 13,200 (1,202) 480,258 49,857 (56,102) (14,877) - - c) Deferred tax assets at 30 June 2021 not brought to account are: Revenue tax losses Other 5,715,427 118,370 5,742,422 24,382 Total Deferred tax asset not recognised 5,833,797 5,766,804 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. 37 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 6. Cash and Cash Equivalents Cash at bank and in hand Term Deposits Total cash and cash equivalents Reconciliation to cash and cash equivalents at the end of the financial year Consolidated 2021 $ 2,898,031 20,275 2,918,306 2020 $ 611,506 20,265 631,771 Balance as per statement of cash flows 2,918,306 631,771 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 0.1% (2020: 0.84%). 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. As at 30 June 2021, the group held customer funds of $30,511 in trust. This relates to funds held in RentPay wallet accounts and payable at the direction of the customers of RentPay payment services. The fund held in trust has not been disclosed on consolidated statement of financial position as it doesn’t meet the definition of financial assets and liabilities. Note 7. Trade and Other Receivables Trade debtors Less: Allowance for expected credit losses Prepayments Total trade and other receivables Consolidated 2021 $ 366,468 (3,634) 362,834 140,851 503,685 2020 $ 332,397 (2,815) 329,582 51,960 381,542 Allowance for expected credit losses The Group has recognised a loss of $- (2020: $10,274) in profit or loss in respect of the expected credit losses for the year ended 30 June 2021. The ageing of the expected credit losses provided for above are as follows: Consolidated 2021 $ - 3,634 - 3,634 2020 $ - 2,815 - 2,815 0 to 3 months overdue 3 to 6 months overdue Over 6 months overdue 38 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 7. Trade and Other Receivables (continued) Movement in the allowance for expected credit losses are as follows: Opening balance Additional provisions recognised Receivables written off during the year as uncollectable Closing Balance As at the reporting date, all overdue balances had been received. Credit Risk – Trade and Other Receivables Consolidated 2021 $ 2,815 819 - 3,634 2020 $ 7,549 10,274 (15,008) 2,815 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 2021 $ 257,255 (213,788) 43,467 2020 $ 207,744 (188,344) 19,400 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 Written down balance at end of year Note 9. Right-of-use asset Building – right of use Less: accumulated depreciation 39 Consolidated 2021 $ 19,400 49,511 (25,444) 43,467 Consolidated 2021 $ 181,346 (161,197) 20,149 2020 $ 36,254 3,354 (20,208) 19,400 2020 $ 174,546 (77,576) 96,970 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 9. Right-of-use asset (continued) 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 Amortisation Written down balance at end of year Note 10. Intangible Assets Consolidated 2021 $ 96,970 7,394 (84,215) 20,149 2020 $ - 174,546 (77,576) 96,970 Consolidated 2021 $ 2020 $ Software and website development at cost 7,147,969 5,483,416 Less: accumulated amortisation (4,721,339) (3,960,059) 2,426,630 1,523,357 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 Amortisation Consolidated 2021 $ 1,523,356 1,664,554 (761,280) 2020 $ 1,707,567 600,949 (785,159) Written down balance at end of year 2,426,630 1,523,357 Note 11. Trade and Other Payables Trade creditors Other payables GST Payable Total Trade and Other Payables Consolidated 2021 $ 410,989 319,564 6,243 736,796 2020 $ 257,832 293,882 5,109 556,823 Trade payables are non-interest bearing and are normally settled on 30 to 60-day terms. 40 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 12. Borrowings Finance lease liability – current Finance lease liability – non-current Total Borrowings Consolidated 2021 $ 13,018 10,131 23,149 2020 $ 8,602 5,734 14,336 These are finance leases for computer equipment with an average remaining term of 41 months. The interest rates and repayments are fixed. Note 13. Lease liability Lease liability – current Lease liability – non-current Total Lease liability Note 14. Employee Benefits Annual leave Long service leave Total Employee Benefits Consolidated 2021 $ 22,511 - 22,511 Consolidated 2021 $ 156,630 62,304 218,934 2020 $ 80,988 21,365 102,353 2020 $ 153,226 31,177 184,403 Expected to be settled within 12 months 218,934 184,403 Expected to be settled after 12 months - - 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 15. Issued Capital Consolidated 2021 $ 2020 $ Ordinary shares fully paid 41,468,040 37,114,067 Ordinary shares fully paid Shares Shares 397,654,227 302,635,759 41 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 15. Issued Capital (continued) Movements in ordinary share capital Details Shares Issue price $ Opening Balance – 1 July 2019 249,497,272 35,313,752 Issue of shares – July and August 2019 41,582,864 $0.036 1,496,983 Issue of shares – March 2020 11,555,554 $0.045 519,999 Issue of shares – performance shares 31 Jan 2019 69 $0.048 3 Share issue transaction costs - Closing Balance – 30 June 2020 302,635,759 (216,670) 37,114,067 Details Shares Issue price $ Opening Balance – 1 July 2020 302,635,759 37,114,067 Issue of shares – September 2020 33,333,333 $0.045 1,500,000 Issue of shares – performance shares October 2020 Issue of shares – performance shares December 2020 3,768,467 $0.030 113,054 2,916,668 $0.048 140,000 Issue of shares – February 2021 55,000,000 $0.050 2,750,000 Share issue transaction costs - (149,081) Closing Balance – 30 June 2021 397,654,227 41,468,040 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 42 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 15. Issued Capital (continued) 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 16. Reserves Consolidated 2021 $ 2020 $ Share based payment reserve 6,370,618 6,314,854 Other reserve 243,726 243,726 Share Based Payment Reserve The share-based payment reserve recognises options, performance rights and performance shares that have been issued as share based payments. Other reserve This reserve is used to recognise the change in the share of the non-controlling interest. Note 17. Share Based Payments The current Rent.com.au Limited Employee Long-Term Incentive Plan (“LTIP”) was approved by shareholders on 29 November 2019. 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 Group 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 43 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 17. Share Based Payments (continued) a) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period were as follows: Consolidated 2021 $ 2020 $ Performance rights issued/(reversed) under LTIP 253,116 (4,373) Performance shares issued to shareholders Options issued under LTIP Total share-based payments (reversal)/expense - 26,533 279,649 3 - (4,370) 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. 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 2021 Number Number Number Number Number Number 13 Aug 2015 13 Aug 2020 $0.300 400,000 22 Feb 2016 22 Feb 2021 $0.300 1,740,000 9 Sep 2016 9 Sep 2021 $0.250 1,250,000 9 Sep 2016 9 Sep 2021 $0.350 1,250,000 9 Sep 2016 9 Sep 2021 $0.500 1,250,000 - - - - - 30 Nov 2020 30 Nov 2025 $0.100 30 Nov 2020 30 Nov 2025 30 Nov 2020 30 Nov 2025 $0.125 $0.150 - - - 2,400,000 2,400,000 2,400,000 5,890,000 7,200,000 - - - - - - - - - (400,000) (1,740,000) - - - - - - - - - - 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 2,400,000 2,400,000 2,400,000 - - - (2,140,000) 10,950,000 3,750,000 Weighted average exercise price $0.34 n/a n/a n/a $0.21 $0.25 The following table sets out the assumptions made in determining the fair value of the options grated during the financial year: Expected volatility (%) Risk free interest rate (%) Weighted average expected life of options (years) Expected dividends Option exercise price (cents) Share price at grant date ($) Fair value of option (cents) Number of options* Expiry date Grant date Options Granted 30 November 2020 Options Granted 30 November 2020 Options Granted 30 November 2020 85 0.30 5 Nil 10 0.043 2.07 85 0.30 5 Nil 12.5 0.043 1.89 85 0.30 5 Nil 15 0.043 1.75 2,400,000 2,400,000 2,400,000 30 November 2025 30 November 2025 30 November 2025 30 November 2020 30 November 2020 30 November 2020 44 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 17. Share Based Payments (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 2020 17 Jun 2015 17 Jun 2020 $0.25 19,000,000 17 Jun 2015 17 Jun 2020 23 Jun 2015 22 Jun 2020 13 Aug 2015 13 Aug 2020 22 Feb 2016 22 Feb 2021 9 Sep 2016 9 Sep 2021 9 Sep 2016 9 Sep 2021 9 Sep 2016 9 Sep 2021 $0.30 $0.30 $0.30 $0.30 $0.25 $0.35 $0.50 13,385,000 7,000,000 400,000 1,740,000 1,250,000 1,250,000 1,250,000 45,275,000 - - - - - - - - - - - - - - - - - - (19,000,000) (13,385,000) (7,000,000) - - - - - - - - - - - 400,000 266,666 1,740,000 - 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 (39,385,000) 5,890,000 4,016,666 Weighted average exercise price $0.28 n/a n/a n/a $0.34 $0.25 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. 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 2021 Performance Rights 1 May 20201 30 Nov 2020 3,863,337 - (3,768,467) (94,870) 2 Dec 20202 31 July 2021 14 Aug 20206 30 Nov 2020 30 Nov 20205a&b 31 Aug 2023 30 Nov 20205a&c 31 Aug 2023 30 Nov 20205a&d 31 Aug 2023 30 Nov 20205a&e 31 Aug 2023 30 Nov 20205a&f 31 Aug 2023 30 Nov 20205a&g 31 Aug 2023 30 Nov 20205a&h 31 Aug 2023 30 Nov 20205a&i 31 Aug 2023 Total 2020 - 538,461 - 538,461 - 2,916,668 (2,916,668) - - 5,950,000 1,487,500 1,487,500 1,050,000 262,500 262,500 2,625,000 2,625,000 - - - - - - - - (850,000) 5,100,000 (212,500) 1,275,000 (212,500) 1,275,000 (150,000) 900,000 (37,500) (37,500) 225,000 225,000 (375,000) 2,250,000 (375,000) 2,250,000 - - - - - - - - - - 3,863,337 19,205,129 (6,685,135) (2,344,870) 14,038,461 Performance Shares 17 Jun 20153 31 Dec 2019 8,160,771 Performance Rights 17 Jun 20154 31 Dec 2019 701,899 13 Aug 20154 31 Dec 2019 22 Feb 20164 31 Dec 2019 46,666 80,000 9 Sep 20164 31 Dec 2019 3,183,741 - - - - - 1 May 20201 30 Nov 2020 - 3,863,337 Total 12,173,077 3,863,337 45 - - - - - - - (8,160,771) (701,899) (46,666) (80,000) (3,183,741) - - - - - - 3,863,337 (12,173,077) 3,863,337 - - - - - - - - - - - - - - - - - - - Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 17. Share Based Payments (continued) 1 Tranche 7 performance rights - these performance rights vested upon continuous employment with the Group until 31 October 2020. Tranche 10 performance rights will vest upon continuous employment with the Group until 30 June 2021. 2 3 Class B Performance Shares did not meet their performance hurdle and expired in January 2020. 4 Class C Performance Rights did not meet their performance hurdle and expired in January 2020. 5 Performance rights issued during the year consist of following performance condition. 5(a) Vesting Condition: 3 year service requirement. To be continuously employed to 30 June 2023 (Overall) 5(b) Achieve $0.100 share price (20-day VWAP by 30 June 2023) 5(c) Achieve $0.125 share price (20-day VWAP by 30 June 2023) 5(d) Achieve $0.150 share price (20-day VWAP by 30 June 2023) 5(e) Achieve > $3.75m in revenue in FY 21 5(f) Achieve > $4.50m in revenue in FY 21 5(g) Achieve > $5.0m in revenue in FY 21 5(h) Achieve > 200k paying RentPay customers by 30 June 2023 5(i) Achieve > 50% of FY23 revenue from new (since FY 20) sources 6 Tranche 8 performance rights - these performance rights vested upon continuous employment with the Group until 31 October 2020. For the performance rights granted during the financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows: Grant date 14 Aug 2020 2 Dec 2020 30 November 2020 Number of performance rights Share price at grant date Total fair value at grant date 2,916,668 538,461 15,750,000 $0.048 $0.045 $0.046 $140,000 $24,231 $724,500 Type Rights Underlying share price Probability %* Value ($) Performance Rights 2,916,668 Performance Rights 538,461 Performance Rights 13,500,000** $0.048 $0.045 $0.046 100% 100% 28% 140,000 $24,231 $173,509 * The probability estimated by the management is over the expiry date of the performance shares/rights. **2.25million performance rights were cancelled during the year. Note 18. Accumulated Losses Accumulated losses at the beginning of the financial year Adjustment for change in accounting Loss after income tax for the year Consolidated 2021 $ 2020 $ (41,883,534) (40,217,335) - (1,214) (41,883,534) (40,218,549) (1,271,604) (1,664,985) Accumulated losses at the end of the financial year (43,155,138) (41,883,534) 46 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 19. Non-controlling interest Issued Capital Accumulated losses Consolidated 2021 $ 6,240 (22,639) (16,399) 2020 $ 6,240 (230) 6,010 The non-controlling interest relates to Novatti Group holding a 2.5% equity holding in RentPay Technology Pty Ltd. Note 20. 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 statements Taxation and corporate services Research & Development Grant services Total auditor’s remuneration Note 21. Earnings per Share Loss after income tax Less: Non-controlling interest Loss after income tax attributable to the owners of Rent.com.au Limited Weighted average number of ordinary shares used in calculating basic loss per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Basic and diluted (loss) per share Consolidated 2021 $ 53,500 15,000 29,598 98,098 2020 $ 52,000 9,870 26,217 88,087 Consolidated 2021 $ 2020 $ (1,294,013) (1,665,215) (22,409) 230 (1,271,604) (1,664,985) Number Number 354,956,678 291,564,581 - - 354,956,678 Cents 291,564,581 Cents (0.36) (0.57) Options have not been included in the calculation of dilutive loss per share as the options are anti-dilutive. 47 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 22. 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 23. Operating Segments Identification of reportable operating segments The Group operates as two operating segments with different revenue streams. The Board (the Chief Operating Decision Makers ('CODM') of the business) reviews performance of the Group both as a whole and as separate operating segments. The Board evaluates Group performance by reference to revenue which is measured consistently with these consolidated financial statements, as well as measuring performance by evaluating 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 monthly. Consolidated 2021 Consolidated Sales to external customers Rent.com.au RentPay $ $ Total $ 2,945,490 148,912 3,094,402 EBITDA 117,468 (806,524) Depreciation and amortisation - - Share based Payments Gain on Asset Disposal Interest Income Interest Charges Other revenue Income tax Net Loss Assets Segment assets Liabilities Segment liabilities - - - - - - - - - (689,056) (870,939) (279,649) 727 453 (9,401) 567,052 (13,200) (1,294,013) 5,644,611 267,626 5,912,237 974,415 26,975 1,001,390 48 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 23. Operating Segments (continued) Consolidated 2020 Consolidated Sales to external customers 2,388,871 63,368 2,452,239 Rent.com.au $ RentPay $ Total $ EBITDA Depreciation and amortisation Share based Payments Gain on Asset Disposal Interest Income Interest Charges Other revenue Net Loss Assets Segment assets Liabilities Segment liabilities Note 24. Commitments Finance lease commitments (771,841) (361,699) - - - - - - - - (1,133,540) (882,944) 4,372 100 1,952 (10,593) 355,437 - (1,665,215) 2,062,338 590,702 2,653,040 856,402 1,513 857,915 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 Note 25. Events After the Reporting Period 2021 $ 13,018 10,131 23,150 23,150 - 23,150 2020 $ 8,602 5,734 14,336 14,336 - 14,336 On 30 July 2021, the Group issued 538,461 ordinary shares on conversion of 538,461 performance rights. Other than the above, there have been no matters or circumstances which have arisen since 30 June 2021 that have significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. 49 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 26. Controlled Entities All controlled entities are included in the consolidated financial statements. The Group 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. Parent Entity Rent.com.au Limited Name of controlled entity Country of Incorporation Principal Activity Percentage Owned 2021 2020 Australia Investment/Parent Rent.com.au (Operations) Pty Ltd Australia Information Technology Lease.com.au Pty Ltd Australia Information Technology 100% 100% 100% 100% RentPay Technology Pty Ltd Australia Information Technology 97.5% 97.5% The Group financial statements incorporate the assets, liabilities and result of the following subsidiary with non-controlling interests in accordance with the accounting policy described in note 1: Country of Incorporation Parent Ownership interest 2021 % Ownership interest 2020 % Non-controlling interest Ownership interest 2020 % Ownership interest 2021 % Name RentPay Technology Pty Ltd* Australia 97.5% 97.5% 2.5% 2.5% * the non-controlling interests hold 2.5% of the voting rights of RentPay Technology Pty Ltd Summarised financial information Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated entity are set out below: Summarised statement of financial position Current assets Non-current assets RentPay Technology Pty Ltd 2021 $ 145,656 121,970 2020 $ 103,677 455,275 Total assets 267,626 558,952 Current liabilities Non-current liabilities 26,837 896,719 1,513 317,017 Total liabilities 923,556 318,530 Net (liabilities)/assets (655,930) 240,422 50 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 26. Controlled Entities (continued) Summarised statement of profit or loss and other comprehensive income Revenue Expenses Loss before income tax expense Income tax expense RentPay Technology Pty Ltd 2021 $ 2020 $ 150,666 (1,033,819) (883,153) (13,200) 63,368 (72,571) (9,203) - Loss after income tax expense (896,352) (9,203) Other comprehensive income - - Total comprehensive loss (896,352) (9,203) Statement of cash flows Net cash used in operating activities Net cash used in investing activities Net cash used in financing activities (43,776) - - 39,277 (63,750) 32,725 Net increase/(decrease) in cash and cash equivalents (43,776) 8,252 Other financial information Loss attributable to non-controlling interests Accumulated non-controlling interests at the end of reporting year (22,409) (16,399) (230) 6,010 Note 27. Cashflow Information a) Reconciliation of Cash Flow from Operations with Loss after Income Tax Consolidated 2021 $ 2020 $ (1,294,013) (1,665,215) 279,649 870,939 - 8,947 (122,281) 173,457 32,209 (4,372) 882,943 15,008 12,878 29,384 (36,358) 6,902 (51,093) (758,830) (Loss) after income tax - Share based payments - Depreciation and amortisation - Provision for doubtful debts - Interest expense Changes in assets and liabilities: - trade and other receivables - trade payables and accruals - employee benefits Cash flows used in operations 51 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 28. Non-cash investing and financing activities Acquisition of plant and equipment by means of finance leases Total non-cash investing and financing activities Note 29. Changes in liabilities arising from financing activities Finance lease liability Balance at the beginning of the year Net cash used in financing activities Acquisition of plant and equipment by means of finance leases Balance at the end of the year Lease liability Balance at the beginning of the year Lease liability recognised Net cash used in financing activities Balance at the end of the year Note 30. Related Party Transactions The Group’s main related parties are as follows: (i) Entities exercising control over the Group: Consolidated 2021 $ 20,838 20,838 Consolidated 2021 $ 14,336 (12,024) 20,838 23,149 102,353 - (79,843) 22,510 2020 $ 2,850 2,850 2020 $ 22,937 (11,451) 2,850 14,336 - 175,761 (73,408) 102,353 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 31. (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. 52 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 30. Related Party Transactions (continued) The following transactions occurred with related parties: Consolidated Transactions: Outgoings and others – Watersun Property Pty Ltd2 Cleaning – Servco Pty Ltd2 Interest expense2 Amortisation of right of use asset2 Software development and AFSL representative fees4 Total Related Party Transactions Balances owing to related parties at 30 June 2021: Watersun Property Pty Ltd2 Servco Pty Ltd2 Directors’ fees3 Right of use asset2 Lease liability2 Novatti Pty Ltd4 2021 $ 85,505 7,933 5,663 84,215 176,600 359,916 2020 $ 126,049 5,912 10,593 77,576 - 220,130 Consolidated 2021 $ 34,700 630 - 20,149 22,511 51,600 2020 $ 109,170 1,102 29,168 96,970 102,353 - 125,709 338,763 1 2 3 4 Philip Warren is a director and shareholder of Grange Consulting Group Pty Ltd. Garry Garside is a director of Watersun Property Pty Ltd and Servco Pty Ltd. Directors’ fees will be repaid with performance rights in lieu of shares. Performance rights were approved by the shareholders on 14 August 2020. Novatti Pty Ltd is a minority shareholder of RentPay Technology Pty Ltd, a subsidiary of Rent.com.au Ltd Note 31. Interests of Key Management Personnel Compensation of Key Management Personnel (KMP) The aggregate compensation made to key management personnel of the Group is set out below: Consolidated 2021 $ 654,055 66,040 53,058 773,153 2020 $ 540,833 41,760 - 582,593 Short-term employee benefits Post-employment benefits Share-based payments Total KMP remuneration 53 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 32. Financial Risk Management 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: Note 6 7 11 12 13 Consolidated 2021 $ 2,918,306 362,834 3,281,140 Consolidated 2021 $ 730,553 23,149 22,511 2020 $ 631,771 329,582 961,353 2020 $ 551,714 14,336 102,353 776,213 668,403 Cash and cash equivalents Trade and other receivables* Total Financial Assets Trade and other payables* Borrowings Lease liability Total Financial Liabilities * Excluding GST and prepayment. Financial Risk Management Policies The Board of Directors are 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. 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. 54 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 32. Financial Risk Management (continued) a) Credit Risk (continued) 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 Consolidated 2021 $ 2020 $ 2,918,306 631,771 - - - - 6 2,918,306 631,771 AA- Rated A+ Rated Unrated 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. 55 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 32. Financial Risk Management (continued) Financial liabilities due for payment Within 1 year 1 to 5 Years Total Weighted average effective interest rate % - - Trade and other payables Borrowings 2021 2020 2021 2020 2021 2020 $ $ 730,553 551,714 $ - $ - $ $ 730,553 551,714 13,018 8,602 10,131 5,734 23,149 14,336 Lease liability 7.43% 22,511 80,989 - 21,364 22,511 102,353 Financial assets realisable cash flows Within 1 year 1 to 5 Years Total Weighted average effective interest rate 2021 2020 2021 2020 2021 2020 % $ $ 0.50% 2,918,306 631,771 - 362,835 329,582 $ - - $ - - $ $ 2,918,30 6 631,771 362,835 329,582 Cash and cash equivalents Trade and other receivables c) Market Risk (i) Interest rate risk 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. (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 33. Contingent Liabilities There are no contingent liabilities for the year ended 30 June 2021 (30 June 2020: nil). 56 Rent.com.au Limited Notes to the Financial Statements 30 June 2021 Note 34. Parent Information The following information has been extracted from the accounting records of the parent entity and has been prepared in accordance with the Australian Accounting Standards. Statement of profit or loss and other comprehensive income (Loss) for the year Total comprehensive (loss) for the year (1,294,013) (1,294,013) (1,665,215) (1,665,215) 2021 $ 2020 $ 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 9,235 4,962,370 4,971,605 1,134 1,858,301 1,859,435 (44,362) (44,362) (70,319) (70,319) 90,147,743 9,757,453 75,119,623 9,701,691 (94,977,953) (83,032,198) 1,789,116 4,927,243 Contingent Liabilities and Capital expenditure There are no contingent liabilities for the parent entity for both financial periods ended 30 June 2021 and 30 June 2020. 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; and • Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may indicate the need to adjust the carrying value of the investment. 57 Rent.com.au Limited Directors’ Declaration 30 June 2021 In the directors' opinion: • • • • the attached financial statements and notes comply with the Corporations Act 2001, the Australian 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 2021 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, 27 August 2021 58 Rent.com.au Limited Additional ASX Information 30 June 2021 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 13 October 2021 includes the following securities: Equity Class Fully paid ordinary shares Employee Options Unlisted options (exp 6 Feb 2022, ex $0.042) Performance Rights All issued fully paid ordinary shares carry one vote per share. 2. Distribution of Ordinary Shares as at 13 October 2021 Number of holders Total on issue 5,565 398,192,688 4 1 4 7,200,000 5,982,028 13,500,000 Range 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-and over Total Holders 190 1,665 1,117 2,150 Units 13,684 5,118,961 8,875,172 74,197,836 443 309,987,035 % 0.00% 1.29% 2.23% 18.63% 77.85% 5,565 398,192,688 100.00% There were 2,004 holders of less than a marketable parcel of ordinary share, and 52 holders from overseas holding 4,187,332 shares. 3. Substantial shareholder notices lodged with the Company Name Capital B Asset Management Pty Ltd Number* % 40,000,000 10.05% * Number of shares held at 13 October 2021 where known, otherwise number of shares is at date of substantial shareholder notice lodged with the Company 4. Voting Rights See note 15 of the financial statements. 5. Restricted securities subject to escrow period 8,500,343 Ordinary Shares held by Mr John Wood are currently in a voluntary escrow period until 5 May 2022. 6. On-market buy back There is currently no on-market buyback program for any of Rent.com.au Limited’s listed securities. 59 Rent.com.au Limited Additional ASX Information 30 June 2021 7. Top 20 Largest Holders of Ordinary Shares as at 13 October 2021 Name 1 CAPITAL B ASSET MANAGEMENT PTY LTD 2 BADER SMSF PTY LTD 3 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 4 CITICORP NOMINEES PTY LIMITED 5 MR MARK DANIEL NEEDHAM 6 MR JASON ALAN CARROLL 7 DR GARRY DESMOND & MRS FRANCES SAMBRAILO GARSIDE 8 TEFIG PTY LTD 9 REEFBAY HOLDINGS PTY LTD 10 ALI YOUNG SUPER PTY LTD 11 MR MARK WOSCHNAK 12 MR BENJAMIN PATRICK SANDEMAN 13 NETWORK CAPITAL PTY LTD 14 ARVADA PTY LTD 15 CAPITAL J INVESTMENTS PTY LTD 16 BFB HOLDINGS PTY LTD 17 BADGER 31 PTY LTD 18 MR ANTHONY BRENDON COPE & MRS AMANDA GAY COPE 19 GARRY DESMOND & FRANCES GARSIDE 20 REEFBAY HOLDINGS PTY LTD Total Top 20 Others Total Ordinary Shares on Issue 8. Unquoted Securities Number % 40,000,000 10.05% 16,705,711 15,795,172 12,158,387 8,500,000 5,925,000 5,840,269 5,779,546 5,433,867 4,733,333 4,400,000 4,273,358 4,000,000 3,800,000 3,500,000 3,227,814 3,000,000 3,000,000 2,160,230 2,151,168 4.20% 3.97% 3.05% 2.13% 1.49% 1.47% 1.45% 1.36% 1.19% 1.10% 1.07% 1.00% 0.95% 0.88% 0.81% 0.75% 0.75% 0.54% 0.54% 154,383,855 38.77% 243,808,833 61.23% 398,192,688 100.00% The names of the security holders holding more than 20% of an unlisted class of security are listed below: Novatti Pty Ltd Mr Greg Bader Mr Johannes Steyn Ferreira Mr Garry Desmond Garside Mr Samuel Ian McDonagh Philuchna Pty Ltd Mr John Wood Total other holders Total Total holdings over 20% Other holders Unlisted Options $0.042 6 Feb 2022 5,982,028 - - - - - - - 5,982,028 1 0 Performance Rights Employee Options - 4,500,000 4,500,000 - - - - 4,500,000 13,500,000 2 2 - - - 2,700,000 1,500,000 1,500,000 1,500,000 - 7,200,000 4 - 60 

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