RIGHTCROWD LIMITED
AND CONTROLLED ENTITIES
ANNUAL REPORT
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
RIGHTCROWD LIMITED
AND CONTROLLED ENTITIES
A.B.N. 20 108 411 427
FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2018
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
RightCrowd Limited
Chairman’s Report
For the year ended 30 June 2018
Dear Shareholder
The Board of RightCrowd Limited (RCW) is pleased to provide the 2018 annual report. In this report we set out
RCW’s financial results for the year ended 30 June 2018, its financial position at that date and commentary on its
activities and outlook.
The completion of the IPO in September 2017 was a key enabler for the Company to achieve market share in the
anticipated growth in the market for physical security and compliance. Since the IPO, dedicated sales and
marketing teams have been established, marketing collateral has been developed, the web site has been
refreshed, and our software implementation and development teams have been increased.
Execution of our strategy has delivered both sales and insights. The details of significant sales have been outlined
in our Quarterly market announcements. We have also previously mentioned that some larger opportunities have
long sales cycles which makes forecasting the timing of significant sales difficult. Notwithstanding that market
dynamic, RCW has achieved increased revenue from new and existing customers and currently has multiple late
stage sales opportunities in relation to new projects
There is continuing confidence that the opportunity in the market for revenue growth is there. The Company
achieved a 33.1% growth in software sales and software consulting revenue in FY 2018 and the management
team expects growth to be at least this number in the FY 2019 year.
From a financial perspective, RCW increased its revenue from continuing operations from $4,146,976 in FY 2017
to $5,520,755 in FY2018. As outlined in the IPO Prospectus and previous announcements it also invested in
building the capabilities to sell, market, develop and deliver its solutions. All monies spent on these activities were
expensed as incurred. As a result, the net loss for the year increased from $4,697,428 (FY 2017) to $5,120,083
(FY 2018).
Cash at bank at 30 June 2018 was $6,609,297. In addition, RCW expects to receive an R&D tax incentive rebate
of at least $1,750,000 in the next quarter.
Finally, I would like to thank our entire team and all of our clients and partners for their support in this
transformative year for RCW. Our team, led by Peter Hill, have shown great expertise and commitment in the
execution of the Company’s strategies.
I look forward to speaking with you, our shareholders, at the Company’s AGM.
Yours sincerely
Robert Baker
Non-executive Chairman
RightCrowd Limited
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
Results for Announcement to the Market
Key Information
Total Revenue
Loss from ordinary activities after tax
attributable to members
2018
$
2017
$
% Change
9,381,950
5,997,148
56.44%
(5,120,083)
(4,697,428)
(9.00%)
Statement of Retained Earnings Showing Movements
Balance at the beginning of the year
2018
$
2017
$
(8,455,911)
(3,758,483)
Cash settlement of convertible note equity component
751,936
-
Net (loss) attributable to members of the parent entity
(5,120,083)
(4,697,428)
Balance at the end of the year
(12,824,058)
(8,455,911)
Dividends / Distributions
Interim dividend
Final dividend
Amount per
security
Franked amount
per security
0.0c
0.0c
0.0c
0.0c
Statement of Profit or Loss and Other Comprehensive Income with Notes to the Statement
Refer to pages 15–56 of the 30 June 2018 financial report and accompanying notes for RightCrowd
Limited.
Statement of Financial Position with Notes to the Statement
Refer to pages 16–56 of the 30 June 2018 financial report and accompanying notes for RightCrowd
Limited.
Statement of Cash Flows with Notes to the Statement
Refer to pages 17–56 of the 30 June 2018 financial report and accompanying notes for RightCrowd
Limited.
Control Gained or Lost over Entities in the Year
There was no change to the Group’s ownership of entities during the year ended 30 June 2018 having
acquired a 100% interest of Reporia Pty Ltd on 29 March 2017. Reporia Pty Ltd owns intellectual property
(IP). The IP is being developed by wholly owned subsidiaries of RightCrowd Limited. Reporia Pty Ltd
contributed NIL profit to the Group’s consolidated profit from ordinary activities during the year ended 30
June 2018. (2017: NIL)
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
Commentary on the Results for the Period
The Board are satisfied that the Company is making solid progress against the plans detailed in the IPO
Prospectus (company shares commenced trading on the ASX on 18 September 2017) and at the
Company's AGM in November 2017.
Over the 2018 financial year, the Company grew revenue for software and related services from $4.147m
(2017) to $5.521m, a growth of 33.1%. This growth has come from new software deployments and strong
growth from services revenue from both new and existing customers.
Total Other Income for the year included a one off Other Revenue item from settlement of the shadow
equity share plan totalling $1.823m.
The Company has continued with its, previously outlined, plan to invest in additional staff in order to
commercialise the RightCrowd software solutions for the global market and this was the primary reason for
the IPO. The outcome of this was an increase in the overall cost base and a loss for the year of $5.120m.
This result is at the level that was expected for the first year of the business cycle following the IPO.
During the year there has been a continued focus on developing the RightCrowd technologies and the
Company has invested in excess of $4m on R&D in Australia and this has allowed it to submit a claim for
an R&D tax incentive which should result in a cash rebate of approximately $1.75m. This activity will
continue in the years to come as RightCrowd brings new innovative solutions to its market.
The IPO has removed all the convertible note debt from the Company’s Statement of Financial Position as
the holders were either repaid or converted to ordinary shareholders. The cash position at the end of the
financial year was $6.609m with trade receivables of $1.116m and a receivable for an R&D tax credit cash
rebate of $1.75m. This would give the Company approximately $9.4m of available cash to use in 2019
financial year to continue operating the business plan.
During the financial year the Company announced a number of closed sales contracts including a sales
contract with an Australian Government owned entity across selected locations nationally and two
contracts with banking and financial services industry customers. One of these was in Australia and the
second was a US Bank with subscription and implementation revenue of around $500k. The revenue for
the latter contract will be earned in FY2019. In addition, the Company has signed and announced a
contract to provide services to a large existing customer and the work will be carried out in the first quarter
of FY 2019 and is valued at approximately $650k.
The Board is of the opinion that these closed contracts are a good indicator of the sales momentum the
Company has generated in the market. The Company continues to see significant interest from national
and multi-national companies, including some in new market segments aiming to improve their physical
security processes and achieve the productivity improvements offered by the RightCrowd solutions.
Potential mid and large scale implementations are a complex buying decision for organisations, and the
initial purchase decision and contract negotiation typically requires an extended timeframe to complete.
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
CONTENTS
Corporate Governance Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
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
Independent Auditor’s Report
Additional Information for Listed Public Companies
1
2
7
14
15
16
17
18
19
57
58
61
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
RightCrowd Limited and the board are committed to achieving and demonstrating the highest standards of
corporate governance. RightCrowd Limited has reviewed its corporate governance practices against the
Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate
Governance Council.
The corporate governance statement is dated as at 30 June 2018 and reflects the corporate governance practices
in place throughout the 2018 financial year. The corporate governance statement was approved by the board on
18 September 2018. A description of the Group's current corporate governance practices is set out in the Group's
corporate governance statement which can be viewed at https://www.rightcrowd.com/about-us/investor-relations/.
Page 1
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
General Information
Directors
Your directors present their report on the consolidated entity (referred to herein as the Group or
RightCrowd) consisting of RightCrowd Limited and its controlled entities for the financial year ended 30
June 2018.
The names of directors in office at any time during or since the end of the year are:
Mr Robert Baker
Non-executive Chairman. Appointed 6 August 2017.
Robert Baker has worked in both Australia and the UK. His main expertise and practice area was external
audit, internal audit, financial reporting, internal control assessments and accounting advice. His business
acumen resulted in clients (including ASX 100 companies) also engaging him to provide business and due
diligence services.
Robert Baker has had nearly a decade of board experience. He has had experience as a board member of
PricewaterhouseCoopers (2008-2013) serving its Finance, Country Admissions (nominations) and Partner
Evaluation and Income (remuneration) Committees and has also been a Managing Partner in the Brisbane
Office. He is currently a Director of Flight Centre Travel Group Limited (ASX: FLT) and has held that role
since September 2013. He is also Chairman of Goodman Private Wealth Ltd and is an Advisory Board
member for several not for profit organisations.
Mr Peter Hill
Managing Director and Chief Executive Officer. Appointed 18 March 2004.
Peter Hill founded the Company in 2004 and has been instrumental in growing the Company to its current
level.
In early 2006, Peter sold the Company to a Silicon Valley company, which was then sold to SAP shortly
thereafter. In 2007, Peter successfully re-acquired the Company from SAP and spun out the company as
an independent entity. Peter is responsible for the Company’s global business strategy and continues to
drive partnerships with billion-dollar global physical security vendors, at both corporate and technical
levels.
An entrepreneur for most of his 30 years in the information technology industry, Peter previously founded
and led two other business software start-ups after finishing his career as a professional basketball player
in the 1990’s. Peter also holds a science degree majoring in computer science.
Mr Alfred Scott Goninan
Non-executive Director. Chairman of the Audit and Risk Committee. Appointed 6 August 2017.
Scott Goninan joins the RightCrowd Board after 26 years’ experience as the original founder and
Managing Director and CEO of the Durachrome Group. He is well practised in delivering strategic direction
and implementation of business operations.
The Durachrome Group imported and exported materials globally and had three production facilities that
operate 24hrs a day 7 days a week. In his role with Durachrome, Scott has developed international
relationships throughout Asia and Europe.
Scott Goninan has experience in reporting to public company boards in his role as a Managing Director.
Scott has ongoing ventures in property development; specialised imports and exports; commercial,
industrial and personal finance; and research and development.
Page 2
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
Directors' Interests in Securities
At the date of this Report the interests of the Directors in the securities of the Company as follows:
Director
Listed Securities
Unlisted Securities
Ordinary Securities
Stock Options
Robert Baker (i)
Peter Hill (ii)
Scott Goninan (iii)
100,000
53,907,428
17,422,517
Nil
Nil
Nil
(i) Securities purchased through the IPO.
(ii) Indirect interest through CNI Pty Ltd ACN 131 410 556.
(iii) Indirect interest through Goninan Property Investments Pty Ltd ACN 151 022 052 ATF The
Goninan Wealth Trust.
Company Secretary
Mr Peter Hill was appointed Company Secretary on 18 March 2004 and resigned on 10 August 2017 in
order to focus on Managing Director responsibilities.
The Company appointed Joint Company Secretaries on 10 August 2017.
Kim Clark is the Head of Corporate Services for Boardroom Pty Ltd’s Queensland office and currently acts
as Company Secretary for various ASX listed and unlisted companies in Australia. Kim is an experienced
business professional with 21 years’ experience in Banking and Finance and 6 years as in-house
Company Secretary of an ASX300 company.
Leslie Milne was appointed the Chief Financial Officer of the RightCrowd Group of companies on 3
January 2017. Leslie is a Fellow of Chartered Association of Certified Accountants and has more than 20
years’ finance and accounting experience across a range of companies in the technology industry and has
held Corporate Reporting and Commercial Finance roles in the United Kingdom and Australia for
companies listed on the FTSE and NASDAQ as well as unlisted companies.
Events after Reporting Period
The directors are not aware of any significant events since the end of the reporting period that impact on
these financial statements.
Principal Activities
RightCrowd is a leading developer of physical security, safety and compliance software. Since 2004, the
Company has invested in research and development to provide innovative solutions which improve
security, safety and compliance for organisational workforces, including employees, contractors and
visitors to sites.
Significant Changes to Activities
During the financial year, RightCrowd Limited gained admission to the official list of the Australian
Securities Exchange after an initial public offering (IPO) raising $9,250,000.
There were no other significant changes in the nature of the consolidated group’s principal activities during
the financial year.
Dividends Paid and Proposed
No dividends have been paid or proposed by the Company during or since the end of the financial year.
Page 3
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
Review of Operations
Business Model
The Company generates revenue from sales of its software, comprising up-front licence fees, annual
subscription fees and annual support and maintenance fees. The software products include large scale
enterprise software (predominantly sold direct to the customer) and ‘out of the box’ software
(predominantly sold through channel partners). The Company also generates revenue from professional
services that it provides to its clients. The pricing structures for sales of the Company’s various products
and consulting fees are dependent on the scale and complexity of the client requirement.
Review of Operations
Commentary on the Results for the Period
The Board are satisfied that the Company is making solid progress against the plans detailed in the IPO
Prospectus (company shares commenced trading on the ASX on 18 September 2017) and at the
Company's AGM in November 2017.
Over the 2018 financial year, the Company grew revenue for software and related services from
$4,146,976 (2017) to $5,520,755, a growth of 33.1%. This growth has come from new software
deployments and strong growth from services revenue from both new and existing customers.
Total Revenue for the year included a one off Other Revenue item from settlement of the shadow equity
share plan totalling $1,823,049.
The Company has continued with its, previously outlined, plan to invest in additional staff in order to
commercialise the RightCrowd software solutions for the global market and this was the primary reason for
the IPO. The outcome of this was an increase in the overall cost base and a loss for the year of
$5,120,083. This result is at the level that was expected for the first year of the business cycle following the
IPO.
During the year there has been a continued focus on developing the RightCrowd technologies and the
Company has invested in excess of $4,000,000 on R&D in Australia and this has allowed it to submit a
claim for an R&D tax incentive which should result in a cash rebate of approximately $1,750,000. This
activity will continue in the years to come as RightCrowd brings new innovative solutions to its market.
The IPO has removed all the convertible note debt from the Company’s Statement of Financial Position as
the holders were either repaid or converted to ordinary shareholders. The cash position at the end of the
financial year was $6,609,297 with trade receivables of $1,115,769 and a receivable for an R&D tax credit
cash rebate of $1,750,000. This would give the Company approximately $9,400,000 of available cash to
use in 2019 financial year to continue operating the business plan.
During the financial year the Company announced a number of closed sales contracts including a sales
contract with an Australian Government owned entity across selected locations nationally and two
contracts with banking and financial services industry customers. One of these was in Australia and the
second was a US Bank with subscription and implementation revenue of around $500,000. The revenue
for the latter contract will be earned in FY2019. In addition, the Company has signed and announced a
contract to provide services to a large existing customer and the work will be carried out in the first quarter
of FY 2019 and is valued at approximately $650,000.
The Board is of the opinion that these closed contracts are a good indicator of the sales momentum the
Company has generated in the market. The Company continues to see significant interest from national
and multi-national companies, including some in new market segments aiming to improve their physical
security processes and achieve the productivity improvements offered by the RightCrowd solutions.
Potential mid and large scale implementations are a complex buying decision for organisations, and the
initial purchase decision and contract negotiation typically requires an extended timeframe to complete.
Revenue Pipeline Outlook
In relation to the financial year ending 30 June 2019, the Company will earn approximately $2,100,000 (FY
2018 $2,030,000) in annual recurring revenue comprising annual subscription fees and annual support and
maintenance fees as a result of sale and licensing of its software in prior periods. In addition to these
recurring software-related revenue streams, pending work for professional services with new and existing
clients, and identified the key opportunities provide confidence it should achieve revenue growth
percentage achieved in FY 2018.
Page 4
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
The Company maintains a CRM system in respect of its future opportunities, and has a significant
pipeline of future opportunities at varying levels of maturity, from early discussions,
scope definition through to quotes submitted for approval. There is however, no guarantee what
proportion of this pipeline will result in actual revenue, or the timing of receipt of revenue.
During the FY 2019 financial period, the Company will focus on activities with the aim of
increasing sales, investing in development of marketing collateral to support direct
selling and sales through it’s reseller channel partners, as well as continued R&D on existing and new products.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2018 has been received and can
be found on page 14 of the financial report.
Meetings of Directors
Directors attendance at Board and Committee meetings is summarised below:
BOARD AND COMMITTEE
ATTENDANCE
[for the period 1 July 2017 to 30 June 2018]
Director/Alternate Director
Date Appointed
Date Ceased
Attended
Held
Attended
Held
Peter Leslie Hill
Alfred Scott Goninan
Robert Anthony Baker
18/03/2004
6/08/2017
6/08/2017
Current
Current
Current
11
11
11
11
11
11
4
4
4
4
4
4
Board Meetings
Audit Committee
Meetings
Indemnification and Insurance for Directors and Officers
During the year the Company paid insurance in respect
of a contract insuring all of the Directors and executive officers of the Group against a liability
incurred in their role as Directors and officers of the group, except where:
- the liability arises out of conduct involving a wilful breach of duty; or
- there has been a contravention of Sections 182 or 183 of the Corporations Act 2001.
Options
At the date of this report, the unissued ordinary shares of RightCrowd Limited under the Employee Share Option
Plan are as follows:
Grant Date
13/09/2017
13/09/2017
13/09/2017
30/05/2018
30/05/2018
30/05/2018
Date of Expiry
Exercise Price
Number under Option
12/12/2018
12/12/2019
12/12/2020
28/08/2019
27/08/2020
28/08/2021
$0.38
$0.43
$0.43
$0.60
$0.68
$0.68
2,096,695
2,096,661
2,096,644
106,668
106,666
106,666
6,610,000
Option holders do not have any rights to participate in any issues of shares or other interests of the
company or any other entity.
For details of options issued to directors and executives as remuneration, refer to the Remuneration
Report.
Page 5
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
Proceedings on Behalf of the Company
No person has applied for leave of court to bring proceedings on behalf of the company or intervene
in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the
company for all or any part of those proceedings.
The company was not a party to any such proceedings during the year.
Non-audit services
No non-audit services were provided by BDO Audit Pty Ltd to the company during the year.
Environmental Issues
The Group’s operations are not subject to any significant environmental regulations in the countries where
it operates.
Page 6
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Remuneration Policy
The remuneration policy of RightCrowd Limited has been designed to align key management personnel
(KMP) objectives with shareholder and business objectives by providing a fixed remuneration component
and offering specific long-term incentives based on key performance areas affecting the consolidated
group’s financial results. The Board of RightCrowd Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain high-quality KMP to run and manage the
consolidated group, as well as create goal congruence between directors, executives and
shareholders.The Remuneration Policy changed during the transition from a private to public company and
was previously managed by the sole Director and since listing has been managed by the Board.
The company listed on the Australian Stock Exchange in September 2017. The Board’s revised policy
for determining the nature and amount of remuneration for KMP of the consolidated group is as
follows:
All KMP receive a base salary (which is based on factors such as length of service and experience),
superannuation and specified cash bonus if included in their agreed slalary package and may, in future
years, receive, additional fringe benefits, cash bonuses, options and performance incentives.
Performance incentives will generally only be paid once predetermined key performance indicators
(KPIs) have been met. Other than the Managing Director, Directors do not receive performance
incentives.
Incentives paid in the form of options or rights are intended to align the interests of the directors and
company with those of the shareholders. In this regard, KMP are prohibited from limiting risk attached
to those instruments by use of derivatives or other means. Other than the Managing Director, it is not
envisaged that Directors receive incentives in the form of options or rights.
The Board will review KMP packages annually by reference to the consolidated group’s performance,
executive performance and comparable information from industry sectors.
The performance of KMP is to be measured against criteria agreed annually with each executive and is
based predominantly on the forecast improvement in the consolidated group’s performance and in
shareholders’ value. All bonuses and incentives must be linked to predetermined performance criteria.
The Board may, however, exercise its discretion in relation to approving incentives, bonuses and
options. Any change must be justified by reference to measurable performance criteria. The policy is
designed to attract the highest calibre of executives and reward them for performance results leading
to long-term growth in shareholder wealth.
KMP receive, at a minimum, a superannuation guarantee contribution required by the government,
which is currently 9.5% of the individual’s average weekly ordinary time earnings (AWOTE). Some
individuals, however, have chosen to sacrifice part of their salary to increase payments towards
superannuation.
KMP do not receive any other retirement benefits.
Upon retirement, KMP are paid employee benefit entitlements accrued to the date of retirement. Any
options not exercised before or on the date of termination will lapse.
All remuneration paid to KMP is valued at the cost to the company and expensed.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The Board will determine payments to the non-executive directors and reviews their
remuneration annually, based on market practice, duties and accountability. The maximum aggregate
amount of fees that can be paid to non-executive directors is subject to approval by shareholders at
the annual general meeting.
Page 7
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
KMP are also entitled and encouraged to participate in the employee share option arrangements to align
executives’ interests with shareholders’ interests.
Options granted under the arrangement do not carry dividend or voting rights. Each option is entitled to be
converted into one ordinary share once the interim or final financial report has been disclosed to the public.
Option value is measured using the Black-Scholes methodology.
KMP or closely related parties of KMP are prohibited from entering into hedge arrangements that would
have the effect of limiting the risk exposure relating to their remuneration.
In addition, the Board’s remuneration policy prohibits directors and KMP from using RightCrowd Limited
shares as collateral in any financial transaction, including margin loan arrangements.
Performance-based Remuneration
KPIs will be set annually, with a certain level of consultation with KMP. The measures are specifically
tailored to the area each individual is involved in and has a level of control over. The KPIs target areas the
Board believes hold greater potential for group expansion and profit, covering financial and non-financial
as well as short and long-term goals. The level set for each KPI is based on budgeted figures for the
Group and respective industry standards.
Performance in relation to the KPIs will be assessed annually, with bonuses being awarded depending on
the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs will be
reviewed by the Board in light of the desired and actual outcomes, and their efficiency will be assessed in
relation to the Group’s goals and shareholder wealth, before the KPIs are set for the following year.
In determining whether or not a KPI has been achieved the Board will base the assessment on audited
figures where appropriate; however, where the KPI involves comparison of the Group, or a division within
the Group, to the market, or involves a non-financial measure, independent reports will be obtained from
external organisations if required.
Relationship between Remuneration Policy and Company Performance
The remuneration policy has been tailored to increase goal congruence between shareholders,
directors and executives. The Board added two non-Executive Directors and approved the
Company’s Remuneration Policy after the financial year end 30 June 2017. As such the
Company’s Director and KMP remuneration has been based on Company performance over the
current and comparative financial periods. As part of the changes brought about by the listing of
RightCrowd, the following policy items were applied to achieve the aim of increased shareholder
and management goal congruence, the first being a performance-based bonus based on KPIs, and
the second being the issue of options to the majority of executives to encourage the alignment of
personal and shareholder interests.
The following table shows the gross revenue, profit / (loss) for the last 5 years for the entity. Over
recent years the company has been managed as a research and development company and as
such the maximum possible investment has been made in order to utilise available tax incentives in
relation to this activity.
2014
$
2015
$
2016
$
2017
$
2018
$
Revenue and other income
4,637,930
6,939,322
8,802,468
5,997,948
9,381,950
Net (loss)
Loss Per Share
Share Price at 30 June
(554,349)
(395,165)
(1,181,662)
(4,697,428)
(5,120,083)
(0.44)
N/A
(0.32)
N/A
(0.95)
N/A
(0.22)
N/A
(0.04)
0.40
Page 8
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Despite the 33.1% increase in software and consulting revenue, the Board acknowledges that the
Company is only part way through its plan to commercialise the RightCrowd software portfolio. For that
reason, no bonus or incentive rewards were awarded to the Managing Director in the current or previous
financial year.
Employment Details of Members of Key Management Personnel
One of the purposes of listing in September 2017 was to raise funds to allow the appointment of additional
KMPs. The following table provides employment details of persons who were, during the financial year,
members of KMP of the consolidated group. The table also illustrates the proportion of remuneration that
was performance and non-performance based.
Position Held as
at 30 June 2018
and any Change
during the Year
Contract Details
(Tenure)
Proportions of Elements
of Remuneration Related
to Performance (Other
than Options Issued)
Proportions of
Elements of
Remuneration Not
Related to
Performance
Non-salary
Cash-based
Incentives
%
Shares/
Units
%
Fixed Salary/
Fees
%
Group KMP
Peter Hill
CEO / Managing
Director
14 years
Leslie Milne CFO / Joint
18 months
Company
Secretary
Robert Baker Non-Executive
11 months
Chairman
Scott
Goninan
Non-Executive
Director
11 months
0
8
0
0
0
0
0
0
100
92
100
100
The employment terms and conditions of all KMP are formalised in contracts of employment. Leslie Milne
was appointed CFO on 3 January 2017. Robert Baker and Scott Goninan were appointed as Directors on
6 August 2017. Contracts of Employment can be terminated by the employee or the Company as follows: -
CEO / Managing Director on giving 6 (six) months’ notice.
CFO on giving 2 (two) weeks’ notice.
Directors are appointed to act between AGMs of the company as per the Constitution.
Employment Contracts
CEO / Managing Director: The company has entered into an employment contract with Mr Peter Hill. The
key terms of the contract are:
Remuneration is outlined in the contract of employment at $250,000 per annum including
superannuation with further opportunity for bonus incentives based on performance;
4 weeks annual leave per annum
Page 9
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Chief Financial Officer: The company has entered into an employment contract with Mr Leslie Milne. The
key terms of the contract are:
Salary of $200,000 per annum (increased 1 January 2018, (previously $180,000) plus statutory
superannuation contributions;
4 weeks annual leave per annum
Previously agreed Performance bonus based on personal performance over the first 6 months of
$10,000 payable in June 2017 was paid during FY 2018
Previously agreed Bonus of $10,000 should RightCrowd raise greater than $5,000,000 in new
capital was paid during FY 2018
Non-Executive Chairman:
The company has entered into a Directors Agreement with Robert Baker. The key terms are set out in the
Appointment letter effective 6 August 2017 and includes a base salary plus statutory superannuation
contributions.
Non-Executive Director:
The company has entered into a Directors Agreement with Scott Goninan. The key terms are set out in the
Appointment letter effective 6 August 2017 and includes a base salary plus statutory superannuation
contributions.
Changes in Directors and Executives Subsequent to Year-end
None.
Remuneration Expense Details for the Year Ended 30 June 2018
The following table of benefits and payments represents the components of the current year and
comparative year remuneration expenses for each member of KMP of the consolidated group. Such
amounts have been calculated in accordance with Australian Accounting Standards.
Page 10
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Table of Benefits and Payments for the Year Ended 30 June 2018 and 30 June 2017
Short-term Benefits
Post-employment
Benefits
Long-term
Benefits
Equity-settled
Share-based
Payments
Salary,
Fees and
Leave
Profit
Share
and
Bonuses
Non-
mone-
tary
Other
Pension
and
Super-
annu-
ation
Other
Incentive
Plans
LSL
Shares/
Units
Options/
Rights
Cash-
settled
Share-
based
Pay-
ments
Terminat
ion
Benefits Total
$
$
$
$
$
$
$
$
$
$
$
$
$
Group KMP
Peter Hill
2018 234,593
Nil
Nil
1,354 20,115
Peter Hill
2017 169,968
Nil 11,987
Nil 14,250
Robert Baker2
2018
47,307
Robert Baker
2017
Nil
Scott Goninan3
2018
32,402
Scott Goninan
2017
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
4,494
Nil
Nil
Nil
3,078
Nil
Nil
Leslie Milne1
2018 199,965 20,000
Nil
432 18,050
Leslie Milne
2017
95,886
Nil
Nil
395
8,484
Total KMP
2018 514,267 20,000
Nil
1,786 45,737
2017 265,854
Nil 11,987
395 22,734
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil 17,808
Nil
2,501
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
7,063
Nil
Nil
Nil 17,808
Nil
7,063
Nil
2,501
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil 273,870
Nil 198,706
Nil
51,801
Nil
Nil
Nil
35,480
Nil
Nil
Nil 245,510
Nil 104,765
Nil 606,661
Nil 303,471
1 Leslie Milne Appointed 3 January 2017
2 Robert Baker Appointed 6 August 2017
3 Scott Goninan Appointed 6 August 2017
Securities Received that Are Not Performance-related
No members of KMP are entitled to receive securities that are not performance-based as part of their
remuneration package.
Cash Bonuses, Performance-related Bonuses and Share-based Payments
During the financial year ended 30 June 2018 the company granted cash bonuses or share-based
payments to members of KMP as follows. The Board will continue to review these forms of remuneration in
the current year.
Leslie Milne, the CFO, was paid a bonus of $20,000 on the basis of achieving performance objectives set
out in his contract of employment in relation to year ended 30 June 2017. The bonus was deferred from
the 2017 financial year as the criteria were principally agreed on the basis that an IPO would happen in
that year. The IPO was delayed until the 2018 financial year so the bonus criteria were carried forward.
The company did not set up any additional performance bonus in relation to the current financial year.
Page 11
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
The Company has also implemented an Employee Share Option Plan (ESOP) as a long-term incentive
plan for all employees of the company and option grants were made at 13th September 2017. The
Company granted 6,505,000 options. The objective of this scheme is to incentivise the creation of
additional shareholder value over the 3-year period. The only conditions in relation to exercise for each
employee is a continuing employment status at the time of vesting. The Scheme is a Premium Priced
Option scheme with an exercise price at year 1 (12 September 2018) of $0.38 and years 2 and 3 of $0.43.
Options under the scheme were granted in 3 equal tranches at the price of $0.30 per option. The market
values of the 3 tranches of options were the following; - 1 $0.05, 2 $0.07, 3 $0.09. Vesting dates of the
tranches are 12/9/18, 12/9/19 and 12/9/20. Under this Plan the following KMPs were granted options
during the financial year.
KMP
Leslie Milne
Options Granted
Vested and exercisable
250,000
83,334 (1/3rd of total)*
*The options which have vested and are currently exercisable did so on the 13 September 2018.
A second grant of Options was approved and granted on 30th May 2018 but no KMP was granted any
Options at this time.
KMP Shareholdings
The number of ordinary shares in RightCrowd Limited held by each KMP of the Group during the financial
year is as follows:
Balance at
Beginning of
Year
Granted as
Remuneration
during the Year
Issued on
Exercise of
Options during
the Year
Other Changes
during the Year
(Note 1)
Balance at End
of Year
Peter Hill (ii)
60,000,000
Leslie Milne (i)
Robert Baker (i)
Scott Goninan (iii)
-
-
-
60,000,000
-
-
-
-
-
-
-
-
-
-
(6,092,572)
53,907,428
66,666
66,666
100,000
100,000
17,422,517
17,422,517
11,496,611
71,496,611
Note 1: On the IPO Offer completion the following transactions had an impact on the ordinary share
holding of KMPs during this financial year.
a. The second tranche of convertible notes with a face value of $7,200,000 were issued on 19 October
2016 and were accounted for at fair value through profit or loss as at 30 June 2017. The key terms of
these convertible notes include a maturity date of 31 March 2020, interest accrues at 4% above the cash
rate of the RBA and they are unsecured. Upon the completion of the Offer, these convertible notes were
converted into 25,083,819 Ordinary Shares. This conversion included the settlement of any interest
accrued to 31 July 2017. Of these, entities related to, Scott Goninan received 17,422,517 shares.
b. Peter Hill’s shareholding was reduced by an IPO consolidation adjustment of 3,592,572 shares and the
IPO Prospectus provided for a sale of 2,500,000 Ordinary Shares at a sale price of $0.30 each in the IPO.
c. Leslie Milne has an indirect interest of 50% of his shareholding through his spouse.
(i)
(ii)
Securities purchased through the IPO.
Indirect interest through CNI Pty Ltd ACN 131 410 556.
(iii)
Goninan Wealth Trust.
Indirect interest through Goninan Property Investments Pty Ltd ACN 151 022 052 ATF The
Page 12
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
KMP Options
The number of options in Rightcrowd Limited held by each KMP of the group during the financial year as
follows:
Balance of
Beginning of
Year
Granted as
remuneration
Exercised
Lapsed/Other Balance at end
Peter Hill
Leslie Milne
Robert Baker
Scott Goninan
-
-
-
-
-
250,000
-
250,000
-
-
-
-
-
-
-
-
of year
-
250,000
-
250,000
Other Equity-related KMP Transactions
There have been no other transactions involving equity instruments apart from those described in the
tables above relating to options, rights and shareholdings.
Loans to/from KMP
There have been no loans to or from KMP’s during the financial year.
Other Transactions with KMP and/or their Related Parties
On 10 October 2016, RightCrowd issued convertible notes with a face value of $5,000,000 to Mr Alfred
Scott Goninan (who was appointed as a Director on 6th of August 2017) with a maturity date of 31 March
2020. Interest accrued on these convertible notes at 4% above the cash rate of the RBA and was accrued
to 30 June 2017 at $198,904 and an additional $24,302 of interest accrued in the 2018 financial year prior
to conversion. The convertible notes and accrued interest were converted to Ordinary Shares at the time of
the IPO in September 2017.
There were no other transactions conducted between the Group and KMP or their related parties, apart
from those disclosed above relating to equity, compensation and loans, that were conducted other than in
accordance with normal employee, customer or supplier relationships on terms no more favourable than
those reasonably expected under arm’s length dealings with unrelated persons.
End of remuneration report (Audited)
This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of
the Board of Directors:
Peter Hill, Director
Dated: 28 September 2018
Page 13
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
AUDITOR’S INDEPENDENCE DECLARATION
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY C R JENKINS TO DIRECTORS OF RIGHTCROWD LIMITED
As lead auditor of RightCrowd Limited for the year ended 30 June 2018, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of RightCrowd Limited and the entities it controlled during the year.
C R Jenkins
Director
BDO Audit Pty Ltd
Brisbane, 28 September 2018
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
Page 14
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Revenue
Other income
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Other expenses
Profit/(loss) before income tax
Income Tax Expense
Net (loss) from continuing operations
Net (loss) for the year
Other comprehensive income
Note
Consolidated Group
2018
$
2017
$
3
3
4
4
4
5
5,520,755
4,146,976
3,861,195
1,850,172
(10,382,182)
(7,949,007)
(646,462)
(208,504)
(360,544)
(542,429)
(3,065,767)
(1,994,636)
(5,073,005)
(4,697,428)
(47,078)
-
(5,120,083)
(4,697,428)
(5,120,083)
(4,697,428)
Items that may be reclassified subsequently to profit or
loss when specific conditions are met
Exchange differences on translating foreign operations, net
of tax
25
Total other comprehensive income for the year
24,241
24,241
6,115
6,115
Total comprehensive loss for the year
(5,095,842)
(4,691,313)
Earnings per share for loss from continuing and
discontinuing operations attributable to ordinary
equity holders of the company
Basic loss per share
Diluted loss per share
8
8
(0.04)
(0.04)
(0.22)
(0.22)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the attached notes
Page 15
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018
Note
Consolidated Group
2018
$
2017
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Other liabilities
Tax liabilities
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
EQUITY
Issued capital
Reserves
Accumulated Losses
TOTAL EQUITY
9
10
14
12
13
15
16
17
17
18
16
18
6,609,297
5,177,761
2,865,769
2,835,700
312,729
23,062
9,787,795
8,036,523
218,993
134,218
-
585,773
218,993
719,991
10,006,788
8,756,514
462,994
544,631
90,956
20,871
1,507,255
2,820,720
4,944
-
891,592
648,780
2,957,741
4,035,002
-
8,908,552
158,579
124,530
158,579
9,033,082
3,116,320
13,068,084
6,890,468
(4,311,570)
19
19,468,728
3,349,925
245,798
794,416
(12,824,058)
(8,455,911)
6,890,468
(4,311,570)
The above Consolidated Statement of Financial Position should be read in conjunction with the attached notes
Page 16
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
Note
Issued Capital
Accumulated
Losses
Transalation
Reserve
Payment
Reserve
Note
Reserve
Foreign Currency
Share Based
Convertible
$
$
$
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
751,936
(220,182)
-
-
-
-
-
(4,697,428)
6,115
(4,691,313)
599,925
599,925
751,936
(4,311,570)
751,936
(4,311,570)
-
-
-
(5,120,083)
24,241
(5,095,842)
Consolidated Group
Balance at 1 July 2016
Comprehensive income
(Loss) for the year
Other comprehensive income for
the year
25
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners, and
other transfers
Shares issued during the year
Total transactions with
owners and other transfers
2,750,000
(3,758,483)
36,365
-
-
-
(4,697,428)
-
-
6,115
(4,697,428)
6,115
599,925
599,925
-
-
-
-
Balance at 30 June 2017
3,349,925
(8,455,911)
42,480
3,349,925
(8,455,911)
42,480
(5,120,083)
-
-
24,241
(5,120,083)
24,241
-
-
-
-
-
Balance at 1 July 2017
Comprehensive income
(Loss) for the year
Other comprehensive income for
the year
25
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners, and
other transfers
Transfer of convertible note
reserve to retained earnings
upon settlement in cash
Share options expensed during
the year
Shares converted during the
year
Transaction costs
Total transactions with
owners and other transfers
Balance at 30 June 2018
Shares issued during the year
19a
9,250,000
19a
19a
7,525,146
(656,343)
751,936
-
-
-
-
-
-
-
-
-
-
(751,936)
-
179,077
-
-
-
-
-
-
-
179,077
9,250,000
7,525,146
(656,343)
16,118,803
751,936
19,468,728
(12,824,058)
66,721
66,721
179,077
(751,936)
16,297,880
179,077
-
6,890,468
The above Consolidated Statement of Changes in Equity should be read in conjunction with the attached notes
Page 17
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Grant income received
Note
Consolidated Group
2018
$
2017
$
6,466,694
4,450,175
(13,243,488)
(9,599,056)
76,950
38,990
(33,072)
(389,269)
1,647,084
792,920
Net cash provided by operating activities
21
(5,085,832)
(4,706,240)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Transaction costs
Proceeds from borrowings
Repayment of borrowings
Net cash provided by/(used in) financing activities
Net increase in cash held
Net foreign exchange differences
Cash and cash equivalents at beginning of financial year
20,546
-
(219,536)
(17,082)
(198,990)
(17,082)
9,250,000
(656,344)
-
-
346,958
7,341,231
(2,276,872)
-
6,663,742
7,341,231
1,378,920
2,617,909
52,616
6,114
5,177,761
2,553,738
Cash and cash equivalents at end of financial year
9
6,609,297
5,177,761
The above Consolidated Statement of Cash Flows should be read in conjunction with the attached notes
Page 18
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
The consolidated financial statements and notes represent those of RightCrowd Limited and Controlled
Entities (the “consolidated group” or “group”).
The separate financial statements of the parent entity, RightCrowd Limited, have not been presented within
this financial report as permitted by the Corporations Act 2001. Parent information is disclosed in note 2.
The financial statements were authorised for issue on 29 September 2018 by the directors of the company.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act
2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board
and International Financial Reporting Standards and Interpretations as issued by the International
Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under
Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial
statements are presented below and have been consistently applied unless stated otherwise.
The financial statement, except for cash flow information, have been prepared on accruals basis and are
based on historical cost, modified, where applicable, by the measurement at fair value of selected non-
current assets, financial assets and financial liabilities.
Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of
business activities and the realisation of assets and settlement of liabilities in the normal course of business.
The Group incurred a net loss for the financial year ended 30 June 2018 of $5,120,083 (2017: $4,697,428)
and net cash operating outflows of $5,085,832 (2017: $4,706,240). As at 30 June 2018, the consolidated
group’s total assets exceeded total liabilities by $6,890,468, and its current assets of $9,787,795 (2017:
$8,036,523) exceeded its current liabilities of $2,957,741 (2017: $4,035,002) by $6,830,054 (2017:
$4,001,521).
As such the Group’s ability to continue to adopt the going concern assumption will depend upon a number of
matters including the successful continued development and further commercialisation of the RightCrowd
solution and, should the Board consider it necessary, subsequent successful raisings of funds.
The Group has forecast its future cash flows requirements to 30 September 2019, which can currently be
met by current level of cash reserves and expected cash inflows from sales and R&D claim. As such the
directors are of the opinion that the use of the going concern assumption is appropriate.
a.
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
(RightCrowd Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are
entities the parent controls. The parent controls an entity when it 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 over the entity. A list of the subsidiaries is provided in Note 11.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements
of the Group from the date on which control is obtained by the Group. The consolidation of a
subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances
and unrealised gains or losses on transactions between group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure uniformity of the accounting policies adopted by the Group.
Page 19
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
b.
Income Tax
The income tax expense (income) for the year comprises current income tax expense (income) and
deferred tax expense (income).
Current income tax expense charged to profit or loss is the tax payable on taxable income for the
current period. Current tax liabilities (assets) are measured at the amounts expected to be paid to
(recovered from) the relevant taxation authority using tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss
when the tax relates to items that are recognised outside profit or loss or arising from a business
combination.
Except for business combinations, no deferred income tax is recognised from the initial recognition
of an asset or liability, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled and their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the related asset
or liability. With respect to non-depreciable items of property, plant and equipment measured at fair
value and items of investment property measured at fair value, the related deferred tax liability or
deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered
entirely through sale. When an investment property that is depreciable is held by the entity in a
business model whose objective is to consume substantially all of the economic benefits embodied
in the property through use over time (rather than through sale), the related deferred tax liability or
deferred tax asset is measured on the basis that the carrying amount of such property will be
recovered entirely through use.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits of
the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where: (i) a legally enforceable right
of set-off exists; and (ii) the deferred tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur in future periods in which significant amounts of deferred tax assets or liabilities
are expected to be recovered or settled.
Page 20
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
c.
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-
recurring basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a
liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing
information is used to determine fair value. Adjustments to market values may be made having
regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities
that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset
or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in
the absence of such a market, the most advantageous market available to the entity at the end of
the reporting period (ie the market that maximises the receipts from the sale of the asset or
minimises the payments made to transfer the liability, after taking into account transaction costs
and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s
ability to use the asset in its highest and best use or to sell it to another market participant that
would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-
based payment arrangements) may be valued, where there is no observable market price in
relation to the transfer of such financial instruments, by reference to observable market information
where such instruments are held as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the respective note to the financial
statements.
d.
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where
applicable, any accumulated depreciation and impairment losses.
Plant and Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less
accumulated depreciation and any accumulated impairment. In the event the carrying amount of
plant and equipment is greater than the estimated recoverable amount, the carrying amount is
written down immediately to the estimated recoverable amount and impairment losses are
recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a
revalued asset. A formal assessment of recoverable amount is made when impairment indicators
are present (refer to Note 1g) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in
excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are recognised as expenses in profit or loss during the financial period in which they
are incurred.
Page 21
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but
excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the
consolidated group commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Leasehold improvements
Motor vehicles
Plant and equipment
Depreciation
2 - 40 years
8 years
1-20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are recognised in profit or loss in the period in which they arise. When
revalued assets are sold, amounts included in the revaluation surplus relating to that asset are
transferred to retained earnings.
e.
Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of
the asset – but not the legal ownership – are transferred to entities in the consolidated group, are
classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts
equal to the fair value of the leased property or the present value of the minimum lease payments,
including any guaranteed residual values. Lease payments are allocated between the reduction of
the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful
lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the
lessor, are recognised as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-
line basis over the lease term.
f.
Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the
contractual provisions to the instrument. For financial assets, this is equivalent to the date that the
entity commits itself to either the purchase or sale of the asset (ie trade date accounting is
adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified “at fair value through profit or loss”, in which case transaction costs are
expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective
interest method, or cost.
Page 22
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Amortised cost is calculated as the amount at which the financial asset or financial liability is
measured at initial recognition less principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between that initial amount and the
maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the
relevant period and is equivalent to the rate that discounts estimated future cash payments or
receipts (including fees, transaction costs and other premiums or discounts) over the expected life
(or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net
carrying amount of the financial asset or financial liability. Revisions to expected future net cash
flows will necessitate an adjustment to the carrying amount with a consequential recognition of an
income or expense item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint ventures as being
subject to the requirements of Accounting Standards specifically applicable to financial instruments.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation
process and when the financial asset is derecognised.
(ii)
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently
measured at amortised cost. Gains or losses are recognised in profit or loss through the
amortisation process and when the financial liability is derecognised.
Non-derivative financial liabilities 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.
Where there is an unconditional right to defer settlement of the liability for at least 12 months
after the reporting date, the financial liabilities are classified as non-current.
The component of the convertible notes that exhibits characteristics of a liability is
recognised as a liability in the statement of financial position, net of transaction costs.
On the issue of the convertible notes that are fixed in nature, the fair value of the liability
component is determined using a market rate for an equivalent non-convertible debt and this
amount is carried as a non-current liability on the amortised cost basis until extinguished on
conversion or redemption. The increase in the liability due to the passage of time, is
recognised as a finance cost. The remainder of the proceeds at initial recognition are
allocated to the conversion option that is recognised and included in shareholders’ equity as
a convertible note reserve, net of transaction costs. The carrying amount of the conversion
option is not remeasured in subsequent years. The corresponding interest on convertible
notes is expensed to profit or loss.
On the issue of the convertible notes that are variable in nature, both a host debt (for the
principal component) and an embedded derivative (for the option component) exist. For
such convertible notes, the combined host debt and embedded derivative are accounted for
at fair value via the profit or loss. The combined host debt and embedded derivative are
remeasured at fair value at each balance date with any movement in the fair value
recognised via the profit or loss. The corresponding interest on convertible notes is
expensed to profit or loss.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events (a “loss event”) having occurred,
which has an impact on the estimated future cash flows of the financial asset(s).
Page 23
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the case of financial assets carried at amortised cost, loss events may include: indications that
the debtors or a group of debtors are experiencing significant financial difficulty, default or
delinquency in interest or principal payments; indications that they will enter bankruptcy or other
financial reorganisation; and changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate
allowance account is used to reduce the carrying amount of financial assets impaired by credit
losses. After having taken all possible measures of recovery, if management establishes that the
carrying amount cannot be recovered by any means, at that point the written-off amounts are
charged to the allowance account or the carrying amount of impaired financial assets is reduced
directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been
renegotiated, the Group recognises the impairment for such financial assets by taking into account
the original terms as if the terms have not been renegotiated so that the loss events that have
occurred are duly considered.
g.
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an
asset may be impaired. The assessment will include the consideration of external and internal
sources of information including dividends received from subsidiaries, associates or joint ventures
deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried
out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s
fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the
asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss,
unless the asset is carried at a revalued amount in accordance with another Standard (eg in
accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any
impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that
other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and
intangible assets not yet available for use.
h.
Intangible Assets Other than Goodwill
Research and development
Expenditure during the research phase of a project and development costs are recognised as an
expense when incurred.
Intellectual property in use
Intellectual property are recognised at cost on acquisition. They have a finite life and are carried at
cost less any accumulated amortisation and any impairment losses. Patents and trademarks are
amortised over their useful lives.
Software and website development costs
Software and website development costs are capitalised only when the Group identifies that the
project will deliver future economic benefits and these benefits can be measured reliably.
Software and developed websites are considered as having finite useful lives and are amortised
on a systematic basis over their useful lives so as to match the economic benefits received to the
periods in which the benefits are received. Amortisation begins when the software or websites
become operational.
Page 24
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The amortisation rates used for each class of intangible asset with a finite useful life are:
Class of Intangible Asset
Amortisation Rate
Software
Intellectual property in use
20 - 40%
10%
i.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the
primary economic environment in which that entity operates. The consolidated financial statements
are presented in Australian dollars, which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at
the exchange rate at the date of the transaction. Non-monetary items measured at fair value are
reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from
the Group’s presentation currency, are translated as follows:
–
–
–
assets and liabilities are translated at exchange rates prevailing at the end of the reporting
period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the
transaction.
Exchange differences arising on translation of foreign operations with functional currencies other
than Australian dollars are recognised in other comprehensive income and included in the foreign
currency translation reserve in the statement of financial position. The cumulative amount of these
differences is reclassified into profit or loss in the period in which the operation is disposed of.
j.
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee
benefits are benefits (other than termination benefits) that are expected to be settled wholly before
12 months after the end of the annual reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short-term employee benefits are measured at
the (undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave
are recognised as part of current trade and other payables in the statement of financial position.
The Group’s obligations for employees’ annual leave and long service leave entitlements are
recognised as provisions in the statement of financial position.
Page 25
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be
settled wholly within 12 months after the end of the annual reporting period in which the employees
render the related service. Other long-term employee benefits are measured at the present value of the
expected future payments to be made to employees. Expected future payments incorporate anticipated
future wage and salary levels, durations of service and employee departures and are discounted at
rates determined by reference to market yields at the end of the reporting period on corporate bonds
that have maturity dates that approximate the terms of the obligations. Any remeasurements for
changes in assumptions of obligations for other long-term employee benefits are recognised in profit or
loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in its
statement of financial position, except where the Group does not have an unconditional right to defer
settlement for at least 12 months after the end of the reporting period, in which case the obligations are
presented as current provisions.
Retirement benefit obligations
Defined contribution superannuation benefits
All employees of the Group receive defined contribution superannuation entitlements, for which the
Group pays the fixed superannuation guarantee contribution (currently 9.5% of the employee’s average
ordinary salary) to the employee’s superannuation fund of choice. All contributions in respect of
employees’ defined contribution entitlements are recognised as an expense when they become
payable. The Group’s obligation with respect to employees’ defined contribution entitlements is limited
to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting
period. All obligations for unpaid superannuation guarantee contributions are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled and are presented as
current liabilities in the Group’s statement of financial position.
Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier of:
(i) the date when the Group can no longer withdraw the offer for termination benefits; and (ii) when the
Group recognises costs for restructuring pursuant to AASB 137: Provisions, Contingent Liabilities and
Contingent Assets and the costs include termination benefits. In either case, unless the number of
employees affected is known, the obligation for termination benefits is measured on the basis of the
number of employees expected to be affected. Termination benefits that are expected to be settled
wholly before 12 months after the annual reporting period in which the benefits are recognised are
measured at the (undiscounted) amounts expected to be paid. All other termination benefits are
accounted for on the same basis as other long-term employee benefits.
k.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can be
reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the
end of the reporting period.
l.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-
term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank
overdrafts are reported within borrowings in current liabilities on the statement of financial position.
m.
Revenue and Other Income
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured, regardless of when payment is made. Revenue
is measured at the fair value of the consideration received or receivable after taking into account
contractually defined terms of payment and excluding taxes (including GST) or duty.
Page 26
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue from the sale of software licenses of a perpetual type is recognised at the point of delivery
as this corresponds to the transfer of significant risks and rewards of the right to use the software.
Interest revenue is recognised using the effective interest method.
Revenue recognition relating to the provision of services is determined with reference to the stage
of completion of the transaction at the end of the reporting period, where outcome of the contract
can be estimated reliably. Stage of completion is generally determined with reference to the project
milestones set out in the project statement of work.
Government grant income (including research and development refundable tax offsets) are
recognised at fair value where there is reasonable assurance that the grant will be received and all
grant conditions will be met. Grants relating to expense items are recognised as income over the
periods necessary to match the grant to the costs it is compensating.
All revenue is stated net of the amount of goods and services tax.
n.
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services
performed in the ordinary course of business. Receivables expected to be collected within 12
months of the end of the reporting period are classified as current assets. All other receivables are
classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method, less any provision for impairment. Refer to Note
1f for further discussion on the determination of impairment losses.
o.
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that
remain unpaid at the end of the reporting period. The balance is recognised as a current liability
with the amounts normally paid within 30 days of recognition of the liability.
p.
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 Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the ATO is included with other receivables or
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 ATO are presented
as operating cash flows included in receipts from customers or payments to suppliers.
q.
Issued Capital and Redeemable Preference Shares
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or
options are shown as a deduction from the equity proceeds net of any income tax benefit.
Preference shares are classified as equity to the extent that they meet the definition of equity.
r.
Cash-settled Share-based Payment Transactions
For cash-settled share-based payment transactions, the entity measures the goods or services
acquired and the liability incurred at the fair value of the liability. Until the liability is settled, the
entity shall re-measure the fair value of the liability at the end of each reporting period and at the
date of settlement, with any changes in fair value recognised in profit or loss for the period.
s.
Equity-settled Share based Payment Transactions
Page 27
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Equity-settled share based compensation by way of issue of options are provided to employees in
exchange for services rendered.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
determined using various valuation methods including Black Scholes, Binomial and the Monte Carlo
Simulation method that takes into account the exercise price, the term of the performance right, the
impact of dilution, the share price at grant date and expect price volatility of the underlying share,
the expected dividend yield and the risk-free interest rate for the term of the performance right.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase
in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the
grant date fair value of the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit or loss for the period
is the cumulative amount calculated at each reporting date less amounts already recognised in
previous periods.
t.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based
on historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the Group.
Key judgement
(i)
Impairment
The Group assesses impairment at the end of each reporting period by evaluating the
conditions and events specific to the Group that may be indicative of impairment triggers.
Recoverable amounts of relevant assets are reassessed using value-in-use calculations
which incorporate various key assumptions.
Key estimates
(i)
Provision for impairment of receivables
The Group assesses that there is no requirement to make a provision for impairment for
receivables at the end of the current reporting period. The Group has a process of regular
assessment of recoverability of receivables.
(ii)
Share based payment tranactions
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 the Black Scholes model taking into account the terms and
conditions upon which the instruments were granted. The accounting estimates and
assumptions, including share price volatility, interest rates and vesting periods would have
no impact on the carrying amounts of assets and liabilities within the next annual reporting
period but may impact the profit or loss and equity.
u.
New Accounting Standards for Application in Future Periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group,
together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
–
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual
reporting periods beginning on or after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge
accounting outlined below) and includes revised requirements for the classification and
measurement of financial instruments, revised recognition and derecognition requirements
for financial instruments and simplified requirements for hedge accounting.
Page 28
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The key changes that may affect the Group on initial application include certain
simplifications to the classification of financial assets, simplifications to the accounting of
embedded derivatives, upfront accounting for expected credit loss, and the irrevocable
election to recognise gains and losses on investments in equity instruments that are not held
for trading in other comprehensive income. AASB 9 also introduces a new model for hedge
accounting that will allow greater flexibility in the ability to hedge risk, particularly with
respect to hedges of non-financial items. Should the entity elect to change its hedge
policies in line with the new hedge accounting requirements of the Standard, the application
of such accounting would be largely prospective.
The Company has assessed the financial implications off AASB 9 on the financial
statements and considers there to be no material impact for the following reasons. The
Company’s customers are in the main large and highly credit-worthy organisations and it
has not had experience of non-payment of invoicing. The Company does not currently carry
out financial hedging other than to apply receivables in the United States to its local cost
base. The Directors will continue to review the implications of the Standard in future
accounting periods.
–
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods
beginning on or after 1 July 2018, as deferred by AASB 2015-8: Amendments to Australian
Accounting Standards – Effective Date of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to
revenue with a single, principles-based model. Apart from a limited number of exceptions,
including leases, the new revenue model in AASB 15 will apply to all contracts with
customers as well as non-monetary exchanges between entities in the same line of
business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for the goods or
services. To achieve this objective, AASB 15 provides the following five-step process:
-
-
-
-
-
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts
that existed in each prior period presented per AASB 108: Accounting Policies, Changes in
Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or
recognise the cumulative effect of retrospective application to incomplete contracts on the
date of initial application. There are also enhanced disclosure requirements regarding
revenue.
The Company has undertaken a review of its ongoing contracts during the 2018 financial
year to consider any implications of the adoption of AASB 15 in future years. From this
review the company has determined that there will be no material impact to the financial
performance or position on initial adoption, other than the changes required to disclosures of
accounting policies.
–
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to
leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single
lessee accounting model that eliminates the requirement for leases to be classified as
operating or finance leases.
The main changes introduced by the new Standard are as follows:
Page 29
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-
-
-
-
-
recognition of a right-of-use asset and liability for all leases (excluding short-term
leases with less than 12 months of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and
Equipment in profit or loss and unwinding of the liability in principal and interest
components;
inclusion of variable lease payments that depend on an index or a rate in the initial
measurement of the lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-
lease components and instead account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the
Standard to comparatives in line with AASB 108 or recognise the cumulative effect of
retrospective application as an adjustment to opening equity on the date of initial application.
Although the directors anticipate that the adoption of AASB 16 will impact the Group's
financial statements, it is impracticable at this stage to provide a reasonable estimate of
such impact.
Page 30
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 2: PARENT INFORMATION
2018
$
2017
$
The following information has been extracted from the books and records
of the parent and has been prepared in accordance with Australian
Accounting Standards.
Statement of Financial Position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
Statement of Profit or Loss and Other Comprehensive Income
Total (loss)
Total comprehensive (loss)
a) The parent entity has no contingent liabilities (2017: nil).
b) The parent entity has no operating lease commitments.
c) The parent entity has not entered into any guarantees.
2,243,456
700,322
4,647,112
4,183,082
6,890,568
4,883,404
100
286,422
-
8,908,552
100
9,194,974
19,468,728
3,349,925
(12,757,337)
(8,413,431)
179,077
751,936
6,890,468
(4,311,570)
(4,343,906)
(5,263,164)
(4,343,906)
(5,263,164)
Page 31
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3: REVENUE AND OTHER INCOME
Consolidated Group
Note
2018
$
2017
$
a. Revenue from continuing operations
Sales revenue:
–
–
software revenue
provision of services
Other revenue:
–
–
–
–
–
–
–
–
–
interest received
export market development grant
CA Project revenue
travel & accommodation recharge
employee contributions
foreign currency exchange
profit on sale of assets
Fair value gain on partial settlement of shadow equity
plan
R&D Refund
Total revenue
NOTE 4: LOSS BEFORE INCOME TAX
Loss before income tax from continuing operations includes the
following specific expenses:
a.
Expenses
Employee benefits expense:
–
–
–
–
–
–
–
–
salaries and wages
defined contribution superannuation expense
WorkCover
other employment expenses
employee share options expense
bonus payments
taxes
Increase in provisions
2,139,511
1,893,507
3,381,244
2,253,469
5,520,755
4,146,976
76,950
-
-
22,335
16,295
171,679
887
1,823,049
38,990
8,356
79,838
27,520
30,725
17,659
-
-
1,750,000
1,647,084
3,861,195
1,850,172
9,381,950
5,997,148
Note
Consolidated Group
2018
$
2017
$
8,864,333
7,141,092
553,312
437,217
7,125
49,250
179,077
12,419
21,917
-
144,629
214,943
307,595
-
276,861
121,419
10,382,182
7,949,007
Page 32
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 4: LOSS BEFORE INCOME TAX (CONTINUED)
Depreciation and amortisation expense
–
–
depreciation expense
amortisation expense
Finance costs
Lease expenses
NOTE 5: TAX EXPENSE/(INCOME)
a.
Income tax expense
The components of tax expense/(income) comprise:
Current tax
Deferred tax
b.
Prima facie reconciliation
The prima facie tax, using tax rates applicable in the
country of operation, on profit (loss) differs from the
income tax provided in the financial statements as follows:
(Loss) before income tax
Prima facie tax on (loss) from ordinary activities before
income tax at Australian tax rate 27.5% (2017: 30%)
Tax effect of:
–
–
–
non-allowable (assessable) items
net Impact of R&D Refund
tax payable by subsidiaries
Deferred tax assets not recognised as recoverability
criteria not met
Income tax expense
Consolidated Group
Note
2018
$
2017
$
61,460
192,581
585,002
15,923
646,462
208,504
360,544
542,429
264,223
142,915
Note
Consolidated Group
2018
$
2017
$
47,078
-
47,078
-
-
-
(5,073,005)
(4,697,428)
(1,395,076)
(1,409,228)
(397,220)
59,678
625,072
641,796
47,078
-
1,167,225
707,754
47,078
-
Deferred tax assets are not brought to account, the benefits of which will only be realised if the
conditions for deductibility set out in Note 1 occur.
Operating tax losses as at 30 June available to off-set
future taxable income
5,029,644
1,753,514
Page 33
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 6: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or
payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June
2018.
The remuneration for FY2018 includes the CFO for the full financial year and also the Board members
from August 2017.
During the year ended 30 June 2018 the company considers that the Group’s KMP for the purpose of this
note are the CEO and CFO. The Board will consider extending this group of personnel during the 2019
financial year as its resources are expanded following listing.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Short-term employee benefits
2018
$
2017
$
536,053
278,236
45,737
17,808
7,063
22,734
2,501
-
606,661
303,471
These amounts include salary, paid leave benefits, fringe benefits and cash bonuses awarded to
executive directors and other KMP.
Post-employment benefits
These amounts are the current-year’s superannuation contributions and post-employment life insurance
benefits.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit
schemes as measured by the fair value of the options, rights and shares granted on grant date.
Further information in relation to KMP remuneration can be found in the Audited Remuneration Report
that forms part of the Directors’ Report.
NOTE 7: AUDITOR’S REMUNERATION
Remuneration of the auditor (BDO Audit Pty Ltd) for:
–
–
auditing or reviewing the financial statements
IPO assurance services
Consolidated Group
2018
$
2017
$
61,500
-
48,500
89,090
61,500
137,590
Page 34
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 8: LOSS PER SHARE
a.
Reconciliation of earnings to profit or loss:
Profit/(Loss)
Earnings used to calculate basic loss per share
Consolidated Group
2018
$
2017
$
(5,120,083)
(4,697,428)
(5,120,083)
(4,697,428)
Earnings used in the calculation of dilutive loss per share
(5,120,083)
(4,697,428)
b.
Weighted average number of ordinary shares outstanding during the
year used in calculating basic and diluted loss per share
119,131,575 21,600,885
Options on issue during the year are not included in the calculation of diluted earnings per share because
they are antidilutive for the year ended 30 June 2018 and 2017. These options could potentially dilute
basic earnings per share in the future.
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to items in the statement of financial
position as follows:
Cash and cash equivalents
NOTE 10: TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
R & D RefundableTax Offset receivable
Total current trade and other receivables
Note
Consolidated Group
2018
$
2017
$
6,609,297
5,177,761
-
-
6,609,297
5,177,761
6,609,297
5,177,761
6,609,297
5,177,761
Note
Consolidated Group
2018
$
2017
$
1,115,769
1,188,616
1,115,769
1,188,616
1,750,000
1,647,084
1,750,000
1,647,084
2,865,769
2,835,700
Page 35
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 10: TRADE AND OTHER RECEIVABLES (CONTINUED)
Credit risk
The Group has no significant concentration of credit risk with respect to any single counterparty or
group of counterparties. The class of assets described as “trade and other receivables” is
considered to be the main source of credit risk related to the Group.
The balances of receivables that remain within initial trade terms (as detailed in the table) are
considered to be of high credit quality.
Gross
Amount
$
Past Due
and
Impaired
$
Past Due but Not Impaired
(Days Overdue)
< 30
$
31–60
$
61–90
$
> 90
$
Within Initial
Trade Terms
$
2018
Trade and term
receivables
1,115,769
Other receivables
1,750,000
2,865,769
Total
2017
Trade and term
receivables
-
-
-
38,303
3,897 73,016 199,746
800,807
-
-
-
-
1,750,000
38,303
3,897 73,016 199,746
2,550,807
1,188,616
- 340,049 16,384 112,234 194,928
525,021
Other receivables
1,647,084
-
-
-
-
-
1,647,084
Total
2,835,700
- 340,049 16,384 112,234 194,928
2,172,105
NOTE 11: INTERESTS IN ENTITIES
a.
Information about Principal Subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary shares, which are held
directly by the Group. The proportion of ownership interests held equals the voting rights held by the
Group. Each subsidiary’s principal place of business is also its country of incorporation.
Name of Subsidiary
Principal Place of
Business/country of
incorporation
Ownership Interest
Held by the Group
Proportion of Non-
controlling Interests
2018
2017
2018
2017
%
%
%
%
Subsidiary of RightCrowd Limited
RightCrowd Software Pty Ltd
Australia
100%
100%
0%
0%
Subsidiary of Rightcrowd Software Pty Ltd
RightCrowd Inc.
RightCrowd Inc.
USA
Philippines
100%
100%
100%
100%
0%
0%
0%
0%
b
Information about interest’s in other entities
Reporia Pty Ltd
Australia
100%
100%
0%
0%
Page 36
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Land and Buildings
Plant and Equipment
Plant and equipment:
At cost
Accumulated depreciation
Leasehold improvements:
At cost
Accumulated amortisation
Total plant and equipment
Total property, plant and equipment
a.
Movements in Carrying Amounts
Consolidated Group
2018
$
2017
$
343,576
641,271
(124,583)
(509,046)
218,993
132,225
2,558
155,188
(2,558)
(153,195)
-
1,993
218,993
134,218
218,993
134,218
Movements in the carrying amounts for each class of property, plant and equipment between the
beginning and the end of the current financial year:
Consolidated Group:
Balance at 1 July 2016
Additions
Depreciation expense
Balance at 30 June 2017
Additions
Disposals
Depreciation expense
Balance at 30 June 2018
Leasehold
Improvements
Plant and
Equipment
$
$
Total
$
134,588
2,601
(135,196)
1,993
-
-
(1,993)
-
175,128
14,481
(57,384)
132,225
219,536
(73,301)
(59,467)
218,993
309,716
17,082
(192,580)
134,218
219,536
(73,301)
(61,460)
218,993
Page 37
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 13: INTANGIBLE ASSETS
Software and website development costs:
Cost
Accumulated amortisation and impairment losses
Net carrying amount
Intellectual property in use:
Cost
Accumulated amortisation and impairment losses
Net carrying amount
Total intangible assets
Consolidated Group
2018
$
2017
$
-
-
-
31,742
(30,894)
848
599,925
599,925
(599,925)
(15,000)
-
-
584,925
585,773
It was determined during the year to re-evaluate the estimated useful life of the intangible asset of
Reporia Pty Ltd. As a result, the asset was amortised in full over the 12 month period to 30 June 2018.
Consolidated Group:
Year ended 30 June 2017
Balance at the beginning of the year
Additions
Amortisation charge
Closing value at 30 June 2017
Year ended 30 June 2018
Software
Intellectual
Property
$
$
Total
$
1,771
-
1,771
-
599,925
599,925
(923)
(15,000)
(15,923)
848
584,925
585,773
Balance at the beginning of the year
848
584,925
585,773
Additions
Disposals
Amortisation charge
Closing value at 30 June 2018
-
(771)
-
-
-
(771)
(77)
(584,925)
(585,002)
-
-
-
Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for
intangible assets are included under depreciation and amortisation expense per the statement of profit or
loss.
Page 38
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 14: OTHER ASSETS
CURRENT
Deposits Held
Prepayments
NOTE 15: TRADE AND OTHER PAYABLES
CURRENT
Unsecured liabilities:
Trade payables
Payroll payables
Accrued expenses
Sundry payables
NOTE 16: BORROWINGS
CURRENT
Unsecured liabilities:
Insurance premium funding
Secured liabilities:
Finance lease liability
Total current borrowings
NON-CURRENT
Unsecured liabilities:
Fixed convertible notes at amortised cost
Variable convertible notes at fair value
16b
16c
Total non-current borrowings
Total borrowings
Consolidated Group
2018
$
2017
$
71,542
241,187
312,729
-
23,062
23,062
Consolidated Group
2018
$
2017
$
156,671
99,865
223,973
158,244
82,250
286,422
100
100
462,994
544,631
Note
Consolidated Group
2018
$
2017
$
16a
90,956
-
-
-
90,956
20,871
20,871
20,871
-
-
-
-
1,708,552
7,200,000
8,908,552
8,908,552
90,956
8,929,423
Page 39
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16: BORROWINGS (CONTINUED)
a.
Insurance Premium Funding:
Opening balance
Proceeds
Less repayments
Gross convertible note
b.
Fixed convertible notes:
Opening balance
Proceeds
Unwinding of the discount
Cash settlement
Gross convertible note
-
346,958
(256,002)
90,956
-
-
-
-
1,708,552
1,555,392
-
-
1,708,552
1,555,392
291,448
153,160
(2,000,000)
-
-
1,708,552
On 15 September 2017 the fixed convertible notes were settled by way of repayment in cash of
$2,000,000.
c.
Variable convertible notes:
Opening balance
Proceeds
Conversion to ordinary shares
Convertible note held at fair value
Consolidated Group
2018
$
2017
$
-
-
7,200,000
7,200,000
(7,200,000)
-
-
7,200,000
Upon completion of the Offer these convertible notes were converted into 25,083,819 ordinary shares on 14
September 2017. This conversion included $7,200,000 convertible notes at face value plus $352,146 interest
which has been accrued and capitalised in payables over the term of the convertible note up to the date of
conversion.
NOTE 17: OTHER LIABILITIES
CURRENT
Deferred revenue
Cash settled share based payment at fair value
(shadow equity plan)
Tax liabilities
Consolidated Group
2018
$
2017
$
1,474,590
825,720
32,665
1,995,000
1,507,255
2,820,720
4,944
-
The majority of cash settled share-based payments have been settled during the year with a gain on fair value of
$1,823,049 recorded as income. The income related to the fair value determination on settlement of cash settled
share-based payments.
Page 40
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 18: PROVISIONS
Employee benefits
Current
Non-current
Consolidated Group
2018
$
891,592
158,579
1,050,171
2017
$
648,780
124,530
773,310
Provision for Employee Benefits
Provision for employee benefits represents amounts accrued for annual leave and long service leave.
The current portion for this provision includes the total amount accrued for annual leave entitlements and the
amounts accrued for long service leave entitlements that have vested due to employees having completed
the required period of service. Based on past experience, the Group does not expect the full amount of
annual leave or long service leave balances classified as current liabilities to be settled within the next 12
months. However, these amounts must be classified as current liabilities since the Group does not have an
unconditional right to defer the settlement of these amounts in the event employees wish to use their leave
entitlement.
The non-current portion for this provision includes amounts accrued for long service leave entitlements that
have not yet vested in relation to those employees who have not yet completed the required period of
service.
In calculating the present value of future cash flows in respect of long service leave, the probability of long
service leave being taken is based on historical data. The measurement and recognition criteria relating to
employee benefits have been discussed in Note 1(j).
NOTE 19: ISSUED CAPITAL
a.
Ordinary Shares
Balance at 1 July 2016
Share movements during the 2017 financial year:
–
–
Share split (47 to 1) 27 February 2017
Share issue 5 April 2017
Balance at 30 June 2017
Share movements during the 2018 financial year:
Consolidated Group
No.
$
1,250,000
750,000
58,750,000
-
2,346,778
599,925
62,346,778
1,349,925
Preference shares converted to ordinary shares 31 August
2017
20,000,016
2,000,000
Share consolidation 31 August 2017
(4,930,613)
-
Convertible note conversion 14 September 2017
25,083,819
7,525,146
–
–
–
–
–
Share issue 14 September 2017
Share issue costs
Balance at 30 June 2018
30,833,333
9,250,000
-
(656,344)
133,333,333 19,468,728
Page 41
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 19: ISSUED CAPITAL (CONTINUED)
On 31 August 2017, 20,000,016 preference shares were converted to ordinary shares on a 1:1
basis. The shares are eligible for dividends paid after 31 August 2017.
On 31 August 2017, a share consolidation of 4,930,613 occurred prior to the IPO. For every 1
ordinary share held shareholders were issued with 0.9401 ordinary shares after consolidation.
On 14 September 2017 convertible notes with a face value of $7,200,000 were converted to
25,083,819 ordinary shares. The shares are eligible for dividends paid after 14 September 2017.
On 14 September 2017 the group issued 30,833,333 ordinary shares at $0.30 each under a
propspectus offer dated 11 August 2017. The shares are eligible for dividends paid after 14
September 2017. Share issue costs which have been deemed to relate to the raising of capital are
$656,344 and have been capitalised accordingly against share capital.
b.
Preference Shares
Balance at 1 July 2016
Shares movements during the 2017 financial year:
–
Share split (47 to 1) 27 February 2017
Balance at 30 June 2017
Shares movements during the 2018 financial year:
Consolidated Group
No.
$
416,667
2,000,000
19,583,349
-
20,000,016
2,000,000
–
Preference shares converted to ordinary 31 August 2017
(20,000,016)
(2,000,000)
Balance at 30 June 2018
-
-
On 31 August 2017, 20,000,016 preference shares were converted to ordinary
shares on a 1:1 basis.
c.
Capital Management
Management controls the capital of the Group in order to maintain a sustainable debt to equity
ratio, generate long-term shareholder value and ensure that the Group can fund its operations
and continue as a going concern.
The Group’s debt and capital include ordinary share capital, convertible preference shares and
financial liabilities, supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market. These
responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year. The gearing for the years ended 30 June 2018 and 30 June 2017 are
as follows:
Page 42
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 19: ISSUED CAPITAL (CONTINUED)
Total borrowings
Less cash and cash equivalents
Net debt / (funds)
Total equity
Note
Consolidated Group
2018
$
2017
$
16
9
90,956
8,929,423
(6,609,297)
(5,177,761)
(6,518,341)
3,751,662
6,890,468
(4,311,570)
NOTE 20: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent Liabilities
In the opinion of the directors, there were no material or significant contingent
liabilities at 30 June 2018 (30 June 2017: none).
NOTE 21: CASH FLOW INFORMATION
Consolidated Group
2018
$
2017
$
(5,120,083)
(4,697,428)
585,002
61,460
15,923
192,581
a.
Reconciliation of Cash Flows from Operating Activities with
Loss after Income Tax
Loss after income tax
Non-cash flows in profit:
Amortisation
depreciation
–
–
–
–
–
–
–
Fair value gain on partial settlement of shadow equity plan
(1,823,049)
share based payments
loss on disposal of fixed assets
Unrealised foreing exchange loss/(gain)
convertible note amortisation
179,077
887
(171,679)
38,724
-
-
-
206,353
153,160
Changes in assets and liabilities, net of the effects of purchase
and disposal of subsidiaries:
–
–
–
–
increase in trade and term receivables
Increase other financial liabilities
increase/(decrease) in trade payables and accruals
Increase in employee provisions
319,736
(846,305)
648,870
(222,062)
(81,637)
276,860
370,119
121,419
Cash flows from operating activities
(5,085,832)
(4,706,240)
Page 43
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 21: CASH FLOW INFORMATION (CONTINUED)
Consolidated Group
2018
$
2017
$
b.
Non-cash Financing and Investing Activities
(i)
Acquisition of intangible assets from Reporia Pty Ltd
2,346,778 ordinary shares issued
-
599,925
(ii)
Conversion of convertible notes
25,083,819 ordinary shares issued
(inclusive of capitalised interest)
7,525,146
-
c.
Reconciliation of movement in liabilities to cash flows
arising from financing activities
Non-Cash
30 June 2017 Financing
Cash Flows
Unwinding of
CN Discount
Conversion of
CN to
Ordinary
Shares
30 June
2018
Borrowings – Current
20,871
70,085
-
-
90,956
$
$
$
$
$
Borrowings
– Non-Current
Total liabilities from
financing activities
8,908,552
(2,000,000)
291,448
(7,200,000)
-
8,929,423
(1,929,915)
291,448
(7,200,000)
90,956
NOTE 22: EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any significant events since the end of the reporting period.
NOTE 23: RELATED PARTY TRANSACTIONS
a.
Related parties
The Group’s main related parties are as follows:
(i)
Entities exercising control over the Group:
The ultimate parent entity that exercises control over the Group is RightCrowd 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 6.
Page 44
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
Note 23: Related Party Transactions (CONTINUED)
(iii) Other related parties:
Other related parties include entities controlled by the ultimate parent entity and entities over
which key management personnel have joint control.
Two of the Directors’ shareholdings are owned by companies
Peter Hill’s shares held indirectly through CNI Pty Ltd ACN 131 410 556.
Scott Goninan’s shares are held indirectly through Goninan Property Investments Pty Ltd
ACN 151 022 052 ATF The Goninan Wealth Trust.
Page 45
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 23: RELATED PARTY TRANSACTIONS (CONTINUED)
b.
Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
(i)
Key management personnel:
Short-term employment benefits
Post-employment benefits
Other long-term benefits
Share-based payments
c.
Amounts outstanding from related parties
(i)
Loans to other related parties:
Beginning of the period
Loan repayment received
End of the period
d.
Amounts payable to related parties
(i)
Loans from key management personnel:
Beginning of the period
Loan repaid
End of the period
e.
Convertible notes issued to related parties
(i) Convertible notes issued to directors
Beginning of the period
Convertible notes issued
Consolidated Group
2018
$
2017
$
536,053
45,737
17,808
7,063
278,236
22,734
-
2,501
606,661
303,471
-
-
-
-
-
-
5,000,000
24,895
(24,895)
-
18,086
(18,086)
-
-
-
5,000,000
Notes converted to ordinary shares
(5,000,000)
-
End of the period
-
5,000,000
Interest expense capitalised to payables
Opening balance of interest expense capitalised
Interest expense capitalised as interest payable
198,904
27,851
Interest expense captialised converted to ordinary shares
(226,755)
-
198,904
-
End of the period
-
198,904
On 10 October 2016, RightCrowd issued convertible notes with a face value of $5,000,000 to Mr Alfred
Scott Goninan (who was appointed as a Director on 6th of August 2017) with a maturity date of 31 March
2020. Interest accrued on these convertible notes at 4% above the cash rate of the RBA and was accrued
to 30 June 2017 at $198,904, with a further $24,302 accrued to in FY 2018, where the face value and the
interst component to date was converted into 17,422,517 ordinary shares at a value of $5,226,755.
Page 46
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 24: FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments,
short-term investments, accounts receivable and payable, loans to and from subsidiaries, bills, leases,
preference shares and convertible notes.
The totals for each category of financial instruments, measured in accordance with AASB 139: Financial
Instruments: Recognition and Measurement as detailed in the accounting policies to these financial
statements, are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Financial liabilities at amortised cost:
–
–
–
trade and other payables
borrowings
other liabilities
Total financial liabilities
Financial Risk Management Policies
Note
Consolidated Group
2018
$
2017
$
9
10
15
16
17
6,609,297
5,177,761
2,865,769
2,835,700
9,475,066
8,013,461
462,994
544,631
90,956
32,665
8,929,423
1,995,000
586,615
11,469,054
The Company’s Executives have been delegated responsibility by the Board of Directors for, among other
issues, managing financial risk exposures of the Group. The Executives monitor the Group’s financial risk
management policies and exposures and approves financial transactions within the scope of its authority.
It also reviews the effectiveness of internal controls relating to commodity price risk, counterparty credit
risk, foreign currency risk, liquidity risk, and interest rate risk. The Board oversees the Executives’
management of risk.
The overall risk management strategy seeks to assist the consolidated group in meeting its financial
targets, while minimising potential adverse effects on financial performance. Its functions include the
review of the use of hedging derivative instruments, 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, foreign currency risk and other price risk (equity price risk).
There have been no substantive changes in the types of risks the Group is exposed to, how these risks
arise, or the Board’s objectives, policies and processes for managing or measuring the risks from the
previous period.
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. The Group’s
objective in managing credit risk is to minimise the credit losses incurred, mainly on trade and other
receivables and loans.
Page 47
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)
Credit risk is managed through the maintenance of procedures (such as 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. Depending on the
division within the Group, credit terms are generally 30 days from the invoice date. For fees with
longer settlements, terms are specified in the individual client contracts. In the case of any loans
advanced, the terms are specific to each loan.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the
reporting period excluding the value of any collateral or other security held, is equivalent to the
carrying amount and classification of those financial assets (net of any provisions) as presented in
the statement of financial position.
The Group has no significant concentrations of credit risk with any single counterparty or group of
counterparties.
Trade and other receivables that are neither past due nor impaired are considered to be of high
credit quality. Aggregates of such amounts are detailed in Note 10.
Credit risk related to balances with banks and other financial institutions is managed by the
Executive in accordance with approved board policy. Such policy requires that surplus funds are
only invested with counterparties with a Standard & Poor’s rating of at least AA–. 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:
– AA rated
– A rated
b.
Liquidity risk
Note
Consolidated Group
2018
$
2017
$
5,626,932
4,801,764
982,365
375,997
9
6,609,297
5,177,761
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 analyses in relation to its operating, investing and
financing activities;
using derivatives that are only traded in highly liquid markets;
monitoring undrawn credit facilities;
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.
Page 48
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)
The table below reflects an undiscounted contractual maturity analysis for financial liabilities at 30
June 2018. No bank overdraft facilities have been extended to the Group.
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.
Financial liability and financial asset maturity analysis
Within 1 Year
1 to 5 Years
Over 5 Years
Total
2018
2017
2018
2017
2018
2017
2018
2017
$
$
$
$
$
$
$
$
Consolidated
Group
Financial
liabilities due for
payment
Trade and other
payables
462,994
544,631
-
-
Borrowings
90,956
20,871
Convertible Notes
-
-
- 8,908,552
Other liabilities
32,665 1,995,000
-
Total expected
outflows
586,615 2,560,502
- 8,908,552
-
-
-
-
-
-
-
-
-
-
462,994
544,631
90,956
20,871
- 8,908,552
32,665 1,995,000
586,615 11,469,054
Within 1 Year
1 to 5 Years
Over 5 Years
Total
2018
2017
2018
2017
2018
2017
2018
2017
$
$
$
$
$
$
$
$
6,609,297 5,177,761
2,865,769 2,835,700
9,475,066 8,013,461
-
-
-
-
-
-
8,888,451 5,452,959
- (8,908,552)
-
-
-
-
- 6,609,297 5,177,761
- 2,865,769 2,835,700
- 9,475,066 8,013,461
- 8,888,451 (3,455,593)
Consolidated
Group
Financial assets
– cash flows
realisable
Cash and cash
equivalents
Trade, term and
loan receivables
Total anticipated
inflows
Net (outflow)/
inflow on financial
instruments
Page 49
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)
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 is also exposed to
earnings volatility on floating rate instruments.
The financial instruments that primarily expose the Group to interest rate risk are borrowings,
and cash and cash equivalents.
Interest rate risk is managed using a mix of fixed and floating rate instruments. At 30 June
2017, the Group had interest-bearing convertible note financial liabilities and no group
interest-bearing financial assets had fixed interest rates on 30 June 2018 or 2017.
(ii)
Foreign currency risk
Exposure to foreign currency risk may result in the fair value or future cash flows of a
financial instrument fluctuating due to movement in foreign exchange rates of currencies in
which the Group holds financial instruments which are other than the AUD functional
currency of the Group.
With instruments being held by overseas operations, fluctuations in the US dollar and
Philippines peso may impact on the Group’s financial results unless those exposures are
appropriately hedged.
The following table shows the foreign currency risk on the financial assets and liabilities of
the Group’s operations denominated in currencies other than the functional currency of the
operations. The foreign currency risk in the books of the parent entity is considered
immaterial and is therefore not shown.
2018
Consolidated Group
USD
AUD
PHP
Other
Total AUD
Net Financial Assets/(Liabilities) in AUD
Functional currency of entity:
Australian dollar
3,331,407
5,509,617
US dollar
Philippines peso
Statement of financial
position exposure
(151,960)
-
-
-
3,179,447
5,509,617
-
-
2,146
2,146
197,241
9,038,265
-
-
(151,960)
2,146
197,241
8,888,451
2017
Net Financial Assets/(Liabilities) in AUD
Consolidated Group
USD
AUD
PHP
Other
Total AUD
Functional currency of entity:
Australian dollar
4,473,704
(8,581,125)
US dollar
Philippines peso
Statement of financial
position exposure
323,962
-
-
-
4,797,666
(8,581,125)
-
-
39,880
39,880
287,986
(3,819,435)
-
-
323,962
39,880
287,986
(3,455,593)
Page 50
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 24: FINANCIAL RISK MANAGEMENT (CONTINUED)
(iii)
Other price risk
Other price risk relates to the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices largely due to demand and
supply factors (other than those arising from interest rate risk or foreign currency risk) for
securities.
The Group has no exposure to price risk.
Fair Values
Fair value estimation
The fair values of financial assets and financial liabilities approximate their carrying value.
Differences between fair values and carrying amounts of financial instruments with fixed interest rates are
due to the change in discount rates being applied by the market since their initial recognition by the Group.
Most of these instruments, which are carried at amortised cost (ie term receivables, held-to-maturity
assets, loan liabilities), are to be held until maturity and therefore the fair value figures calculated bear little
relevance to the Group.
(i)
Cash and cash equivalents, trade and other receivables, and trade and other payables are short-
term instruments in nature whose carrying amounts are equivalent to their fair values.
NOTE 25: RESERVES
a.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of a
foreign controlled subsidiary.
Movements in Reserve
Balance at beginning of year
Exchange differences on translation of foreign
operations
Balance at end of year
Note
Consolidated Group
2018
$
2017
$
42,480
24,241
36,365
6,115
66,721
42,480
b.
Share Based Payment Reserve
The share based payment reserve is used to recognise the value of equity settled share based
payments.
Movements in Reserve
Balance at beginning of year
Share based payments
Balance at end of year
Note
Consolidated Group
2018
$
2017
$
-
179,077
179,077
-
-
-
Page 51
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 25: RESERVES (CONTINUED)
c.
Convertible Note Reserve
The convertible note reserve records the equity component of issued convertible preference shares.
Movements in Reserve
Balance at beginning of year
Transfer of convertible note reserve to retained
earnings upon settlement in cash
Balance at end of year
Note
Consolidated Group
2018
$
2017
$
751,936
751,936
(751,936)
-
-
751,936
NOTE 26: CAPITAL AND LEASING COMMITMENTS
Capital commitments
The Group has no capital commitments at 30 June 2018 (2017: Nil).
Operating lease commitments
Non-cancellable operating leases contracted for but not recognised in the financial statements as follows;
Note
Consolidated Group
Not later than 12 months
Between 12 months and five years
Later than 5 years
2018
$
375,951
204,953
-
2017
$
351,213
256,706
-
580,904
607,919
NOTE 27: SHARE BASED PAYMENTS EXPENSE
OPTIONS
The RightCrowd Limited Option Plan is designed to provide long-term incentives for employees to deliver
long-term shareholder returns. Under the plan, participants are granted options which only vest if certain
performance standards are met.The performance standard for these options is that the option holder must
remain employed by RightCrowd at the time the option vests. Participation in the plan is at the board’s
discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed
benefits.
Options are granted under the plan for no consideration and carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share.
Page 52
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 27: SHARE BASED PAYMENTS EXPENSE (CONTINUED)
Set out below are summaries of options granted under the plan:
Options outstanding as at 1 July 2016
Granted
Forfeited
Expired
Options outstanding as at 30 June 2017
Granted
Forfeited
Exercised
Expired
Number
Weighted Average
Exercise Price
-
-
-
-
6,825,000
(215,000)
-
-
-
-
-
-
$0.42
$0.41
-
-
Options outstanding as at 30 June 2018
6,610,000
$0.42
No share options expired or exercised during the periods covered above
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Date options granted
Expiry date
Exercise
price
Share options
30 June 2018
Share options
30 June 2017
13/09/2017
13/09/2017
13/09/2017
30/05/2018
30/05/2018
30/05/2018
12/12/2018
12/12/2019
12/12/2020
28/08/2019
27/08/2020
28/08/2021
$0.38
$0.43
$0.43
$0.60
$0.68
$0.68
Weighted average remaining contractual life of options outstanding at
end of period
2,096,695
2,096,661
2,096,644
106,668
106,666
106,666
6,610,000
2.25 years
-
-
-
-
-
-
-
-
Details of options issued during the financial year are as follows
a.
On 13 September 2017 6,505,000 share options were granted to employees under the RightCrowd
Limited Employee Option Plan to take up ordinary shares. The options vest as follows:
Vesting Date
13/09/2017
13/09/2018
13/09/2019
Number
2,168,363
2,168,328
2,168,309
Exercise Price
$0.38
$0.43
$0.43
Expiry
12/12/2018
12/12/2019
12/12/2020
The options hold no voting or dividend rights and are not transferable.
Page 53
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 27: SHARE BASED PAYMENTS EXPENSE (CONTINUED)
The fair value of these options was $440,299. This value was calculated using the Black-Scholes-Merton
option pricing model applying the following inputs:
Number of options
Exercise price
Grant date
Expiry date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
Tranche 1
Tranche 2
Tranche 3
2,168,363
2,168,328
2,168,309
$0.38
$0.43
$0.43
13/09/2017
13/09/2017
13/09/2017
12/12/2018
12/12/2019
12/12/2020
58%
0%
1.8%
$0.05
58%
0%
1.8%
$0.07
58%
0%
1.8%
$0.09
b.
On 30 May 2018 320,000 share options were granted to employees under the RightCrowd Limited
Employee Option Plan to take up ordinary shares. The options vest as follows:
Vesting Date
30/05/2019
30/05/2020
30/05/2021
Number
106,668
106,666
106,666
Exercise Price
$0.60
$0.68
$0.68
Expiry
28/08/2019
27/08/2020
28/08/2021
The options hold no voting or dividend rights and are not transferable.
The fair value of these options was $32,000. This value was calculated using the Black-Scholes-Merton
option pricing model applying the following inputs:
Number of options
Exercise price
Grant date
Expiry date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
Tranche 1
Tranche 2
Tranche 3
106,668
106,666
$0.60
$0.68
106,666
$0.68
30/05/2018
30/05/2018
30/05/2018
28/08/2019
27/08/2020
28/08/2021
59%
0%
1.8%
$0.07
59%
0%
1.8%
$0.10
59%
0%
1.8%
$0.13
The expense recognised in the profit or loss for these share based payments is $179,077 (2017: Nil).
Page 54
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 28: SEGMENT REPORTING
Reportable 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 Chief Operating Decision Makers ('CODM'). The
CODM is responsible for the allocation of resources to operating segments and assessing their
performance.
The Company currently operates predominantly in one segment, being the sale and service of the
RightCrowd solution.
i)
Revenue by geographical location
Revenue by geographical location attributable to external customers is disclosed below, based on the
location of the external customer:
North America
Europe, Middle East and Africa
Latin America
Australia
Consolidated Group
2018
$
2017
$
3,450,054
2,136,316
228,708
413,152
733,952
62,039
1,428,841
1,214,669
5,520,755
4,146,976
ii)
Non-current assets by geographical location
Non-current assets by geographical location is disclosed below, based on the location of the assets.
Asia Pacific (ex Australia)
Australia
Consolidated Group
2018
$
30,858
188,135
218,993
2017
$
13,895
702,496
716,391
iii)
Major customers
There is one customer that contributes more than 10% of total revenue of the Group.
Page 55
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
NOTE 29: COMPANY DETAILS
The registered office of the company is:
RightCrowd Limited
Ground Floor, Suite 2
183 Varsity Parade
Varsity Lakes QLD 4227
ABN 20 108 411 427
www.rightcrowd.com
ASX Code RCW
Incorporated in Australia
Auditor BDO Brisbane
Share Registry Boardroom Pty Limited
Solicitor GRT Lawyers Brisbane
The principal places of business are:
–RightCrowd Limited
Ground Floor, Suite 2
183 Varsity Parade
Varsity Lakes QLD 4227
–RightCrowd Software Pty Ltd
Australia
Ground Floor, Suite 2
183 Varsity Parade
Varsity Lakes QLD 4227
United States
2505 2nd Avenue, Suite 515
Seattle WA 98121
Philippines
Unit 2401, One San Miguel Avenue Building, Corner Shaw Boulevard
Ortigas Centre, Pasig City, Manila
Page 56
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of RightCrowd Limited, the directors of the company
declare that:
1.
the financial statements and notes, as set out on pages 15 to 56, are in accordance with the
Corporations Act 2001 and:
a.
b.
comply with Australian Accounting Standards, which, as stated in accounting policy Note 1
to the financial statements, constitutes compliance with International Financial Reporting
Standards; and
give a true and fair view of the financial position as at 30 June 2018 and of the performance
for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion 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 s 295A of the Corporations Act 2001
from the Chief Executive Officer and Chief Financial Officer.
At the date of this declaration, there are reasonable grounds to believe that the company will be able to
meet any obligations or liabilities.
Director ……………………………………………………………………………………………………………….
Dated this 28 September 2018
Peter Hill
Page 57
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of RightCrowd Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of RightCrowd Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; 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 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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
Page 58
Revenue recognition
Key audit matter
How the matter was addressed in our audit
The group generates revenue from multiple streams
including license sales & other services as disclosed
in Note 1(m).
The amount of revenue recognised during the year for
license sales and other services is dependent on the
appropriate identification on the timing of transfer of
the significant risks and rewards of ownership to the
buyer.
In our view, revenue recognition is significant to our
audit due to the significance of revenue to the
financial report and the complex nature of accounting
for the appropriate timing of revenue related to the
licence sales and other services.
Our audit procedures included:
Assessing the Group’s revenue recognition
policy’s for compliance with Australian
Accounting Standards.
Selecting a sample of license sales and other
services recognised as revenue in the general
ledger and agreeing to supporting invoices,
signed customer contracts and proof of
delivery where applicable.
Obtaining and evaluating credit notes issued
post year end and the first and last invoices
issued post and pre year end, to ensure an
appropriate cut-off was achieved at balance
date.
Analytical review procedures on all
significant revenue streams on a
disaggregated basis and against expected
trends and prior year.
Selecting a sample of receipts and invoices
from the clients’ income in advance schedule
and recalculating the appropriate deferred
portion of licence sales revenue.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
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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 has 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 (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 13 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of RightCrowd Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
C R Jenkins
Director
Brisbane, 28 September 2018
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
Page 60
RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The following information is current as at 31 August 2018:
1.
Shareholding
a.
Distribution of Shareholders
Category (size of holding):
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
b.
c.
There are eight (8) shareholdings held in less than marketable
parcels.
The names of the substantial shareholders listed in the holding
company’s register are:
Shareholder:
CNI Pty Ltd
Advance Marketing Technologies Pty Ltd
Goninan Property Investments Pty Ltd
Number
Holders
Units Held
15
50
61
330
53
509
6,823
145,296
526,830
12,286,241
120,368,143
133,333,333
Number
Ordinary % of Issued
Capital
53,907,428
40.431
18,802,491
14.102
17,422,517
13.067
Salmon Earthmoving Services Pty Ltd/Pylmon Pty Ltd
6,964,820
5.224
97,097,256
72.824
d.
Voting Rights
The voting rights attached to each class of equity security are
as follows:
Ordinary shares
–
Each ordinary share is entitled to one vote when a poll is
called; otherwise each member present at a meeting or
by proxy has one vote on a show of hands.
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RightCrowd Limited ABN 20 108 411 427
and Controlled Entities
Financial Report for the Year Ended 30 June 2018
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
e.
20 Largest Shareholders – Ordinary Shares
Number of
Ordinary
Fully Paid
Shares Held
% Held of
Issued
Ordinary
Capital
53,907,428
40.431
Name
1.
2.
CNI Pty Ltd
Advanced Marketing Technologies Pty Ltd
18,802,491
14.102
3. Goninan Property Investments Pty Ltd
17,422,517
13.067
4.
5.
6.
7.
8.
9.
Salmon Earthmoving Services Pty Ltd
HSBC Custody Nominees (Australia) Limited
David Thomas
Berne No 132 Nominees Pty Ltd
Humana Pty Ltd
Dr David John Ritchie & Dr Gillian Joan Ritchie
10. Charles & Cornelia Goode Foundation Pty Ltd
11. National Nominees Limited
12. Lawnhill Superannuation Pty Ltd (Holmes Family)
13. Douglas Financial Consultants Pty Ltd
14. Meek Superannuation Pty Ltd
15. Dr Darryl Leonard Goode & Mrs Lynette Evelyn Goode
16. SAS Investments Pty Ltd
6,964,820
6,346,285
2,206,262
1,851,958
1,005,000
1,000,000
660,000
625,498
581,601
479,018
425,000
400,000
384,492
17. Lawnhill Superannuation Pty Ltd (Rabscud P/L & OWMS)
348,241
18. SJMJ Super Pty Ltd
19. Masada Equities Pty Ltd
20. Tigersharek Investments Pty Ltd
333,336
300,000
300,000
5.224
4.760
1.655
1.389
0.754
0.750
0.495
0.469
0.436
0.359
0.319
0.300
0.288
0.261
0.250
0.225
0.225
114,343,947
85.759
2.
3.
4.
5.
The names of the joint company secretaries are Kim Clark and Leslie Milne.
The address of the principal registered office in Australia is
183 Varsity Parade, Varsity Lakes QLD 4227
Telephone 07 5593 2581.
Registers of securities are held at the following addresses:
New South Wales Level 12, 225 George Street, SydneyNSW 2000.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of
the Australian Securities Exchange Limited.
6.
Unquoted Securities
Options over Unissued Shares:
A total of 6,610,000 options are on issue.
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