RooLife Group Ltd
Annual Report 2022

Plain-text annual report

UNLOCK A WORLD OF POTENTIAL ANNUAL REPORT 2022 ASX RLG www.roolifegroup.com.au ANNUAL REPORT 2 02 2 UNLOCK A WORLD OF POTENTIAL Fully integrated digital marketing and eCommerce platform to help you promote your brand and drive sales globally. ANNUAL REPORT 2022S T N E T N O C F O E L B A T Corporate Information Director’s Report Principal Activities Review of Operations Operating Results for the Year Remuneration Report Auditor’s Independence Declaration P. 01 P. 02 P. 05 P. 06 P. 09 P. 13 P. 25 Consolidated Statement of profit or loss and P. 26 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 Auditor’s Declaration Additional Securities Exchange Information P. 27 P. 28 P.29 P. 30 P. 75 P. 76 P. 80 ANNUAL REPORT 2022 A N N U A L R E P O R T 2 0 2 2 CORPORATE INFORMATION ANNUAL REPORT 20221 ABN 14 613 410 398 Directors Grant Pestell Ye (Shenny) Ruan Bryan Carr Warren Barry Joint Company Secretaries Peter Torre Jyotika Gondariya Registered office Unit B9, 1st Floor, 431 Roberts Road Subiaco WA 6008 Tel: +61 (8) 6444 1702 Principal place of business Level 1 1304 Hay Street West Perth WA 6005 Tel: +61 (8) 6444 1702 Share register Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth WA 6000 Tel: +61 (8) 9323 2000 Solicitors Murcia Pestell Hillard Suite 183, Level 6, 580 Hay Street Perth WA 6000 Non-Executive Chairman Non-Executive Director Managing Director and Chief Executive Officer Executive Sales Director Bankers National Australia Bank Level 14, 100 St Georges Terrace Perth WA 6000 Auditors HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth WA 6000 Securities Exchange Listing RooLife Group Ltd shares and options are listed on the Australian Securities Exchange (ASX: RLG and RLGO) Website address www.roolifegroup.com.au PAGE A N N U A L R E P O R T 2 0 2 2 2 DIRECTORS’ REPORT Your directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of RooLife Group Ltd (‘’RLG’’ or the ‘’Company’’) and the entities it controlled at the end of, or during, the year ended 30 June 2022. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: PAGEANNUAL REPORT 2022DIRECTORS The names of directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. 3 Grant Pestell LL.B. Non-Executive Chairman Experience and expertise Independent non-executive chairman since July 2016. Founding director of Murcia Pestell Hillard solicitors, who act for the Company. Over 20 years’ experience in commercial litigation, corporate and commercial law with extensive experience advising both listed and private companies particularly in the Information & Technology, Energy Resources and Mining Resources Industries; and Managing Director of Murcia Pestell Hillard since 2000. Other current listed directorships Non-Executive Director of COSOL Limited from August 2019. Former listed directorships in the last 3 years None. Interests in shares and options 8,576,626 ordinary shares in RLG. 1,500,000 options over ordinary shares in RLG. 6,000,000 performance shares in RLG. Ye (Shenny) Ruan BEcon, MBA, FINSIA Non-Executive Director appointed 27 July 2021 Experience and expertise Ms Ruan carries 26 years of experience in various financial management roles in global companies and has worked in various APAC counties including China, Singapore, Indonesia and Australia. Her previous roles include CFO of Noble Group China (currently COFC0), Managing Director/Coverage Head of Rabobank China and Finance Head for Cargill’s Starch and Metals business units. In her most recent role as Group CFO and Director of FKS Food and Agri, and Indonesian Conglomerate, Ms Ruan covered all aspects of financial and treasury operations and led key strategic initiatives, including investor sourcing, debt financing, M&A’s and Risk Management of commodity merchandising business in the Group. Other current listed directorships None. Former listed directorships in the last 3 years None. Interests in shares and options Nil ordinary shares in RLG. 3,000,000 performance shares in RLG. Tim Allison B. Com, MBA, GAICD Non-Executive Director resigned 27 July 2021 Experience and expertise Mr Allison has extensive digital and e-Commerce experience and a successful track record in commercialisation and scaling across a range of technology businesses, from traditional retail and distribution to cutting-edge consumer technology in the online and mobile sectors. He has proven experience in growing export value and delivering strong operational results in international markets for technology businesses, including structuring, negotiating and managing joint ventures in China. Mr Allison is currently Executive Director and Chairman of Custom Innovation Company and Executive Director of Tec. Fit, a B2B cloud based SaaS licensing company focused on providing world-class technology solutions to the fashion industry and collaborating with for Universities focused on innovation and cutting edge 3D/2D scanning and 3D printing. Other current listed directorships None. Former listed directorships in the last 3 years None. Interests in shares and options Nil ordinary shares in RLG. Nil options over ordinary shares in RLG. PAGEANNUAL REPORT 20224 Company Secretary The company secretaries are Peter Torre CA, AGIA, MAICD and Jyotika Gondariya CA. Mr Torre was appointed to the position of company secretary in March 2017. Mr Torre is the principal of Torre Corporate, a specialist corporate advisory firm providing corporate secretarial services to a range of listed companies. He is a director of ASX listed VEEM Ltd and Volt Power Group Limited. Mrs Gondariya was appointed to the position of company secretary in March 2022. Mrs Gondariya is a well- credentialled finance professional with over 10-years’ experience with publicly listed and private entities including in audit services. DIRECTORS’ REPORT Directors (continued) Bryan Carr BSC. Managing Director and Chief Executive Officer Warren Barry BSC, MBA. Executive Sales Director Experience and expertise Mr Carr is an experienced ASX public company Managing Director and Chief Executive Officer with extensive operating experience in Australia and China. He has over 20 years’ experience working in technology companies in the private and public company environment where he has developed proven business development skills and comprehensive corporate governance, finance, capital markets and risk management expertise. In addition to his experience in the Australian corporate environment, Mr Carr has a highly developed understanding of Asia-based business operations, including 10 years based in China during which time he developed an in-depth understanding of China and Hong Kong’s commercial, corporate and regulatory operating requirements. Other current listed directorships None. Former listed directorships in the last 3 years None. Interests in shares and options 12,750,000 ordinary shares in RLG. 22,500,000 performance shares in RLG. Experience and expertise Mr Barry has been involved in the digital space for over 22 years and has been actively involved in taking several companies to ASX listing. He has setup and sold several digital agencies over the years as well as being a former CEO of publicly listed Company Gruden. Mr Barry has a BSC from UNSW and a MBA from UWA. Mr Barry’s key area of focus is developing online strategies for companies but also working with them on developing ways to commercialise and monetise their digital footprint. Over his journey to date, Mr Barry has worked with very high-profile clients including Telstra, AFL, CUB, Betta, Sydney Airports, Adelaide Airports, Curves Gym, Shop a Docket, Sealink and The Agency. Other current listed directorships None. Former listed directorships in the last 3 years Corella Resources Ltd from August 2020 to March 2021. Interests in shares and options 25,325,267 ordinary shares in RLG. 13,500,000 performance shares in RLG. PAGEANNUAL REPORT 20225 DIRECTORS’ REPORT (continued) e-Commerce and digital marketing company RooLife Group Ltd (ASX: RLG) (“RLG” or the “Company”) is pleased to provide shareholders with the Company’s Annual Report for the year ended 30 June 2022. PRINCIPAL ACTIVITIES RLG’s technology and services platforms manage the sale of food, beverages and health and wellbeing products, matching consumer demand with businesses and producers seeking to enter and sell into growth markets by connecting global producers and brands directly to consumers. RLG’s Marketplace and services link consumers with brands and facilitates transaction control via its cloud-based operational dashboard with real-time visibility of inventory, consumer purchases and preferences with sales data and other business intelligence, managing sales from order to buyer through direct-to-consumer online store integration. The Company represents and sells a growing number of quality products and international brands from Australia, New Zealand, USA, Europe, UK and South America, selling online and directly to consumers with the technology and sales infrastructure necessary for products and brands to sell at scale. RLG MARKETPLACE MANAGING ALL ASPECTS OF SUPPLY AND SALES OF PRODUCTS GLOBALLY TO CUSTOMERS Global Footprint of Clients Australia New Zealand USA UK France Peru Chile PAGEANNUAL REPORT 2022A N N U A L R E P O R T 2 0 2 2 PAGE 6 6 DIRECTORS’ REPORT (continued) REVIEW OF OPERATIONS Revenue $16.9m +85% Platform Sales $12.9m +118% Throughout the year RLG continued expansion of its platforms selling its products and built on its business development, expanding its international network with the initiatives expected to deliver a growing range of products the Company markets and sells globally. RLG’s focus on its technology, business development, marketing and product selection through FY2022 delivered the strong product sales revenue growth achieved through the year as the Company built and launched additional direct-to-consumer online stores. In line with the Company’s announced strategy, RLG continued investment in its technology and customer acquisition strategies in FY2022, successfully driving growth in sales and customer reach and establishing new channels to market. Key milestone achievements by RLG in FY2022: • Revenue from operations of $16.9 million representing growth of +85% over FY2021. • Triple digit growth in Product Platform Sales (+118%) to $12.9m from $5.9m in FY2021. • Sales Revenue since launch in FY2019 to FY2022 has increased by a Compound Annual Growth Rate (CAGR) of 188% • Cash Receipts from Customers increased +58% to $14.1m from $8.9m in FY2021. • Improving comprehensive P/L position of ($2.5m), representing a +49% improvement over FY2021 and which included non-operational expenses associated with performance shares and options and technical development and launch expenses for new e-commerce stores in China and SE Asia. • Total employee, staff and contractor costs reduced (-4%) while the Company achieved growth in sales revenue of +85% from $9.1m (FY2021) to $16.9m (FY2022). • The Company maintained a strong Net Assets positions of $6.1m representing an improvement of 7% over FY2021. SUMMARY OF KEY & IMPROVING BUSINESS METRICS FY2022 FROM FY2021 Performance Metrics Revenue Product / Platform Sales Comprehensive P/L Cash Receipts from Customers Employee & Contractor Costs Net Assets FY22 % Improvement $16,930,186 $12,919,297 $(2,534,935) $14,064,730 $(3,278,094) $6,071,976 85% 118% 49% 58% -4% 7% PAGEANNUAL REPORT 2022A N N U A L R E P O R T 2 0 2 2 PAGE 7 DIRECTORS’ REPORT (continued) Review of operations (continued) RLG continued the development of its direct-to-consumer sales platforms which delivered growth in product sales, while maintaining its focus on efficiency of operations while more than doubling product sales to $12.9m, which was achieved while reducing total Employee & Contractor Cost by -4%, demonstrating the scalable nature of the Group’s operations and which contributed to the comprehensive Profit/Loss performance of the Group, which improved by 49%. The sales and revenue growth achieved by the Company is an outcome of the overall improving business metrics and growing customer revenue base, with the Company demonstrating a consistent, strong track record of growth since the Company’s first full year of operation in FY2020. Since launch of its e-commerce and digital marketing operations in the second half of FY2019, RLG has achieved consistently strong sales revenue growth with a CAGR (Compound Annual Growth Rate) of 188% for the period between FY2019 and FY 2022. Since launch of its e-commerce and digital marketing operations in the second half of FY2019, RLG has achieved consistently strong sales revenue growth with a CAGR (Compound Annual Growth Rate) of 188% for the period between FY2019 and FY 2022. RLG REVENUE & INCOME FY19 – FY22 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- FY2019 - FY2022 CAGR + 188% FY20 FY19 FY20 FY 21 FY 22 The investment in technology, business development, marketing and product selection has driven the growth in product sales and revenue achieved this financial year with the Company planning to launch more direct-to-consumer online stores managed by the Company’s technology platforms to drive sales to an expanded global customer base representing products and clients across 7 countries. The Company has invested in the business through FY2022 to drive scale in product sales via its technology and sales platforms and is focussed on increasing gross margin of product sales on its online sales platforms which are designed to achieve scalable growth and to continue the Company’s strongly improved profitability. The Board and management’s focus on strategies to rapidly increase revenue has been vindicated with the revenue growth reported over the past two years. The sustainable revenue now positions the Company to be self-sustaining from a cashflow perspective if status quo remains, however, the Board is of the view that further growth is achievable, and indeed necessary in order to achieve the economies of scale to be derived from the established sales platforms and cost base. The increased revenue base has resulted in a stronger balance sheet, and the Board will look to leverage this strength by considering other sources of capital, such as debt finance, in order to provide the growth capital to further accelerate revenue growth and to deliver sustainable future profits. 8 DIRECTORS’ REPORT (continued) Review of operations (continued) The achievement of solid improvement in key financial metrics in FY2022 positions RLG well to continue its growth and expansion, with its business objective to achieve ongoing product sales growth driven from its growing global client and customer base, to continue to Company’s path to profitability. With the continued development of its systems to connect health, food and lifestyle products and brands with the fast growing consumer markets online in China, RLG continued expansion of sales of key client brands with significant new distribution and sales channels implemented with AFT Pharmaceuticals (ASX:AFP, NZX:AFT) and Remedy Drinks. During the year RLG and ASX and NZX-listed AFT Pharmaceuticals officially launched the first New Zealand OTC (Over The Counter, without prescription) online pharmacy store in China, making it the first New Zealand company to have its OTC pharmaceutical products approved for sale cross border into China on Alibaba’s Tmall Global platform. Over the last 12 months RLG managed the end-to-end approval process for AFT to sell its OTC (Over The Counter, without prescription) pharmaceutical products directly into China on the RLG-operated Kiwi Health Global Flagship Store’, which launched with OTC products in July 2022. RLG is also seeing strong traction with Remedy Drinks’ range of kombucha beverages, for which RLG is the exclusive distributor in China. With the in-store placement and marketing with ALDI stores in China this means that Chinese shoppers can buy RLG’s range of Remedy Drinks products in ALDI stores and via ALDI’s online mini program as well as top Chinese online grocery and delivery platforms of MeiTuan, Ele.me and JD Fresh. This is in addition to sales and distribution through over 100 other supermarket and hospitality outlets. While the global supply chain impact of Shanghai’s two-month-long lockdown impacted the delivery of products onto the Company’s sales platforms and restricted delivery to consumers, nevertheless the Company achieved sales revenue totalling $4.2m for the last Quarter of FY2022, which was up 10% from the corresponding Quarter in FY2021. As the Company continued its rapid expansion through FY2022, operational efficiency improved by 50% as measured by the ratio of Employee Contractor Costs ($3,280,415) to Sales Revenue ($16,930,186) with actual amounts paid to Employees, Contractors and Directors reducing -4% from FY2021, while Sales Revenue increased 85% for the comparable period. Direct expenses increased as a percentage of sales as cost of supply, logistics and marketing increased during the year in line with global conditions. Operational efficiency remains a strong focus with changes implemented in June expected to deliver savings and commercial benefits in FY2023. PAGEANNUAL REPORT 20229 DIRECTORS’ REPORT (continued) OPERATING RESULTS FOR THE YEAR The Group has earned revenue and other income of $16,991,895 (30 June 2021: $9,611,225) with cash receipts of $14,064,730, (30 June 2021: $8,910,824) with the consolidated comprehensive loss attributable to members of the Group $2,534,935, (30 June 2021: $4,993,319) which includes non-cash based items totalling $312,355. Despite being impacted by Covid lockdowns in its key market of China and global supply chain delays with increased costs, RLG achieved strong sales growth and improvement in other business metrics linked directly to delivery and importantly improved profitability by $2,458,384. The increased logistics and supply costs and associated delays in delivery of product in market during the year adversely impacted the Company’s profit and loss performance, however the company was able to record a 49% improvement in comprehensive profit and loss performance for FY2022 and is optimistic that with improving Covid conditions globally that it will be able to continue to improve on this position. RLG REVENUE & P/L PERFORMANCE FY2021 & FY2022 $22,500,000 $17,500,000 $12,500,000 $7,500,000 $2,500,000 $(2,500,000) FY 2022 FY2021 FY20 FY2021 FY2022 Revenue $8,910,824 $16,991,895 Loss $(4,993,319) $(2,534,935) On 30 December 2021, shareholder approval was provided for the placement of shares in the Company to a China-linked sales channel, the China Cross Border Trading Group consortium (collectively “CCTG”) at $0.026, representing a 24% premium to the closing share price that day, raising $1,000,000 before costs. PAGEANNUAL REPORT 2022DIRECTORS’ REPORT (continued) 10 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than disclosed elsewhere in this report, there have been no significant changes in the state of affairs of the Group to the date of this report. DIVIDENDS No dividends have been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. SIGNIFICANT EVENTS AFTER BALANCE DATE There has been no matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Group. Therefore, this information has not been presented in this report. DIRECTORS’ MEETINGS The number of board meetings of the Company’s board of directors held during the year ended 30 June 2022, and the number of meetings attended by each director are set out below. As set out in the Company’s Corporate Governance Statement, the Company does not currently have any fully constituted committees, however, matters typically dealt with by an Audit and Risk Committee, and a Remuneration and Nomination Committee are dealt with in full board meetings as and when required. Number of meetings held: Board Meetings 9 Grant Pestell Timothy Allison Shenny Ruan Warren Barry Bryan Carr Number of meetings attended: Number of meetings eligible to attend: 8 1 8 9 9 9 1 8 9 9 Other matters of Board business have been resolved by circular resolution of directors, which are a record of decisions made at a number of informal meetings of the directors held to control, implement and monitor the Company’s activities throughout the year. PAGEANNUAL REPORT 2022DIRECTORS’ REPORT (continued) 11 INTERESTS IN THE ORDINARY SHARES, OPTIONS AND PERFORMANCE SHARES OF THE COMPANY AND RELATED BODIES CORPORATE At the date of this report, ordinary shares, options and performance shares granted to Directors of the Company and the entities it controlled are: Directors Grant Pestell Bryan Carr Warren Barry Shenny Ruan Fully paid ordinary shares Number 8,576,626 12,750,000 25,325,267 - Share options Number 1,500,000 - - - 46,651,893 1,500,000 Performance shares Number 6,000,000 22,500,000 13,500,000 3,000,000 45,000,000 UNISSUED SHARES UNDER OPTION At the date of this report unissued ordinary shares of the Company under option are: Date options granted 9 September 2016 9 September 2021 30 December 2021 Number of shares under option 3,000,000 10,000,000 34,807,691 47,807,691 Exercise price of option Expiry date of option $0.40 $0.05 $0.05 30 June 2023 31 March 2024 30 November 2024 SHARES ISSUED DURING OR SINCE THE END OF THE YEAR AS A RESULT OF EXERCISE OF OPTIONS No ordinary shares were issued during the year as a result of the exercise of an option. No ordinary shares have been issued by the Company since the end of the financial year as a result of the exercise of an option. REMUNERATION REPORT The Remuneration Report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the Key Management Personnel of the Group for the financial year ended 30 June 2022 and is included on page 13. PAGEANNUAL REPORT 2022DIRECTORS’ REPORT (continued) 12 ENVIRONMENTAL LEGISLATION The Group is not subject to any significant environmental legislation. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has agreed to indemnify all the directors of the Company for any liabilities to another person (other than the Company or related body corporate) that may arise from their position as directors of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year the Company paid a premium in respect of a contract insuring the directors and officers of the Company and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. NON-AUDIT SERVICES Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 25 to the financial statements. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110: Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the Company with an Independence Declaration in relation to the audit of the financial report. This Independence Declaration is set out on page 25 and forms part of this directors’ report for the year ended 30 June 2022. 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. Signed in accordance with a resolution of the directors. Bryan Carr Managing Director and Chief Executive Officer Perth, 29 August 2022 REMUNERATION REPORT This report, which forms part of the directors’ report, outlines the remuneration arrangements in place for the key management personnel (“KMP”) of RooLife Group Ltd for the financial year ended 30 June 2022. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Group. Key Management Personnel The directors and other key management personnel of the Group during or since the end of the financial year were: Ye (Shenny) Ruan Non-Executive Director (appointed 27 July 2021) Non-Executive Chairman Non-Executive Director (resigned 27 July 2021) Managing Director and Chief Executive Officer Executive Sales Director Jyotika Gondariya Russell Francis Chief Financial Officer and Joint Company Secretary Chief Technical Officer (resigned 29 October 2021) Except as noted, the named persons held their current positions for the whole of the financial year and since the financial Remuneration philosophy The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in determining remuneration levels is to: • • • set competitive remuneration packages to attract and retain high calibre employees; link executive rewards to shareholder value creation; and establish appropriate, demanding performance hurdles for variable executive remuneration. Other than the performance bonus scheme applicable to certain employees, remuneration is not linked to Group Remuneration Committee The Company does not have a separate remuneration committee until such time as the board is of a sufficient size and structure, and the Company’s operations are of a sufficient magnitude for a separate committee to be of benefit to the The full board carries out the duties that would ordinarily be assigned to that committee, ensuring that the level and composition of remuneration provided to attract and retain high quality directors and employees is commercially appropriate and targeted to align with the interests of the Company whilst not resulting in a conflict with the objectivity of its independent directors. The board of directors of the Company is responsible for determining and reviewing compensation arrangements for the directors, the CEO and the executive team. The board assesses the appropriateness of the nature and amount of remuneration of directors and executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board and executive team. Directors Grant Pestell Tim Allison Bryan Carr Warren Barry Executives year. performance. Company. PAGEANNUAL REPORT 2022 13 REMUNERATION REPORT This report, which forms part of the directors’ report, outlines the remuneration arrangements in place for the key management personnel (“KMP”) of RooLife Group Ltd for the financial year ended 30 June 2022. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Group. Key Management Personnel The directors and other key management personnel of the Group during or since the end of the financial year were: Directors Grant Pestell Ye (Shenny) Ruan Tim Allison Bryan Carr Warren Barry Executives Non-Executive Chairman Non-Executive Director (appointed 27 July 2021) Non-Executive Director (resigned 27 July 2021) Managing Director and Chief Executive Officer Executive Sales Director Jyotika Gondariya Russell Francis Chief Financial Officer and Joint Company Secretary Chief Technical Officer (resigned 29 October 2021) Except as noted, the named persons held their current positions for the whole of the financial year and since the financial year. Remuneration philosophy The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in determining remuneration levels is to: • • • set competitive remuneration packages to attract and retain high calibre employees; link executive rewards to shareholder value creation; and establish appropriate, demanding performance hurdles for variable executive remuneration. Other than the performance bonus scheme applicable to certain employees, remuneration is not linked to Group performance. Remuneration Committee The Company does not have a separate remuneration committee until such time as the board is of a sufficient size and structure, and the Company’s operations are of a sufficient magnitude for a separate committee to be of benefit to the Company. The full board carries out the duties that would ordinarily be assigned to that committee, ensuring that the level and composition of remuneration provided to attract and retain high quality directors and employees is commercially appropriate and targeted to align with the interests of the Company whilst not resulting in a conflict with the objectivity of its independent directors. The board of directors of the Company is responsible for determining and reviewing compensation arrangements for the directors, the CEO and the executive team. The board assesses the appropriateness of the nature and amount of remuneration of directors and executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board and executive team. PAGEANNUAL REPORT 2022 REMUNERATION REPORT (Continued) REMUNERATION REPORT (Continued) 14 Remuneration structure In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct. Use of remuneration consultants Independent external advise is sought from remuneration consultants as required. No advice was sought for remuneration during the financial year. Non-executive director remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The Constitution of the Company provides that the directors may determine the remuneration of directors prior to the first annual general meeting of the Company. The fees determined by the directors are set out below. The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The Company will seek the approval of shareholders in the event the directors’ fees are increased beyond the levels stated. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors will be reviewed annually. The Board may consider advice from external shareholders as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process. Each Director receives a fee for being a director of the Company. An additional fee will also be paid for each board committee on which a director sits when such board committees are established. The payment of additional fees for serving on a committee recognises the additional time commitment required by directors who serve on one or more sub committees. The Company has entered into non-executive director contracts for services with each of Messrs Pestell and Allison and Ms Ruan. Each such contract is on broadly similar terms, which include the following: • Term: Continuation of appointment is subject to and contingent upon the fulfilment of the obligations of a non- executive director under the ASX Listing Rules, the Constitution of the Company and the Corporations Act, and the successful re-election by the Company shareholders. • Fixed fee: - Mr Pestell: A$71,175 per annum; and - Mr Allison: A$45,000 per annum plus superannuation - Ms Ruan: A$45,000 per annum plus superannuation Mr Pestell and Ms Ruan have received Performance Shares (as disclosed in Note 19) as incentivisation. The conversion of the Performance Shares is conditional upon the achievement of certain milestones. Each Performance Share converts to one fully paid ordinary share upon conversion. The non-executive directors may be entitled to such additional fees or other amounts as the board determines (in its absolute discretion) where performing special duties or otherwise performing services outside the scope of the ordinary duties of a director. The non-executive directors may also be reimbursed for out-of-pocket expenses incurred as a result of their respective directorships or any special duties upon production of the relevant receipts. The non-executive directors are expected to attend regular board meetings involving a minimum commitment of 10 hours per month, as well as attending the annual general meeting of the Company and informal meetings and consider general correspondence from time to time. Executive director and senior manager remuneration Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and long-term incentive schemes). Fixed Remuneration Fixed remuneration is reviewed annually by the board. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The board has access to external, independent advice where necessary. Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group. The fixed remuneration component is detailed in the Key Management Personnel remuneration table for the year ended 30 June 2022. Variable Remuneration The objective of the short-term incentive program is to link the achievement of the Group's operational targets with the remuneration received by the executives charged with meeting those targets. The total potential short-term incentive available is set at a level so as to provide sufficient incentive to the senior manager to achieve the operational targets and such that the cost to the Group is reasonable in the circumstances. The aggregate of annual payments available for executives across the Group is subject to the approval of the board. The Company also makes long term incentive payments to reward senior executives in a manner that aligns this element of remuneration with the creation of shareholder wealth. Executive Director Consultancy Agreements (a) Managing Director and Chief Executive Officer The terms and conditions of the employment contract entered into between the Company and Mr Carr are as follows: Commencement date: 20 December 2018; Term: The consultancy agreement continues until either party terminates by giving the other not less than six months' prior notice in writing; Fixed fee: $273,750 per annum, reviewable annually; Equity incentivisation: Mr Carr has received Performance Shares (as set out in the below table) as incentivisation. The conversion of the Performance Shares is conditional upon the achievement of certain milestones, (each Performance Share converts to one fully paid ordinary share upon conversion); Performance bonus scheme: Subject to meeting key performance measures, which will be set by the board, the CEO will be eligible every 12 months for a lump sum bonus payment of up to 50% of base fee, payable as either cash or fully paid shares in the capital of the Company; Intellectual property: Mr Carr acknowledges that the Company is the exclusive owner of all rights, title and interest in all intellectual property created by him within the course of his consultancy services; and Non-solicitation: Mr Carr will not, for a period of 24 months after termination of consultancy agreement, solicit any customer or employee of the Group (other than in connection with businesses which are not competitive with those operated by the Group). PAGEANNUAL REPORT 2022 15 REMUNERATION REPORT (Continued) Executive director and senior manager remuneration Remuneration consists of fixed remuneration and variable remuneration (comprising short-term and long-term incentive schemes). Fixed Remuneration Fixed remuneration is reviewed annually by the board. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The board has access to external, independent advice where necessary. Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group. The fixed remuneration component is detailed in the Key Management Personnel remuneration table for the year ended 30 June 2022. Variable Remuneration The objective of the short-term incentive program is to link the achievement of the Group's operational targets with the remuneration received by the executives charged with meeting those targets. The total potential short-term incentive available is set at a level so as to provide sufficient incentive to the senior manager to achieve the operational targets and such that the cost to the Group is reasonable in the circumstances. The aggregate of annual payments available for executives across the Group is subject to the approval of the board. The Company also makes long term incentive payments to reward senior executives in a manner that aligns this element of remuneration with the creation of shareholder wealth. Executive Director Consultancy Agreements (a) Managing Director and Chief Executive Officer The terms and conditions of the employment contract entered into between the Company and Mr Carr are as follows: Commencement date: 20 December 2018; Term: The consultancy agreement continues until either party terminates by giving the other not less than six months' prior notice in writing; Fixed fee: $273,750 per annum, reviewable annually; Equity incentivisation: Mr Carr has received Performance Shares (as set out in the below table) as incentivisation. The conversion of the Performance Shares is conditional upon the achievement of certain milestones, (each Performance Share converts to one fully paid ordinary share upon conversion); Performance bonus scheme: Subject to meeting key performance measures, which will be set by the board, the CEO will be eligible every 12 months for a lump sum bonus payment of up to 50% of base fee, payable as either cash or fully paid shares in the capital of the Company; Intellectual property: Mr Carr acknowledges that the Company is the exclusive owner of all rights, title and interest in all intellectual property created by him within the course of his consultancy services; and Non-solicitation: Mr Carr will not, for a period of 24 months after termination of consultancy agreement, solicit any customer or employee of the Group (other than in connection with businesses which are not competitive with those operated by the Group). PAGEANNUAL REPORT 2022 16 REMUNERATION REPORT (Continued) REMUNERATION REPORT (Continued) Executive Director Consultancy Agreements (continued) Other Key Management Personnel Employment Contracts (b) Executive Sales Director (a) Chief Financial Officer and Joint Company Secretary’s contract The terms and conditions of the employment contract entered into between the Company and Mr Barry are as follows: The terms and conditions of the employment contract entered into between the Company and Mrs Gondariya are Commencement date: 1 October 2020; Term: The employment contract continues until either party terminates by giving the other not less than three months' prior notice in writing; Term: The employment contract continues until either party terminates by giving the other not less than three months' prior notice in writing; Fixed fee: $273,750 per annum (including superannuation), reviewable annually; Remuneration: $114,000 per annum plus superannuation for three days per week, formally moving as follows: Commencement date: 7 May 2021; Equity incentivisation: Mr Barry has received Performance Shares (as set out in the below table) as incentivisation. The conversion of the Performance Shares is conditional upon the achievement of certain milestones, (each Performance Share converts to one fully paid ordinary share upon conversion); Performance bonus scheme: Subject to meeting key performance measures, which will be set by the board, Mr Barry will be eligible every 12 months for a lump sum bonus payment of up to 50% of base fee, payable as either cash or fully paid shares in the capital of the Company; Intellectual property: Mr Barry acknowledges that the Company is the exclusive owner of all rights, title and interest in all intellectual property created by him within the course of his employment services; and Non-solicitation: Mr Barry will not, for a period of 24 months after termination of employment, solicit any customer or employee of the Group (other than in connection with businesses which are not competitive with those operated by the Group). to full time at $240,000 from 7 March 2022, reviewable by the Company from time to time; Equity incentivisation: Mrs Gondariya will receive Performance Shares as incentivisation. The conversion of the Performance Shares is conditional upon the achievement of certain milestones, (each Performance Share converts to one fully paid ordinary share upon conversion); Performance bonus scheme: Subject to meeting key performance measures, which will be set by the board, Mrs Gondariya will be eligible every 12 months for a lump sum bonus payment of $10,000 payable in cash and to participate in Company’s performance bonus scheme. Intellectual property: Mrs Gondariya acknowledges that the Company is the exclusive owner of all rights, title and interest in all intellectual property created by Mrs Gondariya in the course of her employment; and Non-solicitation: Mrs Gondariya will not, for a period of 24 months after termination of employment, solicit any customer or employee of the Company (other than in connection with businesses which are not competitive with those operated by the Company). PAGEANNUAL REPORT 2022 17 REMUNERATION REPORT (Continued) Other Key Management Personnel Employment Contracts (a) Chief Financial Officer and Joint Company Secretary’s contract The terms and conditions of the employment contract entered into between the Company and Mrs Gondariya are as follows: Commencement date: 7 May 2021; Term: Remuneration: The employment contract continues until either party terminates by giving the other not less than three months' prior notice in writing; $114,000 per annum plus superannuation for three days per week, formally moving to full time at $240,000 from 7 March 2022, reviewable by the Company from time to time; Equity incentivisation: Mrs Gondariya will receive Performance Shares as incentivisation. The conversion of the Performance Shares is conditional upon the achievement of certain milestones, (each Performance Share converts to one fully paid ordinary share upon conversion); Performance bonus scheme: Subject to meeting key performance measures, which will be set by the board, Mrs Gondariya will be eligible every 12 months for a lump sum bonus payment of $10,000 payable in cash and to participate in Company’s performance bonus scheme. Intellectual property: Mrs Gondariya acknowledges that the Company is the exclusive owner of all rights, title and interest in all intellectual property created by Mrs Gondariya in the course of her employment; and Non-solicitation: Mrs Gondariya will not, for a period of 24 months after termination of employment, solicit any customer or employee of the Company (other than in connection with businesses which are not competitive with those operated by the Company). PAGEANNUAL REPORT 2022 REMUNERATION REPORT (Continued) REMUNERATION REPORT (Continued) Remuneration of Key Management Personnel Remuneration of Key Management Personnel (continued) 18 30 June 2022 Short-term employee benefits Post- employment benefits Share- based payments Salary & fees $ 71,175 3,115 41,942 273,750 248,864 Other $ - - - 136,875 124,432 Super $ Shares / Share options $ TToottaall $$ - 25,201 9966,,337766 312 - 4,194 12,602 33,,442277 5588,,773388 - 110,702 552211,,332277 37,330 67,501 447788,,112277 Directors Grant Pestell Tim Allison Ye Ruan Bryan Carr ¹ Warren Barry2 Executives Jyotika Gondariya 3 Russell Francis 4 200,272 90,580 16,000 21,627 12,394 225500,,229933 - 6,667 2,600 9999,,884477 992299,,669988 227777,,330077 7700,,113300 223311,,000000 11,,550088,,113355 Relative proportions of remuneration of KMP that are linked to performance Fixed remuneration Remuneration linked to performance % % 74% 100% 79% 53% 60% 89% 97% 26% 0% 21% 47% 40% 11% 3% ¹ Other benefits for Mr Carr comprise of a cash bonus of $136,875. The amount remains unpaid and is included in amounts payable as at 30 June 2022. Share-based payments for Mr Carr comprise of: - - $16,195 accelerated vested component of Executive options granted in the previous financial year and ccaanncceelllleedd during the financial year; $94,507 vested component of performance shares granted in the current financial year. The Executive options were valued using the Monte Carlo model taking into account the inputs as disclosed in Note 19. The performance shares were valued at the closing market price on grant date as disclosed in Note 19. 2 Other benefits for Mr Barry comprise of a cash bonus of $124,432. The amount remains unpaid and is included in amounts payable as at 30 June 2022. Superannuation benefits for Mr Barry comprise of the statutory superannuation on salary of $24,887 and superannuation payable of $12,443 on the unpaid bonus. Superannuation payable is included in amounts payable as at 30 June 2022. Share-based payments for Mr Barry comprise of: - - $10,797 accelerated vested component of Executive options granted in the previous financial year and ccaanncceelllleedd during the financial year; $56,704 vested component of performance shares granted in the current financial year. The Executive options were valued using the Monte Carlo model taking into account the inputs as disclosed in Note 19. The performance shares were valued at the closing market price on grant date as disclosed in Note 19. 3 Other benefits for Mrs Gondariya comprise a cash bonus of $16,000. The amount remains unpaid and is included in amounts payable as at 30 June 2022. Share-based payments to Mrs Gondariya comprise of the performance shares granted in the current financial year. The performance shares were valued at the closing market price on grant date as disclosed in Note 19. 4 Share-based payments to Mr Francis consisted of 800,000 shares granted in satisfaction of past services. These shares were recognised as a shared based payment expense in the financial year ended 30 June 2021. A further 200,000 shares were granted in satisfaction of services provided during the period. The shares were valued at closing market price on grant date. 30 June 2021 Short-term employee employment Post- Share- based benefits benefits payments Super Share options TToottaall remuneration performance $$ % % Other $ - - Shares / $ - - $ - 4,275 7711,,117755 4499,,227755 151,875 139,432 - 10,195 443355,,882200 30,256 6,797 443300,,442222 Relative proportions of remuneration of KMP that are linked to performance Remuneration Fixed linked to 100% 100% 63% 66% 100% 92% 90% 0% 0% 37% 34% 0% 8% 10% - 705 2,458 - 2288,,223311 19,000 17,500 223377,,220055 10,000 18,652 15,227 224433,,228899 11,,006699,,004455 330022,,001122 7744,,664411 4499,,771199 11,,449955,,441177 Salary & fees $ 71,175 45,000 273,750 253,937 25,773 200,000 199,410 Directors Grant Pestell Tim Allison Bryan Carr¹ Warren Barry2 Executives Jyotika Gondariya Russell Francis 3 5 Jacqueline Gray 4 5 ¹ Other benefits for Mr Carr comprise of a cash bonus of $151,875. $15,000 of the bonus has been paid in the current financial year, with the balance of $136,875 remaining unpaid and included in amounts payable as at 30 June 2021. Share-based payments for Mr Carr comprise of the vested component of Executive options granted in the previous financial year. These options were valued using the Monte Carlo model taking into account the inputs as disclosed in Note 19. 2 Other benefits for Mr Barry comprise of a cash bonus of $139,432. $15,000 of the bonus has been paid in the current financial year, with the balance of $124,432 remaining unpaid and included in amounts payable as at 30 June 2021. Superannuation benefits for Mr Barry comprise of the statutory superannuation on salary of $17,813 and superannuation payable of $12,443 on the unpaid bonus. Superannuation payable is included in amounts payable as at 30 June 2021. Share-based payments for Mr Barry comprise of the vested component of Executive options granted in the previous financial year. 3 Other benefits for Mr Francis comprise of a motor vehicle mileage allowance of $705. 4 Other benefits for Mrs Gray comprise a cash bonus of $10,000. The bonus has been paid in the current financial year. 5 Share-based payments for Mr Francis and Mrs Gray comprise of the vested component of ordinary shares to be granted in satisfaction of past services. The shares have not been formally granted at 30 June 2021 and await formal acceptance of offers. As the employees have provided the services to the Company, AASB 2 “Share-based payments” requires the Company to estimate the expected fair value of the shares that will be recorded on the formal grant date. The shares have been valued at closing market price as at 30 June 2021. Upon formal grant date, the Company will perform a reassessment of the fair value of the shares with any subsequent difference being recorded through the statement of profit or loss and other comprehensive income. Employee share, right and option plans Options granted as compensation No options were granted as compensation during the current year and previous year. Executive options granted in the year ended 30 June 2020 were cancelled during the period. As the Executive options had market based performance conditions, the cancellation resulted in an acceleration to the vesting with $26,992 recognised as an expense during the year (2021: $16,992). PAGEANNUAL REPORT 2022 19 REMUNERATION REPORT (Continued) Remuneration of Key Management Personnel (continued) 30 June 2021 Short-term employee benefits Post- employment benefits Share- based payments Relative proportions of remuneration of KMP that are linked to performance Salary & fees $ 71,175 45,000 273,750 253,937 25,773 200,000 199,410 Directors Grant Pestell Tim Allison Bryan Carr¹ Warren Barry2 Executives Jyotika Gondariya Russell Francis 3 5 Jacqueline Gray 4 5 Other $ - - Super Shares / Share options $ - 4,275 $ - - 7711,,117755 4499,,227755 151,875 139,432 - 10,195 443355,,882200 30,256 6,797 443300,,442222 - 705 2,458 - 2288,,223311 19,000 17,500 223377,,220055 10,000 18,652 15,227 224433,,228899 Fixed remuneration Remuneration linked to performance % % TToottaall $$ 100% 100% 63% 66% 100% 92% 90% 0% 0% 37% 34% 0% 8% 10% 11,,006699,,004455 330022,,001122 7744,,664411 4499,,771199 11,,449955,,441177 ¹ Other benefits for Mr Carr comprise of a cash bonus of $151,875. $15,000 of the bonus has been paid in the current financial year, with the balance of $136,875 remaining unpaid and included in amounts payable as at 30 June 2021. Share-based payments for Mr Carr comprise of the vested component of Executive options granted in the previous financial year. These options were valued using the Monte Carlo model taking into account the inputs as disclosed in Note 19. 2 Other benefits for Mr Barry comprise of a cash bonus of $139,432. $15,000 of the bonus has been paid in the current financial year, with the balance of $124,432 remaining unpaid and included in amounts payable as at 30 June 2021. Superannuation benefits for Mr Barry comprise of the statutory superannuation on salary of $17,813 and superannuation payable of $12,443 on the unpaid bonus. Superannuation payable is included in amounts payable as at 30 June 2021. Share-based payments for Mr Barry comprise of the vested component of Executive options granted in the previous financial year. 3 Other benefits for Mr Francis comprise of a motor vehicle mileage allowance of $705. 4 Other benefits for Mrs Gray comprise a cash bonus of $10,000. The bonus has been paid in the current financial year. 5 Share-based payments for Mr Francis and Mrs Gray comprise of the vested component of ordinary shares to be granted in satisfaction of past services. The shares have not been formally granted at 30 June 2021 and await formal acceptance of offers. As the employees have provided the services to the Company, AASB 2 “Share-based payments” requires the Company to estimate the expected fair value of the shares that will be recorded on the formal grant date. The shares have been valued at closing market price as at 30 June 2021. Upon formal grant date, the Company will perform a reassessment of the fair value of the shares with any subsequent difference being recorded through the statement of profit or loss and other comprehensive income. Employee share, right and option plans Options granted as compensation No options were granted as compensation during the current year and previous year. Executive options granted in the year ended 30 June 2020 were cancelled during the period. As the Executive options had market based performance conditions, the cancellation resulted in an acceleration to the vesting with $26,992 recognised as an expense during the year (2021: $16,992). PAGEANNUAL REPORT 2022 20 REMUNERATION REPORT (Continued) REMUNERATION REPORT (Continued) Employee share, right and option plans (continued) Key management personnel equity holdings Performance rights granted as compensation As approved at the Company’s 2021 Annual General Meeting, required under Listing Rule 10.14, the following performance rights were issued to Directors. Fully paid ordinary shares GGrraanntt ddaattee EExxppiirryy ddaattee VVeessttiinngg ddaattee FFaaiirr vvaalluuee ppeerr rriigghhtt aatt ggrraanntt ddaattee 30 June 2022 BBaallaannccee aatt bbeeggiinnnniinngg ooff yyeeaarr NNuummbbeerr GGrraanntteedd aass ccoommppeennssaattiioonn NNuummbbeerr AAccqquuiirreedd oonn BBaallaannccee aatt eenndd ooff mmaarrkkeett NNuummbbeerr yyeeaarr NNuummbbeerr BBaallaannccee hheelldd nnoommiinnaallllyy NNuummbbeerr Grant Pestell 1 7,076,626 1,500,000 8,576,626 30 June 2022 Directors Grant Pestell Shenny Ruan Bryan Carr Warren Barry2 NNuummbbeerr ooff rriigghhttss ggrraanntteedd 6,000,000 3,000,000 29 November 2021 1 December 2024 29 November 2021 1 December 2024 22,500,000 29 November 2021 1 December 2024 13,500,000 29 November 2021 1 December 2024 (i) (i) (i) (i) $0.022 $0.022 $0.022 $0.022 (i) Performance rights issued to Directors were issued in various tranches with different vesting dates attached to each tranche. Refer to Note 19 for further details. The following performance rights were issued to the Executives during the year: 4433,,443333,,776688 33,,221188,,112255 4477,,888800,,998833 Executives NNuummbbeerr ooff rriigghhttss ggrraanntteedd GGrraanntt ddaattee EExxppiirryy ddaattee VVeessttiinngg ddaattee FFaaiirr vvaalluuee ppeerr rriigghhtt aatt ggrraanntt ddaattee Jyotika Gondariya 3,000,000 28 February 2022 28 February 2029 (i) $0.022 (i) The performance rights issued to Executives were issued in three tranches and vest as follows: - - - 1,000,000 performance rights vest on 31 August 2022; 1,000,000 performance rights vest on 31 August 2023; and 1,000,000 performance rights vest on 31 August 2024. 30 June 2021 No performance rights were granted as compensation during the previous year. 1 Mr Pestell’s shareholding includes shares held directly and indirectly. G Pestell owns 25% of Digrevni Investments Pty Ltd (“Digrevni”), which is the holder of 2,500,000 ordinary shares in RLG. G Pestell also has a 25% interest in Artemis Corporate Limited which holds 2,264,107 ordinary shares in the Company and a 24% interest in Storm Enterprises Pty Ltd which holds 712,514 ordinary shares and 3,500,000 options over ordinary shares in the Company. 2 Mr Francis was issued 1,000,000 ordinary shares during the period. Of these, 800,000 shares were granted in satisfaction of past services and 200,000 shares related to services provided during the period. Balance at beginning of year Vendor Shares Net change other Number Number Number Balance at end of year Number Balance held nominally Number DDiirreeccttoorrss Tim Allison Ye Ruan Bryan Carr Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis 2 30 June 2021 DDiirreeccttoorrss Grant Pestell 1 Tim Allison Bryan Carr2 Warren Barry2 EExxeeccuuttiivveess Jyotika Gondariya Russell Francis 2 Jacqueline Gray 3 - - - - - - - - - 229,090 1,000,000 11,,222299,,009900 12,250,000 24,107,142 500,000 1,218,125 12,750,000 25,325,267 229,090 1,000,000 - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - -- 5,726,626 1,350,000 7,076,626 3,452,381 7,619,047 6,904,762 15,238,095 1,892,857 1,250,000 12,250,000 24,107,142 - - - - - - - - - - 1166,,779988,,005544 2222,,114422,,885577 44,,449922,,885577 4433,,443333,,776688 1 Mr Pestell’s shareholding includes shares held directly and indirectly. G Pestell owns 25% of Digrevni Investments Pty Ltd (“Digrevni”), which is the holder of 2,500,000 ordinary shares in RLG. G Pestell also has a 25% interest in Artemis Corporate Limited which holds 2,264,107 ordinary shares in the Company and a 24% interest in Storm Enterprises Pty Ltd which holds 712,514 ordinary shares and 3,500,000 options over ordinary shares in the Company. 2 Shares issued to the vendors of Choose Digital Pty Ltd and RooLife Pty Ltd (previously RooLife Ltd) on achievement of the following performance milestones: - Tranche 1 – 15,238,095 performance shares converted to ordinary shares upon the businesses achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). - Tranche 2 – 15,238,096 performance shares converted to ordinary shares upon the businesses achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). PAGEANNUAL REPORT 2022 21 REMUNERATION REPORT (Continued) Key management personnel equity holdings Fully paid ordinary shares 30 June 2022 DDiirreeccttoorrss BBaallaannccee aatt bbeeggiinnnniinngg ooff yyeeaarr NNuummbbeerr GGrraanntteedd aass ccoommppeennssaattiioonn NNuummbbeerr AAccqquuiirreedd oonn mmaarrkkeett BBaallaannccee aatt eenndd ooff yyeeaarr NNuummbbeerr NNuummbbeerr BBaallaannccee hheelldd nnoommiinnaallllyy NNuummbbeerr Grant Pestell 1 7,076,626 Tim Allison Ye Ruan Bryan Carr Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis 2 - - 12,250,000 24,107,142 - - 4433,,443333,,776688 - - - - - 1,500,000 8,576,626 - - - - 500,000 1,218,125 12,750,000 25,325,267 229,090 1,000,000 11,,222299,,009900 - - 229,090 1,000,000 33,,221188,,112255 4477,,888800,,998833 - - - - - - - -- 1 Mr Pestell’s shareholding includes shares held directly and indirectly. G Pestell owns 25% of Digrevni Investments Pty Ltd (“Digrevni”), which is the holder of 2,500,000 ordinary shares in RLG. G Pestell also has a 25% interest in Artemis Corporate Limited which holds 2,264,107 ordinary shares in the Company and a 24% interest in Storm Enterprises Pty Ltd which holds 712,514 ordinary shares and 3,500,000 options over ordinary shares in the Company. 2 Mr Francis was issued 1,000,000 ordinary shares during the period. Of these, 800,000 shares were granted in satisfaction of past services and 200,000 shares related to services provided during the period. 30 June 2021 Balance at beginning of year Vendor Shares Net change other Balance at end of year Balance held nominally Number Number Number Number Number DDiirreeccttoorrss Grant Pestell 1 Tim Allison Bryan Carr2 Warren Barry2 EExxeeccuuttiivveess Jyotika Gondariya Russell Francis 2 Jacqueline Gray 3 5,726,626 - 3,452,381 7,619,047 - - 6,904,762 15,238,095 1,350,000 7,076,626 - 1,892,857 1,250,000 - 12,250,000 24,107,142 - - - - - - - - - - - - - 1166,,779988,,005544 2222,,114422,,885577 44,,449922,,885577 4433,,443333,,776688 - - - - - - - -- 1 Mr Pestell’s shareholding includes shares held directly and indirectly. G Pestell owns 25% of Digrevni Investments Pty Ltd (“Digrevni”), which is the holder of 2,500,000 ordinary shares in RLG. G Pestell also has a 25% interest in Artemis Corporate Limited which holds 2,264,107 ordinary shares in the Company and a 24% interest in Storm Enterprises Pty Ltd which holds 712,514 ordinary shares and 3,500,000 options over ordinary shares in the Company. 2 Shares issued to the vendors of Choose Digital Pty Ltd and RooLife Pty Ltd (previously RooLife Ltd) on achievement of the following performance milestones: - Tranche 1 – 15,238,095 performance shares converted to ordinary shares upon the businesses achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). - Tranche 2 – 15,238,096 performance shares converted to ordinary shares upon the businesses achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). PAGEANNUAL REPORT 2022 REMUNERATION REPORT (Continued) REMUNERATION REPORT (Continued) Key management personnel equity holdings (continued) Key management personnel equity holdings (continued) 22 Fully paid ordinary shares (continued) 3 Mr Francis is to be issued 800,000 ordinary shares in satisfaction of past services. The shares have not been granted at 30 June 2021 and await formal acceptance of offers. The shares were issued in the financial year ended 30 June 2022. 4 Mrs Gray is to be issued 609,091 ordinary shares in satisfaction of past services. The shares have not been granted at 30 June 2021 and await formal acceptance of offers. The shares were issued in the financial year ended 30 June 2022. Share options 30 June 2022 DDiirreeccttoorrss BBaallaannccee aatt bbeeggiinnnniinngg ooff yyeeaarr NNuummbbeerr Grant Pestell 5,850,000 Tim Allison Ye Ruan - - CCaanncceelllleedd NNuummbbeerr11 LLaappsseedd NNuummbbeerr BBaallaannccee aatt eenndd ooff yyeeaarr BBaallaannccee vveesstteedd aatt eenndd ooff yyeeaarr VVeesstteedd bbuutt nnoott eexxeerrcciissaabbllee VVeesstteedd aanndd eexxeerrcciissaabbllee OOppttiioonnss vveesstteedd dduurriinngg tthhee yyeeaarr NNuummbbeerr NNuummbbeerr NNuummbbeerr NNuummbbeerr NNuummbbeerr Bryan Carr 13,642,857 (12,000,000) (1,642,857) Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis 9,000,000 (8,000,000) (1,000,000) - - - - - - (4,350,000) 1,500,000 1,500,000 - - - - - - - - - - - - - - - - - 2288,,449922,,885577 ((2200,,000000,,000000)) ((66,,999922,,885577)) 11,,550000,,000000 11,,550000,,000000 - - - - - - - -- 1,500,000 - - - - - - 11,,550000,,000000 - - - - - - - -- 1 For the options cancelled during the year, the Group has accelerated the vesting with the remaining expense recognised in the current financial year. Balance at beginning of year Received as free- attaching Number Number Lapsed Number Balance at end of year Balance vested at end of year Vested but not exercisable Vested and exercisable Options vested during the year Number Number Number Number Number 30 June 2021 year Vendor during the year Balance at beginning of Number Shares Number 1 Number Converted Balance at end Net change other of year Number 30 June 2021 DDiirreeccttoorrss Grant Pestell 6,500,000 850,000 (1,500,000) 5,850,000 5,850,000 Tim Allison Bryan Carr - - 12,000,000 1,642,857 Warren Barry 8,000,000 1,000,000 EExxeeccuuttiivveess Jyotika Gondariya Russell Francis Jacqueline Gray - - - - - - - - - - - - - - 13,642,857 1,642,857 9,000,000 1,000,000 - - - - - - 2266,,550000,,000000 33,,449922,,885577 ((11,,550000,,000000)) 2288,,449922,,885577 88,,449922,,885577 - - - - - - - -- 5,850,000 - 1,642,857 1,000,000 - - - 88,,449922,,885577 - - - - - - - -- Where applicable, all share options issued to key management personnel were made in accordance with the provisions of the employee share option plan. No options were exercised by key management personnel during the current or previous financial year. Performance rights and Performance Shares 30 June 2022 yyeeaarr tthhee yyeeaarr dduurriinngg tthhee yyeeaarr BBaallaannccee aatt bbeeggiinnnniinngg ooff GGrraanntteedd dduurriinngg CCoonnvveerrtteedd BBaallaannccee aatt eenndd NNeett cchhaannggee ootthheerr NNuummbbeerr NNuummbbeerr NNuummbbeerr NNuummbbeerr 1 The company has entered into performance rights based payment arrangement with Directors during the year. The performance rights granted were in three tranches with separate market and non- market conditions for each tranche as disclosed in Note 19. 2 The company has entered into performance rights based payment arrangement with Executives during the year. Further details are disclosed in Note 19. DDiirreeccttoorrss Grant Pestell Tim Allison Ye Ruan Bryan Carr Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis DDiirreeccttoorrss Grant Pestell Tim Allison Bryan Carr Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis Jacqueline Gray - - - - - - - -- - - - - - 6,000,0001 3,000,0001 22,500,0001 13,500,0001 3,000,0002 4488,,000000,,000000 - - - - - - - - - -- - - - - - - - -- - - - - - 6,904,762 15,238,095 (6,904,762) (15,238,095) 2222,,114422,,885577 ((2222,,114422,,885577)) ooff yyeeaarr NNuummbbeerr 6,000,000 3,000,000 22,500,000 13,500,000 3,000,000 4488,,000000,,000000 - - - - - - - - - -- - - - - - - - -- - - - - - - - -- PAGEANNUAL REPORT 2022 23 REMUNERATION REPORT (Continued) Key management personnel equity holdings (continued) Performance rights and Performance Shares 30 June 2022 DDiirreeccttoorrss Grant Pestell Tim Allison Ye Ruan Bryan Carr Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis BBaallaannccee aatt bbeeggiinnnniinngg ooff yyeeaarr GGrraanntteedd dduurriinngg tthhee yyeeaarr CCoonnvveerrtteedd dduurriinngg tthhee yyeeaarr NNeett cchhaannggee ootthheerr NNuummbbeerr NNuummbbeerr NNuummbbeerr NNuummbbeerr BBaallaannccee aatt eenndd ooff yyeeaarr NNuummbbeerr - - - - - - - -- 6,000,0001 - 3,000,0001 22,500,0001 13,500,0001 3,000,0002 - 4488,,000000,,000000 - - - - - - - -- - - - - - - - -- 6,000,000 - 3,000,000 22,500,000 13,500,000 3,000,000 - 4488,,000000,,000000 1 The company has entered into performance rights based payment arrangement with Directors during the year. The performance rights granted were in three tranches with separate market and non- market conditions for each tranche as disclosed in Note 19. 2 The company has entered into performance rights based payment arrangement with Executives during the year. Further details are disclosed in Note 19. 30 June 2021 DDiirreeccttoorrss Grant Pestell Tim Allison Bryan Carr Warren Barry EExxeeccuuttiivveess Jyotika Gondariya Russell Francis Jacqueline Gray Balance at beginning of year Converted Vendor during the year Net change other Number Shares Number 1 Number Balance at end of year Number - - 6,904,762 15,238,095 - - - 2222,,114422,,885577 - - - - - - - -- - - (6,904,762) (15,238,095) - - - ((2222,,114422,,885577)) - - - - - - - -- - - - - - - - -- PAGEANNUAL REPORT 2022 24 REMUNERATION REPORT (Continued) Key management personnel equity holdings (continued) Performance rights and Performance Shares (continued) 1 Represents Tranches 1 and 2 performance shares received as part consideration for the sale of shares in RooLife Limited and CHOOSE Digital Pty Ltd. The Trance 1 performance shares formed part of contingent consideration on acquisition. The Company valued the consideration at $0.035 per share being the Company’s share price on the date of acquisition, The Company recorded a value of $533,334 for Tranche 1 shares in the accounting records. The Tranche 2 shares did not form part of contingent consideration on acquisition, as at the date of the acquisition, the directors could not resolve with any certainty whether it would be considered probable that the performance milestone will be achieved. The contingent consideration payable in shares was classified as equity and would not be subsequently remeasured if the performance milestones were satisfied. Shares issued on satisfaction of the performance milestones would be accounted for within equity. During the year, the performance milestones in relation to the performance shares were satisfied. The performance shares have therefore converted to ordinary shares. The issue of ordinary shares has been accounted for within equity. Refer to Note 17 for further details. The conditions for those performance shares were achieved during the year and therefore the ordinary shares have been issued. Loans to key management personnel No loans have been provided to any member of the Group’s key management personnel in the year. Key management personnel transactions In addition to the above remuneration, related party transactions with key management personnel are described below. The following amounts were paid to Murcia Pestell Hillard Pty Ltd, a company related to Mr Pestell: - provision of general legal services 2022 $ 2021 $ 2233,,113344 2233,,113344 46,972 46,972 END OF REMUNERATION REPORT PAGEANNUAL REPORT 2022 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of RooLife Group Ltd for the year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 29 August 2022 D I Buckley Partner CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2022 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2022 26 CCoonnttiinnuuiinngg ooppeerraattiioonnss Revenue Other income Direct product,logistics and marketing costs Staff and contactor costs of providing goods and services Other costs of providing goods and services Depreciation expense Amortisation expense Impairment of assets Share based payment expense Business development costs Consulting and investor relation fees Employee costs Other expenses LLoossss bbeeffoorree iinnccoommee ttaaxx Income tax benefit NNeett lloossss ffoorr tthhee yyeeaarr OOtthheerr ccoommpprreehheennssiivvee lloossss,, nneett ooff iinnccoommee ttaaxx Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations OOtthheerr ccoommpprreehheennssiivvee iinnccoommee// ((lloossss)) ffoorr tthhee yyeeaarr,, nneett ooff iinnccoommee ttaaxx Notes 2, 4 2 12 13 11 19 2 3 22002222 $$ 2021 $ 1166,,993300,,118866 6611,,770099 1166,,999911,,889955 ((1133,,888800,,994444)) ((11,,557733,,445511)) ((339933,,226655)) ((1133,,881133)) ((2200,,222299)) ((6688,,770022)) ((223366,,115500)) ((553333,,227799)) ((662244,,881122)) ((11,,770066,,996644)) ((558888,,667733)) 9,132,242 478,983 9,611,225 (7,123,444) (1,581,583) (316,963) (13,107) (510,912) (1,021,831) (324,160) (662,836) (583,391) (1,845,041) (619,339) ((22,,664488,,338877)) (4,991,382) -- - ((22,,664488,,338877)) (4,991,382) 111133,,445522 (1,937) 111133,,445522 (1,937) TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr ((22,,553344,,993355)) (4,993,319) Basic loss per share (cents per share) Diluted loss per share (cents per share) 5 5 ((00..3399)) ((00..3399)) (0.97) (0.97) AAsssseettss CCuurrrreenntt aasssseettss Cash and cash equivalents Trade and other receivables Financial asset Other current assets Inventories TToottaall ccuurrrreenntt aasssseettss NNoonn--ccuurrrreenntt aasssseettss Property, plant and equipment Deferred tax assets Financial asset non-current Other intangible assets Goodwill TToottaall nnoonn--ccuurrrreenntt aasssseettss TToottaall aasssseettss LLiiaabbiilliittiieess CCuurrrreenntt lliiaabbiilliittiieess Trade and other payables Deferred revenue TToottaall ccuurrrreenntt lliiaabbiilliittiieess NNoonn--ccuurrrreenntt lliiaabbiilliittiieess Deferred tax liabilities Provisions TToottaall nnoonn--ccuurrrreenntt lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss EEqquuiittyy Issued capital Reserves Accumulated losses TToottaall eeqquuiittyy Notes 22002222 $$ 2021 $ 7 8 9 10 11 12 3 9 13 14 15 2 3 16 17 18 22,,441144,,229999 33,,997799,,444499 5500,,000000 339999,,999944 227711,,887722 3,815,089 1,097,301 - 339,624 457,014 77,,111155,,661144 5,709,028 1144,,778811 4499,,663333 8800,,000000 117799,,553388 22,,338899,,008855 15,471 37,661 - 50,000 2,389,085 22,,771133,,003377 2,492,217 99,,882288,,665511 8,201,245 33,,113344,,554400 556666,,226677 1,948,205 511,348 33,,770000,,880077 2,459,553 4499,,663333 66,,223355 5555,,886688 37,661 6,227 43,888 33,,775566,,667755 2,503,441 66,,007711,,997766 5,697,804 3300,,441111,,442255 11,,773333,,449911 27,574,463 1,547,894 ((2266,,007722,,994400)) (23,424,553) 66,,007711,,997766 5,697,804 The accompanying notes form part of these financial statements The accompanying notes form part of these financial statements PAGEANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2022 Notes 22002222 $$ 2021 $ 27 AAsssseettss CCuurrrreenntt aasssseettss Cash and cash equivalents Trade and other receivables Financial asset Other current assets Inventories TToottaall ccuurrrreenntt aasssseettss NNoonn--ccuurrrreenntt aasssseettss Property, plant and equipment Deferred tax assets Financial asset non-current Other intangible assets Goodwill TToottaall nnoonn--ccuurrrreenntt aasssseettss TToottaall aasssseettss LLiiaabbiilliittiieess CCuurrrreenntt lliiaabbiilliittiieess Trade and other payables Deferred revenue TToottaall ccuurrrreenntt lliiaabbiilliittiieess NNoonn--ccuurrrreenntt lliiaabbiilliittiieess Deferred tax liabilities Provisions TToottaall nnoonn--ccuurrrreenntt lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss EEqquuiittyy Issued capital Reserves Accumulated losses TToottaall eeqquuiittyy The accompanying notes form part of these financial statements 7 8 9 10 11 12 3 9 13 14 15 2 3 16 17 18 22,,441144,,229999 33,,997799,,444499 5500,,000000 339999,,999944 227711,,887722 3,815,089 1,097,301 - 339,624 457,014 77,,111155,,661144 5,709,028 1144,,778811 4499,,663333 8800,,000000 117799,,553388 22,,338899,,008855 15,471 37,661 - 50,000 2,389,085 22,,771133,,003377 2,492,217 99,,882288,,665511 8,201,245 33,,113344,,554400 556666,,226677 1,948,205 511,348 33,,770000,,880077 2,459,553 4499,,663333 66,,223355 5555,,886688 37,661 6,227 43,888 33,,775566,,667755 2,503,441 66,,007711,,997766 5,697,804 3300,,441111,,442255 11,,773333,,449911 ((2266,,007722,,994400)) 27,574,463 1,547,894 (23,424,553) 66,,007711,,997766 5,697,804 PAGEANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASHFLOWS For the year ended 30 June 2022 For the year ended 30 June 2022 28 CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess Receipts from customers Payments to suppliers and employees Interest received Interest paid Government grants and tax incentives NNeett ccaasshh oouuttffllooww ffrroomm ooppeerraattiinngg aaccttiivviittiieess CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess Payments for property, plant and equipment Proceeds (payment for) / from security deposits (net) Payments for intellectual property NNeett ccaasshh iinnffllooww//((oouuttffllooww)) ffrroomm iinnvveessttiinngg aaccttiivviittiieess CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Proceeds from issue of shares Payments for share issue costs NNeett ccaasshh iinnffllooww ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr 7 Notes 22002222 $$ 2021 $ 1144,,006644,,773300 8,910,824 ((1188,,110022,,558833)) (12,762,724) 22,,995599 ((11,,004466)) 4499,,442288 7,917 (1,532) 465,022 7 ((33,,998866,,551122)) (3,380,493) ((1122,,888844)) ((77,,667700)) ((114455,,225533)) ((116655,,880077)) 22,,770022,,000000 ((2266,,006633)) 22,,667755,,993377 ((11,,447766,,338822)) 33,,881155,,008899 7755,,559922 22,,441144,,229999 (25,679) 41,721 - 16,042 6,260,168 (473,930) 5,786,238 2,421,787 1,342,942 50,360 3,815,089 YYeeaarr eennddeedd 3300 JJuunnee 22002222 Issued capital $ Notes Share- based payment reserve Foreign currency translation reserve Accumulated losses TToottaall eeqquuiittyy $ $ $ $$ Balance as at 1 July 2021 27,574,463 1,705,106 (157,212) (23,424,553) 55,,669977,,880044 Loss for the year Other comprehensive income, net of income tax TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr Shares issued during the year Share issue costs Conversion of performance shares Share-based payments 17 17 18 18 - - -- 2,702,000 (29,043) - - -- - - 152,739 11,266 (152,739) 224,884 - (2,648,387) ((22,,664488,,338877)) 113,452 - 111133,,445522 111133,,445522 ((22,,664488,,338877)) ((22,,553344,,993355)) - - - - - - - - 22,,770022,,000000 ((2299,,004433)) -- 223366,,115500 BBaallaannccee aass aatt 3300 JJuunnee 22002222 3300,,441111,,442255 11,,777777,,225511 ((4433,,776600)) ((2266,,007722,,994400)) 66,,007711,,997766 YYeeaarr eennddeedd 3300 JJuunnee 22002211 Issued capital $ Notes Share-based payment reserve Foreign currency translation reserve Accumulated losses TToottaall eeqquuiittyy $ $ $ $$ Balance as at 1 July 2020 21,298,469 1,867,682 (155,275) (18,433,171) 44,,557777,,770055 Loss for the year Other comprehensive loss, net of income tax TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr Shares issued during the year Share issue costs Conversion of performance shares Share-based payments 17 17 18 18 - - -- 6,260,169 (517,509) - - -- - - 533,334 - (533,334) 370,758 - (4,991,382) ((44,,999911,,338822)) (1,937) - ((11,,993377)) ((11,,993377)) ((44,,999911,,338822)) ((44,,999933,,331199)) - - - - - - - - 66,,226600,,116699 ((551177,,550099)) -- 337700,,775588 BBaallaannccee aass aatt 3300 JJuunnee 22002211 2277,,557744,,446633 11,,770055,,110066 ((115577,,221122)) ((2233,,442244,,555533)) 55,,669977,,880044 The accompanying notes form part of these financial statements The accompanying notes form part of these financial statements PAGEANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF CASHFLOWS For the year ended 30 June 2022 29 CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess Receipts from customers Payments to suppliers and employees Interest received Interest paid Government grants and tax incentives Notes 22002222 $$ 2021 $ 1144,,006644,,773300 ((1188,,110022,,558833)) 22,,995599 ((11,,004466)) 4499,,442288 8,910,824 (12,762,724) 7,917 (1,532) 465,022 NNeett ccaasshh oouuttffllooww ffrroomm ooppeerraattiinngg aaccttiivviittiieess 7 ((33,,998866,,551122)) (3,380,493) CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess Payments for property, plant and equipment Proceeds (payment for) / from security deposits (net) Payments for intellectual property NNeett ccaasshh iinnffllooww//((oouuttffllooww)) ffrroomm iinnvveessttiinngg aaccttiivviittiieess CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Proceeds from issue of shares Payments for share issue costs NNeett ccaasshh iinnffllooww ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr 7 ((1122,,888844)) ((77,,667700)) ((114455,,225533)) ((116655,,880077)) 22,,770022,,000000 ((2266,,006633)) 22,,667755,,993377 ((11,,447766,,338822)) 33,,881155,,008899 7755,,559922 22,,441144,,229999 (25,679) 41,721 - 16,042 6,260,168 (473,930) 5,786,238 2,421,787 1,342,942 50,360 3,815,089 The accompanying notes form part of these financial statements PAGEANNUAL REPORT 2022 30 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (a) Basis of preparation These financial statements are general purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The consolidated financial statements are for the Group consisting of RooLife Group Ltd and its subsidiaries. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The financial statements have been prepared on a historical cost basis. Historical cost is based on the fair values of the consideration given in exchange for goods and services. The financial statements are presented in Australian dollars. The Company is a listed public company, incorporated in Australia and operating in Australia, China and Hong Kong. The entity’s principal activities are the provision of fully integrated digital marketing and customer acquisition services driving online sales of products and services for clients in Australia and China. (b) Adoption of new and revised standards Standards and Interpretations applicable to 30 June 2022 The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. No change to group accounting polices was required. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted, however are not expected to have a material impact on Group accounting policies. Company. (c) Statement of compliance The financial report was authorised for issue on 29 August 2022. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). (d) Significant accounting estimates and judgements The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. IImmppaaiirrmmeenntt ooff ggooooddwwiillll:: The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill is allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in Note 14. NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (d) Significant accounting estimates and judgements (continued) IImmppaaiirrmmeenntt ooff ootthheerr iinnttaannggiibblleess:: The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount, being the higher of its fair value less costs to sell and its value in use. The value in use requires an estimation of the recoverable amount of the cash generating units to which the intangibles are allocated. During the year, the Group did not identify any impairment indicator and therefore no impairment of other intangibles is The Group measures the cost of equity-settled transactions with employees and third parties by reference to the fair value of the equity instruments at the date at which they are granted. For share-based payments that do not contain market conditions, the fair value is determined using a Black and Scholes model, using the assumptions detailed in Note 19. For share-based payments that contain market conditions, the fair value is determine using a Monte Carlo model, using the required. SShhaarree--bbaasseedd ppaayymmeenntt ttrraannssaaccttiioonnss:: assumptions detailed in Note 19. (e) Going concern (f) Basis of consolidation The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Control is achieved when the Company: • has power over the investee; • is exposed, or has rights, to variable returns from its involvement in with the investee; and • has the ability to its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. When the Company has less than a majority of the voting rights if an investee, it has the power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights are sufficient to give it power, including, • the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote • potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual • any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous holders; arrangements; and shareholder meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. PAGEANNUAL REPORT 2022 31 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (d) Significant accounting estimates and judgements (continued) IImmppaaiirrmmeenntt ooff ootthheerr iinnttaannggiibblleess:: The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount, being the higher of its fair value less costs to sell and its value in use. The value in use requires an estimation of the recoverable amount of the cash generating units to which the intangibles are allocated. During the year, the Group did not identify any impairment indicator and therefore no impairment of other intangibles is required. SShhaarree--bbaasseedd ppaayymmeenntt ttrraannssaaccttiioonnss:: The Group measures the cost of equity-settled transactions with employees and third parties by reference to the fair value of the equity instruments at the date at which they are granted. For share-based payments that do not contain market conditions, the fair value is determined using a Black and Scholes model, using the assumptions detailed in Note 19. For share-based payments that contain market conditions, the fair value is determine using a Monte Carlo model, using the assumptions detailed in Note 19. (e) Going concern The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. (f) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved when the Company: • has power over the investee; • • has the ability to its power to affect its returns. is exposed, or has rights, to variable returns from its involvement in with the investee; and The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. When the Company has less than a majority of the voting rights if an investee, it has the power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights are sufficient to give it power, including, • the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; • potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholder meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) Note 1: Statement of significant accounting policies (continued) (f) Basis of consolidation (continued) (h) Foreign currency translation (continued) 32 Any difference between the amount paid by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between: • The aggregate of the fair value of the consideration received and the fair value of any retained interest; and • The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non- controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by the applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 9, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. (g) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors of RooLife Group Ltd. (h) Foreign currency translation Both the functional and presentation currency of RooLife Group Ltd is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The functional currencies of the foreign operations are: • OpenDNA (UK) Limited: Wholly owned UK subsidiary. Currency: GBP • OpenDNA (Singapore) Pte Ltd: Wholly owned Singaporean subsidiary. Currency: SGD • RooLife (HK) Limited: Wholly owned Hong Kong subsidiary. Currency: HKD • Roolife China: Wholly owned Chinese subsidiary. Currency: CNY • Qualis Holdings Pty Ltd: Wholly owned Australia subsidiary. Currency: USD As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of RooLife Group Ltd at the rate of exchange ruling at the balance date and income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relation to the partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange rate differences are re- attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of the reporting period. Exchange differences are recognised in other comprehensive income. (i) Revenue recognition Revenue arises mainly from the provision of services in the areas of digital marketing, website services, application development and subscription, and marketing consulting. The Group generates revenue largely from it’s China operations. To determine whether to recognise revenue, the Group follows a 5-step process: 1 2 Identifying the contract with a customer Identifying the performance obligations 3 Determining the transaction price 4 Allocating the transaction price to the performance obligations 5 Recognising revenue when/as performance obligation(s) are satisfied. The revenue and profits recognised in any period are based on the delivery of performance obligations and an assessment of when control is transferred to the customer. In determining the amount of revenue and profits to record, and related items in the statement of financial position (such as contract fulfilment assets, capitalisation of costs to obtain a contract, trade receivables, accrued income and deferred income) to recognise in the period, management is required to form a number of key judgements and assumptions. This includes an assessment of the costs the Group incurs to deliver the contractual commitments and whether such costs should be expensed as incurred or capitalised. Revenue is recognised either when the performance obligation in the contract has been performed, so 'point in time' recognition or 'over time' as control of the performance obligation is transferred to the customer. For contracts with multiple components to be delivered such as Web Development management applies judgement to consider whether those promised goods and services are (i) distinct - to be accounted for as separate performance obligations; (ii) not distinct - to be combined with other promised goods or services until a bundle is identified that is distinct or (iii) part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer. PAGEANNUAL REPORT 2022 33 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (h) Foreign currency translation (continued) As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of RooLife Group Ltd at the rate of exchange ruling at the balance date and income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relation to the partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange rate differences are re- attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of the reporting period. Exchange differences are recognised in other comprehensive income. (i) Revenue recognition Revenue arises mainly from the provision of services in the areas of digital marketing, website services, application development and subscription, and marketing consulting. The Group generates revenue largely from it’s China operations. To determine whether to recognise revenue, the Group follows a 5-step process: Identifying the contract with a customer Identifying the performance obligations 1 2 3 Determining the transaction price 4 Allocating the transaction price to the performance obligations 5 Recognising revenue when/as performance obligation(s) are satisfied. The revenue and profits recognised in any period are based on the delivery of performance obligations and an assessment of when control is transferred to the customer. In determining the amount of revenue and profits to record, and related items in the statement of financial position (such as contract fulfilment assets, capitalisation of costs to obtain a contract, trade receivables, accrued income and deferred income) to recognise in the period, management is required to form a number of key judgements and assumptions. This includes an assessment of the costs the Group incurs to deliver the contractual commitments and whether such costs should be expensed as incurred or capitalised. Revenue is recognised either when the performance obligation in the contract has been performed, so 'point in time' recognition or 'over time' as control of the performance obligation is transferred to the customer. For contracts with multiple components to be delivered such as Web Development management applies judgement to consider whether those promised goods and services are (i) distinct - to be accounted for as separate performance obligations; (ii) not distinct - to be combined with other promised goods or services until a bundle is identified that is distinct or (iii) part of a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer. PAGEANNUAL REPORT 2022 34 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (i) Revenue recognition (continued) TTrraannssaaccttiioonn pprriiccee At contract inception the total transaction price is estimated, being the amount to which the Group expects to be entitled and has rights to under the present contract. The transaction price does not include estimates of consideration resulting from change orders for additional goods and services unless these are agreed. Once the total transaction price is determined, the Group allocates this to the identified performance obligations in proportion to their relative stand-alone selling prices and recognises revenue when (or as) those performance obligations are satisfied. For each performance obligation, the Group determines if revenue will be recognised over time or at a point in time. Where the Group recognises revenue over time for long term contracts, this is in general due to the Group performing and the customer simultaneously receiving and consuming the benefits provided over the life of the contract. For each performance obligation to be recognised over time, the Group applies a revenue recognition method that faithfully depicts the Group’s performance in transferring control of the goods or services to the customer. This decision requires assessment of the real nature of the goods or services that the Group has promised to transfer to the customer. The Group applies the relevant output or input method consistently to similar performance obligations in other contracts. When using the output method, the Group recognises revenue on the basis of direct measurements of the value to the customer of the goods and services transferred to date relative to the remaining goods and services under the contract. Where the output method is used, in particular for long term service contracts where the series guidance is applied, the Group often uses a method of time elapsed which requires minimal estimation. Certain long term contracts use output methods based upon estimation of number of users, level of service activity or fees collected. If performance obligations in a contract do not meet the over time criteria, the Group recognises revenue at a point in time. This may be at the point of physical delivery of goods and acceptance by a customer or when the customer obtains control of an asset or service in a contract with customer-specified acceptance criteria. PPeerrffoorrmmaannccee oobblliiggaattiioonnss The nature of contracts or performance obligations categorised within these revenue types include the following: a) Digital marketing services This category includes: • SEO services and media management with performance conditions linked to the completion of the contracts; • Marketing consulting which is invoiced as the service is being performed with the performance obligations • satisfied during the delivery of the service; Application development and subscription services which include content fees, page view fees and user subscription fees linked to the activity of subscribers; and • Website services which include bespoke website builds, hosting fees and creative and design services. Performance obligations are linked to milestone events and for hosting, on an ongoing delivery basis. Revenue in relation to digital marketing services is recognised over time. temporary difference and to unused tax losses. b) Product and Platform sales This category includes the sale of products and sale of products via platforms. Performance obligations are satisfied on delivery of the goods to the customer. Revenue is recognised at a point in time. DDiissaaggggrreeggaattiioonn ooff rreevveennuuee The Group disaggregates revenue from contracts with customers by contract type, which includes Digital Marketing and Product and Platform sales as management believe this best depicts how the nature, amount, timing and uncertainty of the Group’s revenue and cash flows. NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (i) Revenue recognition (continued) CCoonnttrraacctt aasssseettss aanndd ccoonnttrraacctt lliiaabbiilliittiieess The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due. IInntteerreesstt iinnccoommee Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets’ net carrying amount on initial recognition. (j) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets. (k) Leases A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. (l) Income tax The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. PAGEANNUAL REPORT 2022 35 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (i) Revenue recognition (continued) CCoonnttrraacctt aasssseettss aanndd ccoonnttrraacctt lliiaabbiilliittiieess The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due. IInntteerreesstt iinnccoommee Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets’ net carrying amount on initial recognition. (j) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets. (k) Leases A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. (l) Income tax The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) Note 1: Statement of significant accounting policies (continued) 36 (l) Income tax (continued) Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (m) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included. • The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (n) Impairment of tangible and intangible assets other than goodwill The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (o) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (p) Trade and other receivables Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 30 – 90 days. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is an expectation that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance. The amount of the impairment loss is recognised in the profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. PAGEANNUAL REPORT 2022 37 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (n) Impairment of tangible and intangible assets other than goodwill The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (o) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (p) Trade and other receivables Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 30 – 90 days. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is an expectation that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance. The amount of the impairment loss is recognised in the profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) Note 1: Statement of significant accounting policies (continued) 38 (q) Financial instruments RReeccooggnniittiioonn aanndd ddeerreeccooggnniittiioonn Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. CCllaassssiiffiiccaattiioonn aanndd iinniittiiaall mmeeaassuurreemmeenntt ooff ffiinnaanncciiaall aasssseettss Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: fair value through profit or loss (FVTPL) • amortised cost • • equity instruments at fair value through other comprehensive income (FVOCI) • debt instruments at fair value through other comprehensive income (FVOCI). All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. The classification is determined by both: • • the entity’s business model for managing the financial asset the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. SSuubbsseeqquueenntt mmeeaassuurreemmeenntt ooff ffiinnaanncciiaall aasssseettss Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • • they are held within a business model whose objective is to hold the financial assets to collect its contractual cash flows the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments as well as listed bonds that were previously classified as held- to-maturity under IAS 39. ((qq)) Financial instruments (continued) Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for the investment in unlisted and listed equity securities at fair value through other comprehensive income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not allow for measurement at cost. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Equity instruments at fair value through other comprehensive income (Equity FVOCI) Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are never measured at FVOCI. reclassified to profit or loss. Dividend from these investments continue to be recorded as other income within the profit or loss unless the dividend clearly represents return of capital. This category includes unlisted equity securities that were previously classified as ‘available-for-sale’ under AASB 139. Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon derecognition of the asset. Debt instruments at fair value through other comprehensive income (Debt FVOCI) Financial assets with contractual cash flows representing solely payments of principal and interest and held within a business model of collecting the contractual cash flows and selling the assets are accounted for at debt FVOCI. The Group accounts for financial assets at FVOCI if the assets meet the following conditions: they are held under a business model whose objective it is to “hold to collect” the associated cash flows and sell the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest • • financial assts; and on the principal amount outstanding. Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset. Impairment of financial assets ‘expected credit loss (ECL) model’. AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. The Group considers a broad range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. PAGEANNUAL REPORT 2022 39 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) ((qq)) Financial instruments (continued) Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply. The category also contains an equity investment. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for the investment in unlisted and listed equity securities at fair value through other comprehensive income (FVOCI). The fair value was determined in line with the requirements of AASB 9, which does not allow for measurement at cost. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Equity instruments at fair value through other comprehensive income (Equity FVOCI) Investments in equity instruments that are not held for trading are eligible for an irrevocable election at inception to be measured at FVOCI. Under Equity FVOCI, subsequent movements in fair value are recognised in other comprehensive income and are never reclassified to profit or loss. Dividend from these investments continue to be recorded as other income within the profit or loss unless the dividend clearly represents return of capital. This category includes unlisted equity securities that were previously classified as ‘available-for-sale’ under AASB 139. Any gains or losses recognised in other comprehensive income (OCI) are not recycled upon derecognition of the asset. Debt instruments at fair value through other comprehensive income (Debt FVOCI) Financial assets with contractual cash flows representing solely payments of principal and interest and held within a business model of collecting the contractual cash flows and selling the assets are accounted for at debt FVOCI. The Group accounts for financial assets at FVOCI if the assets meet the following conditions: • • they are held under a business model whose objective it is to “hold to collect” the associated cash flows and sell financial assts; and the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset. Impairment of financial assets AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. The Group considers a broad range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) Note 1: Statement of significant accounting policies (continued) 40 ((qq)) Financial instruments (continued) Impairment of financial assets (continued) In applying this forward-looking approach, a distinction is made between: • • • financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Level 1’) and financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Level 2’). ‘Level 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. Trade and other receivables and contract assets The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. CCllaassssiiffiiccaattiioonn aanndd mmeeaassuurreemmeenntt ooff ffiinnaanncciiaall lliiaabbiilliittiieess The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. (r) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Office equipment Computer equipment 4 years 3 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. (rr)) Property, plant and equipment (continued) Impairment The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset's value in use can be estimated to approximate fair value. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income in the cost of sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement. Derecognition and disposal expected from its use or disposal. An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (s) Goodwill liabilities. Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. • • and Each unit or group of units to which the goodwill is so allocated: represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format determined in accordance with AASB 8 Operating Segments. Impairment is determined by assessing the recoverable amount of the cash-generating unit or groups of cash-generating units, to which the goodwill relates. When the recoverable amount of the cash-generating unit or groups of cash- generating units is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash- generating unit or groups of cash-generating units and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Impairment losses recognised for goodwill are not subsequently reversed. PAGEANNUAL REPORT 2022 41 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (rr)) Property, plant and equipment (continued) Impairment The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset's value in use can be estimated to approximate fair value. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income in the cost of sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement. Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (s) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated: • • represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format determined in accordance with AASB 8 Operating Segments. Impairment is determined by assessing the recoverable amount of the cash-generating unit or groups of cash-generating units, to which the goodwill relates. When the recoverable amount of the cash-generating unit or groups of cash- generating units is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash- generating unit or groups of cash-generating units and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Impairment losses recognised for goodwill are not subsequently reversed. PAGEANNUAL REPORT 2022 42 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (t) Intangible assets IInnttaannggiibbllee aasssseettss aaccqquuiirreedd sseeppaarraatteellyy Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for on a prospective basis. IInntteerrnnaallllyy ggeenneerraatteedd iinnttaannggiibbllee aasssseettss –– rreesseeaarrcchh aanndd ddeevveellooppmmeenntt eexxppeennddiittuurree Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally- generated intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: • The technical feasibility of completing the intangible asset so that it will be available for use or sale; • The intention to complete the intangible asset and use or sell it; • The ability to use or sell the intangible asset; • How the intangible asset will generate probable future economic benefits; • The availability of adequate technical, financial and other resources to complete development and to use or sell the intangible asset; and • The ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. Amortisation is calculated on a straight-line basis over the estimated useful life of 2-5 years. The assets’ residual value, useful lives and amortisation are reviewed and adjusted if appropriate, at each financial year end. IInnttaannggiibbllee aasssseettss aaccqquuiirreedd iinn aa bbuussiinneessss ccoommbbiinnaattiioonn Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. (u) Trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. (v) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (v) Borrowings (continued) The fair value of the liability portion of a convertible note is determined using a market interest rate for an equivalent non- convertible note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the note. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. (w) Employee leave benefits WWaaggeess,, ssaallaarriieess,, aannnnuuaall lleeaavvee aanndd ssiicckk lleeaavvee Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave not expected to be settled within 12 months of the balance date are recognised in non-current other payables in respect of employees’ services up to the balance date. They are measured as the present value of the estimated future outflows to be made by the Group. LLoonngg sseerrvviiccee lleeaavvee The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the balance date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (x) Share-based payments The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either a Black-Scholes model or a Monte Carlo model, further details of which are given in Note 19. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of RooLife Group Ltd (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). PAGEANNUAL REPORT 2022 43 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) (v) Borrowings (continued) The fair value of the liability portion of a convertible note is determined using a market interest rate for an equivalent non- convertible note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the note. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders’ equity, net of income tax effects. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. (w) Employee leave benefits WWaaggeess,, ssaallaarriieess,, aannnnuuaall lleeaavvee aanndd ssiicckk lleeaavvee Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave not expected to be settled within 12 months of the balance date are recognised in non-current other payables in respect of employees’ services up to the balance date. They are measured as the present value of the estimated future outflows to be made by the Group. LLoonngg sseerrvviiccee lleeaavvee The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the balance date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (x) Share-based payments The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either a Black-Scholes model or a Monte Carlo model, further details of which are given in Note 19. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of RooLife Group Ltd (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 1: Statement of significant accounting policies (continued) Note 2: Revenue and expenses (x) Share based payments (continued) Revenue 44 The cumulative expense recognised for equity-settled transactions at each balance date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. (y) Earnings/loss per share Basic earnings/loss per share is calculated as net profit/loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the parent, adjusted for: • costs of servicing equity (other than dividends) and preference share dividends; • the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share, refer to Note 5. (z) Parent entity financial information The financial information for the parent entity, RooLife Group Ltd, disclosed in Note 24 has been prepared on the same basis as the consolidated financial statements, except as set out below. IInnvveessttmmeennttss iinn ssuubbssiiddiiaarriieess Investments in subsidiaries are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. SShhaarree--bbaasseedd ppaayymmeennttss The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. Over time Digital marketing services Total Revenue Other income Interest income Grants and subsidies Other expenses Accountancy fees Auditors’ remuneration Bad and doubtful debts Foreign exchange gain Interest expense Legal fees Rent and associated costs Subscriptions and fees Travel and accommodation Other expenses The Group derives its revenue from the sale of goods and the provision of services at a point in time and over time. Revenue from contracts with customers Reconciliation of revenue from contracts with customers At a point in time Product and Platform sales Unearned revenue at year end in relation to incomplete performance obligations amounted to $566,267 (2021: $511,348) 22002222 $$ 2021 $ 1166,,993300,,118866 9,132,242 1122,,991199,,229977 1122,,991199,,229977 5,931,208 5,931,208 44,,001100,,888899 44,,001100,,888899 1166,,993300,,118866 3,201,034 3,201,034 9,132,242 22002222 $$ 2021 $ 33,,002266 5588,,668833 6611,,770099 22002222 $$ 2277,,775555 4488,,887722 1188,,112288 ((1199,,999988)) 11,,004466 2288,,770033 111155,,448855 111166,,779922 4444,,225577 220077,,663333 558888,,667733 8,142 470,841 478,983 2021 $ 32,027 56,960 9,180 (11,908) 1,532 44,612 131,603 61,896 42,890 250,547 619,339 PAGEANNUAL REPORT 2022 45 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 2: Revenue and expenses Revenue The Group derives its revenue from the sale of goods and the provision of services at a point in time and over time. Revenue from contracts with customers Reconciliation of revenue from contracts with customers At a point in time Product and Platform sales Over time Digital marketing services Total Revenue 22002222 $$ 1166,,993300,,118866 2021 $ 9,132,242 1122,,991199,,229977 1122,,991199,,229977 5,931,208 5,931,208 44,,001100,,888899 44,,001100,,888899 1166,,993300,,118866 3,201,034 3,201,034 9,132,242 Unearned revenue at year end in relation to incomplete performance obligations amounted to $566,267 (2021: $511,348) Other income Interest income Grants and subsidies Other expenses Accountancy fees Auditors’ remuneration Bad and doubtful debts Foreign exchange gain Interest expense Legal fees Rent and associated costs Subscriptions and fees Travel and accommodation Other expenses 22002222 $$ 2021 $ 33,,002266 5588,,668833 6611,,770099 22002222 $$ 2277,,775555 4488,,887722 1188,,112288 ((1199,,999988)) 11,,004466 2288,,770033 111155,,448855 111166,,779922 4444,,225577 220077,,663333 558888,,667733 8,142 470,841 478,983 2021 $ 32,027 56,960 9,180 (11,908) 1,532 44,612 131,603 61,896 42,890 250,547 619,339 PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 46 Note 3: Income tax Income tax recognised in profit or loss The major components of tax benefit are: Current tax benefit Deferred tax benefit relating to the origination and reversal of temporary differences Total tax benefit 22002222 $$ 2021 $ -- -- -- - - - The prima facie income tax benefit on pre-tax accounting loss from operations reconciles to the income tax benefit in the financial statements as follows: Accounting loss before tax from continuing operations ((22,,664488,,338877)) (4,991,382) 3300 JJuunnee 22002222 Income tax benefit calculated at 25% (2021: 26%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: • • • • Effect of expenses that are not deductible in determining taxable profit Effect of unused tax losses and timing differences not recognised as deferred tax assets Effect of changes in tax rates on timing difference Effect of adjustment in tax from prior period Income tax benefit reported in the consolidated statement of comprehensive income ((666622,,009977)) (1,297,759) 110088,,774477 102,322 441155,,773355 111199,,003311 1188,,558833 1,195,437 - - -- - The tax rate used in the above reconciliation is the corporate tax rate of 26% payable by Australian corporate entities on taxable profits under Australian tax law. Deferred tax assets comprise: Tax losses - revenue Deferred tax liabilities comprise: Timing differences Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items: Tax losses – revenue Timing differences Blackhole expenditure 4499,,663333 37,661 4499,,663333 4499,,663333 37,661 37,661 44,,119911,,442255 3,614,224 111100,,116644 114433,,002255 198,099 216,557 44,,444444,,661144 4,028,880 The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits thereof. Note 4: Segment reporting Description of segments AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board of directors in order to allocate resources to the segment and to assess its performance. Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Group primarily reports on a geographical segment basis as its risks and rates of return are affected predominantly by differences in the various locations in which it operates and this is the format of the information provided for management purposes. Segment information location of the target market. The following tables present revenue and profit/loss information and certain asset and liability information regarding geographical segments for the year ended 30 June 2022. Revenue is attributed to geographical location based on the United Australia Kingdom Singapore $ $ China $ Consolidation adjustments $ TToottaall $$ Sales to external customers RReevveennuuee Total 2,489,383 2,489,383 - - 14,563,653 14,563,653 (122,850) 1166,,993300,,118866 (122,850) 1166,,993300,,118866 SSeeggmmeenntt rreessuulltt (4,923,495) 2,784,571 198,429 (453,541) (254,351) ((22,,664488,,338877)) Interest income Grants and subsidies Depreciation Amortisation Impairment expense Income tax benefit 2,911 15,000 (10,879) (6,593) - - - - - - - - 115 43,683 (2,934) (13,636) (68,702) - - - - - - - 33,,002266 5588,,668833 ((1133,,881133)) ((2200,,222299)) ((6688,,770022)) -- SSeeggmmeenntt aasssseettss 19,237,340 2,584 6,988,144 (16,399,417) 99,,882288,,665511 SSeeggmmeenntt lliiaabbiilliittiieess (2,468,093) (4,009,576) (9,022,766) 11,743,760 ((33,,775566,,667755)) $ - - - - - - - - - - PAGEANNUAL REPORT 2022 47 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 4: Segment reporting Description of segments AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board of directors in order to allocate resources to the segment and to assess its performance. Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Group primarily reports on a geographical segment basis as its risks and rates of return are affected predominantly by differences in the various locations in which it operates and this is the format of the information provided for management purposes. Segment information The following tables present revenue and profit/loss information and certain asset and liability information regarding geographical segments for the year ended 30 June 2022. Revenue is attributed to geographical location based on the location of the target market. 3300 JJuunnee 22002222 RReevveennuuee Sales to external customers Total Australia $ United Kingdom $ Singapore $ China $ Consolidation adjustments $ TToottaall $$ 2,489,383 2,489,383 - - - - 14,563,653 14,563,653 (122,850) (122,850) 1166,,993300,,118866 1166,,993300,,118866 SSeeggmmeenntt rreessuulltt (4,923,495) 2,784,571 198,429 (453,541) (254,351) ((22,,664488,,338877)) Interest income Grants and subsidies Depreciation Amortisation Impairment expense Income tax benefit 2,911 15,000 (10,879) (6,593) - - SSeeggmmeenntt aasssseettss 19,237,340 SSeeggmmeenntt lliiaabbiilliittiieess (2,468,093) - - - - - - - - - - - - - - 115 43,683 (2,934) (13,636) (68,702) - - - - - - - 33,,002266 5588,,668833 ((1133,,881133)) ((2200,,222299)) ((6688,,770022)) -- 2,584 6,988,144 (16,399,417) 99,,882288,,665511 (4,009,576) (9,022,766) 11,743,760 ((33,,775566,,667755)) PAGEANNUAL REPORT 2022 48 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 4: Segment reporting (continued) Segment information (continued) Note 5: Loss per share Basic and diluted loss per share 3300 JJuunnee 22002211 SSeeggmmeenntt rreevveennuuee Sales to external customers Total Australia $ United Kingdom $ Singapore $ China $ Consolidation adjustments $ TToottaall $$ 2,050,684 2,050,684 - - - - 7,221,562 7,221,562 (140,004) (140,004) 99,,113322,,224422 99,,113322,,224422 Reconciliation of loss used in calculating loss per share Total basic and diluted loss per share attributable to the ordinary equity holders of the Company ((00..3399)) (0.97) SSeeggmmeenntt rreessuulltt (2,663,500) 82,213 (230,575) (804,580) (1,374,940) ((44,,999911,,338822)) Interest income Grants and subsidies Depreciation Amortisation Impairment expense Income tax benefit 8,014 283,100 (5,241) - - - - - - - - - - 3,040 - - - - 128 184,701 (7,866) - (20,207) - - - - (510,912) (1,001,624) - 88,,114422 447700,,884411 ((1133,,110077)) ((551100,,991122)) ((11,,002211,,883311)) -- SSeeggmmeenntt aasssseettss 20,615,874 49,829 3,004 3,162,156 (15,629,618) 88,,220011,,224455 SSeeggmmeenntt lliiaabbiilliittiieess (1,832,239) (2,918,448) (4,030,572) (4,696,142) 10,973,960 ((22,,550033,,444411)) Major customers During the year ended 30 June 2022, approximately $7,912,000 (2021: $3,853,000) of the Group’s external revenue was derived from sales to a major China based customer through the China operating segment. Note 6: Dividends Other segment information There were no dividends paid or declared to equity holders during the year ended 30 June 2022. SSeeggmmeenntt rreevveennuuee rreeccoonncciilliiaattiioonn ttoo tthhee ssttaatteemmeenntt ooff ccoommpprreehheennssiivvee iinnccoommee Total segment revenue Inter-segment sales elimination Total 22002222 $$ 1177,,005533,,003366 ((112222,,885500)) 1166,,993300,,118866 2021 $ 9,272,246 (140,004) 9,132,242 22002222 CCeennttss ppeerr sshhaarree 2021 Cents per share $$ $ ((22,,664488,,338877)) (4,991,382) NNuummbbeerr Number Loss attributable to the ordinary equity holders of the Company used in the calculation of basic and diluted loss per share Weighted average number of shares used as the denominator Weighted average number of ordinary shares used in the denominator in calculating loss per share 667766,,333388,,773355 516,862,759 Information concerning classification of securities Options granted are considered to be potential ordinary shares and have been included in the determination of diluted loss per share to the extent to which they are dilutive (the options are not considered to be dilutive). The options have not been included in the determination of basic loss per share. Details relating to the options are set out in Note 19. PAGEANNUAL REPORT 2022 49 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 5: Loss per share Basic and diluted loss per share 22002222 CCeennttss ppeerr sshhaarree 2021 Cents per share Total basic and diluted loss per share attributable to the ordinary equity holders of the Company ((00..3399)) (0.97) Reconciliation of loss used in calculating loss per share Loss attributable to the ordinary equity holders of the Company used in the calculation of basic and diluted loss per share Weighted average number of shares used as the denominator $$ $ ((22,,664488,,338877)) (4,991,382) NNuummbbeerr Number Weighted average number of ordinary shares used in the denominator in calculating loss per share 667766,,333388,,773355 516,862,759 Information concerning classification of securities Options granted are considered to be potential ordinary shares and have been included in the determination of diluted loss per share to the extent to which they are dilutive (the options are not considered to be dilutive). The options have not been included in the determination of basic loss per share. Details relating to the options are set out in Note 19. Note 6: Dividends There were no dividends paid or declared to equity holders during the year ended 30 June 2022. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 7: Cash and cash equivalents Note 8: Trade and other receivables 50 Cash at bank and on hand 22,,441144,,229999 3,815,089 Cash at bank earns interest at floating rates based on daily bank deposit rates. Trade debtors Allowance for impairment Total 22002222 $$ 2021 $ At 30 June 2022, the Group had available $49,999 (2020: $49,999) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met. (i) the average credit period on sales of goods and rendering of services is 30 days. Reconciliation to the Statement of Cash Flows: For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of outstanding bank overdrafts. In determining the recoverability of a trade receivable, the Group considers any changes in the credit quality of the trade receivable from the date credit was initially granted up to the balance date. The concentration of credit risk is limited due to the customer base being large and unrelated. The above allowance for impairment relates to one specific debtor which management has deemed to be non-recoverable. Accordingly, the Directors believe that there are no further credit provisions required in excess of the allowance for impairment. Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Reconciliation of trade and other receivables Cash at bank and on hand, as above Balance per statement of cash flows 22002222 $$ 2021 $ 22,,441144,,229999 22,,441144,,229999 3,815,089 3,815,089 Reconciliation of loss for the year to net cash flows from operating activities Net loss for the year Unrealised foreign exchange gain Equity settled share-based payment Bad and doubtful debts Depreciation Amortisation Impairment of assets Change in net assets and liabilities, net of effects from acquisition and disposal of businesses: (Increase)/Decrease in assets: Trade and other receivables Inventories Increase/(Decrease) in liabilities: Trade and other payables Provisions Net cash from operating activities 22002222 $$ 2021 $ ((22,,664488,,338877)) ((4444,,666677)) 223366,,115500 1188,,112288 1133,,881133 2200,,222299 6688,,770022 (4,991,382) (11,908) 324,160 9,180 13,107 510,912 1,021,831 ((33,,001144,,004488)) 118855,,114422 (773,645) (356,743) 11,,117788,,441188 88 883,505 (9,510) ((33,,998866,,551122)) (3,380,493) Note (i) 22002222 $$ 33,,993344,,005533 ((5588,,997788)) 33,,887755,,007755 2021 $ 1,091,947 (49,350) 1,042,597 22002222 $$ 2021 $ 33,,887755,,007755 1,042,597 110044,,000044 337700 52,866 1,838 33,,997799,,444499 1,097,301 Note (i) (ii) 22002222 $$ 5500,,000000 8800,,000000 2021 $ - - Trade debtors, noted above Accrued revenue Other receivables Total Note 9: Financial assets Financial asset – current Financial asset – non-current (i) Convertible note granted in settlement of services provided. The note is repayable in 6 months and accrues interest at 10% per annum. The note is convertible to equity at the discretion of the holder. The fair value of the conversion feature is not material. The financial asset is measured at amortised cost. (ii) Shares held in a private company which were granted in settlement for services provided in a web development project. The shares are valued using the price at the most recent capital raise of the entity. (iii) The financial assets are Level 3 instruments in the fair value hierarchy. PAGEANNUAL REPORT 2022 51 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 8: Trade and other receivables Trade debtors Allowance for impairment Total Note (i) 22002222 $$ 33,,993344,,005533 ((5588,,997788)) 33,,887755,,007755 2021 $ 1,091,947 (49,350) 1,042,597 (i) the average credit period on sales of goods and rendering of services is 30 days. In determining the recoverability of a trade receivable, the Group considers any changes in the credit quality of the trade receivable from the date credit was initially granted up to the balance date. The concentration of credit risk is limited due to the customer base being large and unrelated. The above allowance for impairment relates to one specific debtor which management has deemed to be non-recoverable. Accordingly, the Directors believe that there are no further credit provisions required in excess of the allowance for impairment. Reconciliation of trade and other receivables Trade debtors, noted above Accrued revenue Other receivables Total Note 9: Financial assets Financial asset – current Financial asset – non-current 22002222 $$ 2021 $ 33,,887755,,007755 1,042,597 110044,,000044 337700 52,866 1,838 33,,997799,,444499 1,097,301 Note (i) (ii) 22002222 $$ 5500,,000000 8800,,000000 2021 $ - - (i) Convertible note granted in settlement of services provided. The note is repayable in 6 months and accrues interest at 10% per annum. The note is convertible to equity at the discretion of the holder. The fair value of the conversion feature is not material. The financial asset is measured at amortised cost. (ii) Shares held in a private company which were granted in settlement for services provided in a web development project. The shares are valued using the price at the most recent capital raise of the entity. (iii) The financial assets are Level 3 instruments in the fair value hierarchy. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 10: Other current assets Note 12: Property, plant and equipment(continued) 52 Prepayments Security deposits Other Total Note 11: Inventories Inventories at cost Impairment allowance Total IImmppaaiirrmmeenntt ooff iinnvveennttoorriieess:: 22002222 $$ 112266,,663399 227700,,334444 33,,001111 339999,,999944 22002222 $$ 334400,,557744 ((6688,,770022)) 227711,,887722 2021 $ 145,317 191,298 3,009 339,624 2021 $ 457,014 - 457,014 The Group has identified inventories that are slow moving and inventories held for brands that the Company no longer procures products from. Whilst the Group intends to continue to invest in marketing activities to realise proceeds on the sale of these inventories, it is considered prudent to record an allowance for these inventories to ensure that carrying value is not stated in excess of expected net realisable value. An impairment loss of $60,872 has been recorded during the year (2021: $nil). Note 12: Property, plant and equipment IImmppaaiirrmmeenntt ooff ffiixxeedd aasssseettss:: has been recognised during the year (2021: $nil). Note 13: Other intangible assets The recoverable amount of fixed assets is estimated to be in line with the carrying values, therefore, no impairment loss Carrying value 3300 JJuunnee 22002222 Cost Accumulated Depreciation Carrying value 30 June 2021 Cost Accumulated Depreciation Carrying value Office equipment $ Computer equipment $ 9,350 (5,152) 4,198 39,363 (28,780) 10,583 Office equipment $ Computer equipment $ 9,350 (2,222) 7,128 26,241 (17,898) 8,343 TToottaall $$ 4488,,771133 ((3333,,993322)) 1144,,778811 Total $ 35,591 (20,120) 15,471 30 June 2021 Technology development Website Customer contracts Technology Website development Customer contracts $ 150,046 (20,508) 129,538 3,230,747 (1,696,309) (1,534,438) $ - $ - - - $ 50,000 50,000 $ - $ - - 14,857 (11,457) (3,400) 50,000 3,295,604 (1,707,766) (1,537,838) - 50,000 50,000 Reconciliation 3300 JJuunnee 22002222 Opening balance Additions Depreciation expense Closing balance 30 June 2021 Opening balance Additions Depreciation expense Closing balance Carrying value 3300 JJuunnee 22002222 Cost Accumulated amortisation Carrying value Cost Accumulated amortisation Accumulated impairment Carrying value Office equipment $ - 7,128 (2,930) 4,198 Computer equipment $ 8,343 13,123 (10,883) 10,583 Office equipment $ Computer equipment $ 923 7,027 (822) 7,128 6,195 14,433 (12,285) 8,343 TToottaall $$ 1155,,447711 1133,,112233 ((1133,,881133)) 1144,,778811 Total $ 7,118 21,460 (13,107) 15,471 TToottaall $$ 200,046 (20,508) 117799,,553388 Total $$ PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 12: Property, plant and equipment(continued) 53 Reconciliation 3300 JJuunnee 22002222 Opening balance Additions Depreciation expense Closing balance 30 June 2021 Opening balance Additions Depreciation expense Closing balance Office equipment $ Computer equipment $ 7,128 - (2,930) 4,198 8,343 13,123 (10,883) 10,583 Office equipment $ Computer equipment $ 923 7,027 (822) 7,128 6,195 14,433 (12,285) 8,343 TToottaall $$ 1155,,447711 1133,,112233 ((1133,,881133)) 1144,,778811 Total $ 7,118 21,460 (13,107) 15,471 IImmppaaiirrmmeenntt ooff ffiixxeedd aasssseettss:: The recoverable amount of fixed assets is estimated to be in line with the carrying values, therefore, no impairment loss has been recognised during the year (2021: $nil). Note 13: Other intangible assets Carrying value 3300 JJuunnee 22002222 Cost Accumulated amortisation Carrying value 30 June 2021 Cost Accumulated amortisation Accumulated impairment Carrying value Technology Website development $ 150,046 (20,508) 129,538 $ - - - Customer contracts $ 50,000 - 50,000 Technology Website development $ $ Customer contracts $ TToottaall $$ 200,046 (20,508) 117799,,553388 Total $$ 3,230,747 (1,696,309) (1,534,438) 14,857 (11,457) (3,400) 50,000 3,295,604 - - (1,707,766) (1,537,838) - - 50,000 50,000 PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 13: Other intangible assets (continued) Note 14: Goodwill (continued) 54 Reconciliation 3300 JJuunnee 22002222 Opening balance Addition Amortisation Impairment Foreign currency difference Carrying value 3300 JJuunnee 22002211 Opening balance Amortisation Impairment Carrying value Technology Website development $ - 150,046 (20,229) - (279) 129,538 Technology $ 1,532,743 (510,912) (1,021,831) - $ - - - - - - Website development $ - - - - Customer contracts $ 50,000 - - - - TToottaall $$ 5500,,000000 115500,,004466 ((2200,,222299)) -- ((227799)) 50,000 117799,,553388 Customer contracts $ TToottaall $$ 50,000 11,,558822,,774433 - - ((551100,,991122)) ((11,,002211,,883311)) 50,000 5500,,000000 IImmppaaiirrmmeenntt ooff iinnttaannggiibbllee aasssseettss:: The recoverable amount of intangible assets is estimated to be in line with the carrying values, therefore, no impairment loss has been recognised during the year (2021: $1,021,831). Note 14: Goodwill Carrying value Cost Accumulated impairment Carrying value Reconciliation Opening balance Impairment Carrying value 22002222 $$ 2021 $ 44,,440055,,226666 ((22,,001166,,118811)) 22,,338899,,008855 4,405,266 (2,016,181) 2,389,085 22002222 $$ 22,,338899,,008855 -- 22,,338899,,008855 2021 $ 2,389,085 - 2,389,085 IImmppaaiirrmmeenntt Goodwill acquired through business combinations has been allocated to the following cash generating units: • Australia focused digital marketing • China focused digital marketing and e-commerce Carrying amount of goodwill allocated to each of the cash generating units: 22002222 $$ 958,333 1,430,752 2,389,085 2021 $ 958,333 1,430,752 2,389,085 Australia focused digital marketing China focused digital marketing and e-commerce Carrying value using a steady rate, together with a terminal value. Key assumptions used in value-in-use calculations The recoverable amount of the Group’s goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on a one year projection period approved by management and extrapolated for a further five years Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive. 3300 JJuunnee 22002222 3300 JJuunnee 22002211 China focused Australia digital Australia focused digital marketing and focused digital marketing and marketing e-commerce marketing e-commerce China focused digital Not e (i) (ii) (iii) (iv) Pre-tax discount rate Revenue growth rate Cost of sales growth rate Overheads growth rate 21.7% 11.4% - 23% 11% - 13% 21.7% 15% - 35% 9% -33% (11%) - 5% (47.2%) - 5% 22.4% 10% - 54% 5% - 26% (23%) - 5% 22.4% 28% - 33% 10% -34% (38%) - 5% (i) The discount rate reflects management’s estimate of the time value of money and the Group’s weighted average cost of capital adjusted for the relevant cash generating unit, the risk free rate and the volatility of the share price relative to market movements. (ii) The revenue growth rate for the Australia focused digital marketing unit has been estimated by management based on past performance and contracted sales wins. Compared to prior year, the revenue growth rate estimation has reduced as the Group is halfway through the completion of a one-off web development project. Excluding the impact of the one-off project when comparing to prior year, the revenue growth rate estimation has increased as the Group retains its current customer base and has secured additional contracts. The revenue growth rate for the China focused digital marketing and e-commerce unit has been estimated by management based on the increase in contracted sales wins. There is an expectation that further brands will be signed on as the China operations expand. Compared to prior year, the revenue growth rate estimation has reduced as the Group has adopted a prudent approach in estimating growth given the impacts of COVID-19 lockdowns in China. Whilst, global supply and logistics chains are now stabilising, due to the evolving nature of the pandemic it is prudent to factor in effects of potential lockdowns in revenue growth estimates. PAGEANNUAL REPORT 2022 55 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 14: Goodwill (continued) IImmppaaiirrmmeenntt Goodwill acquired through business combinations has been allocated to the following cash generating units: • Australia focused digital marketing • China focused digital marketing and e-commerce Carrying amount of goodwill allocated to each of the cash generating units: Australia focused digital marketing China focused digital marketing and e-commerce Carrying value 22002222 $$ 958,333 1,430,752 2,389,085 2021 $ 958,333 1,430,752 2,389,085 The recoverable amount of the Group’s goodwill has been determined by a value-in-use calculation using a discounted cash flow model, based on a one year projection period approved by management and extrapolated for a further five years using a steady rate, together with a terminal value. Key assumptions used in value-in-use calculations Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive. 3300 JJuunnee 22002222 3300 JJuunnee 22002211 Australia focused digital marketing China focused digital marketing and e-commerce Australia focused digital marketing China focused digital marketing and e-commerce 21.7% 11.4% - 23% 11% - 13% 21.7% 15% - 35% 9% -33% (11%) - 5% (47.2%) - 5% 22.4% 10% - 54% 5% - 26% (23%) - 5% 22.4% 28% - 33% 10% -34% (38%) - 5% Not e (i) (ii) (iii) (iv) Pre-tax discount rate Revenue growth rate Cost of sales growth rate Overheads growth rate (i) The discount rate reflects management’s estimate of the time value of money and the Group’s weighted average cost of capital adjusted for the relevant cash generating unit, the risk free rate and the volatility of the share price relative to market movements. (ii) The revenue growth rate for the Australia focused digital marketing unit has been estimated by management based on past performance and contracted sales wins. Compared to prior year, the revenue growth rate estimation has reduced as the Group is halfway through the completion of a one-off web development project. Excluding the impact of the one-off project when comparing to prior year, the revenue growth rate estimation has increased as the Group retains its current customer base and has secured additional contracts. The revenue growth rate for the China focused digital marketing and e-commerce unit has been estimated by management based on the increase in contracted sales wins. There is an expectation that further brands will be signed on as the China operations expand. Compared to prior year, the revenue growth rate estimation has reduced as the Group has adopted a prudent approach in estimating growth given the impacts of COVID-19 lockdowns in China. Whilst, global supply and logistics chains are now stabilising, due to the evolving nature of the pandemic it is prudent to factor in effects of potential lockdowns in revenue growth estimates. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 14: Goodwill (continued) Note 15: Trade and other payables (current) 56 IImmppaaiirrmmeenntt ((ccoonnttiinnuueedd)) Key assumptions used in value-in-use calculations (continued) (iii) The cost of sales growth rate for the Australia focused digital marketing unit has been based by management on past performance adjusted for incremental costs for sales wins. The cost of sales growth rate for the China focused digital marketing and e-commerce unit has been estimated by management in accordance with past performance, adjusted for cost reductions expected to be achieved from contractual renegotiations. Compared to prior year, the costs of sales growth rate estimation has reduced as the Group has made significant headway in the identification of the optimal structure for delivery of services. (iv) The overheads growth rate for the Australia focused digital marketing unit and China focused digital marketing and e-commerce unit has been based by management on past performance adjusted for cost savings initiatives implemented by the Group. Compared to prior year, the overheads growth rate has decreased as it is expected that overhead costs will be positively impacted in the upcoming financial year due to the flow through of cost saving initiatives and then stabilise at a more conservative growth rate. Impact of possible changes in key assumptions As disclosed in note 1, the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows: Revenue would need to decrease by more than 17% (2021: 19%) for the Australia focused digital marketing unit and 24% (2021: 14%) for the China focused digital marketing and e-commerce unit before goodwill would need to be impaired, with all other assumptions remaining constant. The discount rate would be required to increase by 34% (2021: 35%) for the Australia focused digital marketing unit and 21% (2021:10%) for the China focused digital marketing and e-commerce unit before goodwill would need to be impaired, with all other assumptions remaining constant. The directors believe that other reasonable changes in the key assumptions on which the recoverable amount of, both the Australia focused digital marketing unit and China focused digital marketing and e-commerce unit, goodwill is based on would not cause the cash-generating units’ carrying amounts to exceed their recoverable amounts. If there are any negative changes in the key assumptions on which the recoverable amount of goodwill is based, this would result in an impairment charge for the goodwill of both the Australia focused digital marketing unit and the China focused digital marketing and e-commerce unit. (i) Trade payables are non-interest bearing and are normally settled on 30-day terms. Deferred remuneration and bonuses payable Trade payables Accruals Payroll liabilities Security deposits payable GST/VAT payable Other payables Note 16: Provisions Long service leave Note 17: Issued capital Share capital Note (i) 22,,222200,,777777 22002222 $$ 117777,,995500 330099,,116600 223399,,338855 118822,,336611 776666 44,,114411 2021 $ 843,840 281,532 365,307 280,294 134,678 8,395 34,159 33,,113344,,554400 1,948,205 22002222 $$ 2021 $ 66,,223355 66,,222277 22002222 $$ 2021 $ 702,230,863 / 579,753,113 Ordinary shares issued and fully paid 3300,,441111,,442255 27,754,463 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. PAGEANNUAL REPORT 2022 57 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 15: Trade and other payables (current) Trade payables Accruals Deferred remuneration and bonuses payable Payroll liabilities Security deposits payable GST/VAT payable Other payables Note (i) 22002222 $$ 22,,222200,,777777 117777,,995500 330099,,116600 223399,,338855 118822,,336611 776666 44,,114411 33,,113344,,554400 2021 $ 843,840 281,532 365,307 280,294 134,678 8,395 34,159 1,948,205 (i) Trade payables are non-interest bearing and are normally settled on 30-day terms. Note 16: Provisions Long service leave Note 17: Issued capital Share capital 22002222 $$ 2021 $ 66,,223355 66,,222277 22002222 $$ 2021 $ 702,230,863 / 579,753,113 Ordinary shares issued and fully paid 3300,,441111,,442255 27,754,463 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 17: Issued capital (continued) Note 17: Issued capital (continued) Movement in ordinary share capital Options over ordinary shares 58 3300 JJuunnee 22002222 Date Details Opening balance Shares issued to sophisticated investors Shares issued to employees 6 July 2021 9 September 2021 30 December 2021 Shares issued to private investors 16 March 2022 Shares issued to employees and consultant Less: Transaction costs arising on share issue Closing balance Note NNuummbbeerr $$ (i) (i) 557799,,775533,,111133 7744,,000000,,000000 22,,881166,,221122 3388,,446611,,553388 77,,220000,,000000 770022,,223300,,886633 2277,,557744,,446633 11,,770022,,000000 7700,,440055 11,,000000,,000000 9933,,660000 ((2299,,004433)) 3300,,441111,,442255 (i) The Company was required to issue 9,149,545 shares as consideration for employment and consulting services provided in the financial year ended 30 June 2021. As at 30 June 2021, the shares had not been issued as the Company was awaiting formal acceptance of offers. As the service had been provided, the shares were valued at the closing share price of $0.025 at balance date. 2,816,212 of these shares were issued on 9 September 2021 and 6,333,333 shares on 16 March 2022. A further 866,667 shares were issued on 16 March 2022 for employment services provided in the financial year ended 30 June 2022. These shares were valued at closing share price on date of issue of $0.013. 30 June 2021 Date Details Note NNuummbbeerr $$ Opening balance Shares issued to sophisticated investors 27 August 2020 22 September 2020 8 October 2020 14 October 2020 30 December 2020 Shares issued on cancellation of performance shares 27 April 2021 Shares issued on conversion of performance Shares Shares issued under the Entitlement Issue Shortfall Shares issued under the Entitlement Issue Shares issued on exercise of options Less: Transaction costs arising on share issue Closing balance (i) 334400,,662211,,229911 2255,,554466,,559955 2211,,229988,,446699 776666,,339988 3300,,447766,,119911 5544,,115522,,448899 112288,,993311,,554466 11 2255,,000000 557799,,775533,,111133 553333,,333344 11,,662244,,557755 33,,886677,,994466 -- 11,,225500 ((551177,,550099)) 2277,,557744,,446633 (i) Shares issued to the vendors of Choose Digital Pty Ltd and RooLife Pty Ltd (previously RooLife Ltd) on achievement of the following performance milestones: - Tranche 1 – 15,238,095 performance shares converted to ordinary shares upon the businesses achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). - Tranche 2 – 15,238,096 performance shares converted to ordinary shares upon the businesses achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). Options to subscribe for ordinary shares in the Company have been granted as follows: (i) to employers and consultants under share based payment plans, details of which are disclosed in Note 18; and (ii) to shareholders as free attaching options under placements offered by the Company. Movement in options over ordinary shares 3300 JJuunnee 22002222 Grant date Expiry date Exercise Price Note Opening balance Options issued Options lapsed CClloossiinngg bbaallaannccee UUnnlliisstteedd ooppttiioonnss:: 9 September 2016 18 January 2017 5 March 2020 9 September 2021 30 June 2023 18 January 2022 $0.40 $0.40 5 February 2024 $0.055 31 March 2023 $0.05 30 December 2021 30 November UUnnlliisstteedd ppeerrffoorrmmaannccee ooppttiioonnss:: 30 December 2021 30 November 2024 $0.05 (iii) (i) (ii) (iii) (iv) 16 March 2022 LLiisstteedd ooppttiioonnss:: 28 September 2018 23 November 2018 1 February 2019 13 May 2019 28 June 2019 6 March 2020 8 October 2020 2024 16 June 2022 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 14 October 2020 31 October 2021 24 November 2020 31 October 2021 24 November 2020 31 October 2021 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 - - - - 7,214,307 53,500,000 10,000 16,666,667 11,333,333 31,455,821 54,127,489 128,931,546 25,546,595 7,766,398 3,000,000 600,000 20,000,000 (600,000) (20,000,000) - - - 33,,000000,,000000 1100,,000000,,000000 44,,880077,,669911 10,000,000 4,807,691 30,000,000 - 3300,,000000,,000000 20,000,000 (20,000,000) - - - - - - - - - - - - - (7,214,307) (53,500,000) (10,000) (16,666,667) (11,333,333) (31,455,821) (54,127,489) (128,931,546) (25,546,595) (7,766,398) -- -- -- -- -- -- -- -- -- -- -- -- -- 360,152,156 64,807,691 (377,152,156) 4477,,880077,,669911 (i) The Executive options were cancelled on the issue of performance rights and resulted in an acceleration of the vesting with the full option value expensed in the current financial year. Refer to Note 19 for further detail. (iii) The Group issued 10,000,000 options to consultants for service received in the year ended 30 June 2021. The options were awaiting formal acceptance of offers and were formally granted in the current financial year. The expense was recorded in the year that the service was provided. (iii) The Group issued 4,807,691 unlisted options with an exercise price of $0.05 to private investors. A further 30,000,000 unlisted performance options were issued to the same investors with an exercise price of $0.05. Refer to Note 19 for further details. (iv) The Group issued 20,000,000 incentive Performance Options to investor relations consultants. The options converted to unlisted options following the expiry of 3 months and satisfaction of service conditions. The unlisted options to be received upon conversion of the Performance options has an exercise price of $0.05 with a 3 year expiry. The Performance Options lapsed on conclusion of the corporate mandate. PAGEANNUAL REPORT 2022 59 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 17: Issued capital (continued) Options over ordinary shares Options to subscribe for ordinary shares in the Company have been granted as follows: (i) (ii) to shareholders as free attaching options under placements offered by the Company. to employers and consultants under share based payment plans, details of which are disclosed in Note 18; and Movement in options over ordinary shares 3300 JJuunnee 22002222 Grant date Expiry date Exercise Price Note Opening balance Options issued Options lapsed CClloossiinngg bbaallaannccee UUnnlliisstteedd ooppttiioonnss:: 9 September 2016 18 January 2017 5 March 2020 9 September 2021 30 June 2023 18 January 2022 5 February 2024 30 December 2021 31 March 2023 30 November 2024 UUnnlliisstteedd ppeerrffoorrmmaannccee ooppttiioonnss:: 30 December 2021 16 March 2022 LLiisstteedd ooppttiioonnss:: 28 September 2018 23 November 2018 1 February 2019 13 May 2019 28 June 2019 6 March 2020 8 October 2020 14 October 2020 24 November 2020 24 November 2020 30 November 2024 16 June 2022 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 $0.40 $0.40 $0.055 $0.05 (i) (ii) $0.05 (iii) (iii) (iv) $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 3,000,000 600,000 20,000,000 - - - - 7,214,307 53,500,000 10,000 16,666,667 11,333,333 31,455,821 54,127,489 128,931,546 25,546,595 7,766,398 - - - 10,000,000 4,807,691 - (600,000) (20,000,000) - 33,,000000,,000000 -- -- 1100,,000000,,000000 - 44,,880077,,669911 30,000,000 - 3300,,000000,,000000 20,000,000 (20,000,000) - - - - - - - - - - (7,214,307) (53,500,000) (10,000) (16,666,667) (11,333,333) (31,455,821) (54,127,489) (128,931,546) (25,546,595) (7,766,398) -- -- -- -- -- -- -- -- -- -- -- 360,152,156 64,807,691 (377,152,156) 4477,,880077,,669911 (i) The Executive options were cancelled on the issue of performance rights and resulted in an acceleration of the vesting with the full option value expensed in the current financial year. Refer to Note 19 for further detail. (iii) The Group issued 10,000,000 options to consultants for service received in the year ended 30 June 2021. The options were awaiting formal acceptance of offers and were formally granted in the current financial year. The expense was recorded in the year that the service was provided. (iii) The Group issued 4,807,691 unlisted options with an exercise price of $0.05 to private investors. A further 30,000,000 unlisted performance options were issued to the same investors with an exercise price of $0.05. Refer to Note 19 for further details. (iv) The Group issued 20,000,000 incentive Performance Options to investor relations consultants. The options converted to unlisted options following the expiry of 3 months and satisfaction of service conditions. The unlisted options to be received upon conversion of the Performance options has an exercise price of $0.05 with a 3 year expiry. The Performance Options lapsed on conclusion of the corporate mandate. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 60 Note 17: Issued capital (continued) Movement in options over ordinary shares (continued) 3300 JJuunnee 22002211 Grant date Expiry date Exercise Price Note Opening balance Options issued Options exercised Options lapsed CClloossiinngg bbaallaannccee UUnnlliisstteedd ooppttiioonnss:: 9 September 2016 9 September 2016 11 November 2016 18 January 2017 18 January 2017 5 March 2020 LLiisstteedd ooppttiioonnss:: 28 September 2018 23 November 2018 1 February 2019 13 May 2019 28 June 2019 6 March 2020 8 October 2020 14 October 2020 24 November 2020 24 November 2020 30 June 2021 30 June 2023 11 November 2020 18 January 2021 18 January 2022 5 February 2024 $0.35 $0.40 $0.30 $0.35 $0.40 $0.055 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 31 October 2021 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 (i) (i) (ii) (iii) 3,000,000 3,000,000 2,000,000 600,000 600,000 20,000,000 - - - - - - - - - - - - - 7,214,307 - 53,500,000 - 10,000 - 16,666,667 - 11,333,333 - 31,455,821 - 54,152,489 - 128,931,546 25,546,595 - 7,766,398 - - - - - - - (25,000) - - - (3,000,000) - (2,000,000) (600,000) - - - - - - - - - - - - 149,380,128 216,397,028 (25,000) (5,600,000) -- 33,,000000,,000000 -- -- 660000,,000000 2200,,000000,,000000 77,,221144,,330077 5533,,550000,,000000 1100,,000000 1166,,666666,,666677 1111,,333333,,333333 3311,,445555,,882211 5544,,112277,,448899 112288,,993311,,554466 2255,,554466,,559955 77,,776666,,339988 336600,,115522,,115566 (i) The terms of the Entitlement Issue in October 2020 entitled the holder to be issued with 1 free attaching listed option for every ordinary share purchased at $0.030. (ii) The terms of the share placement to sophisticated and professional investors in August 2020 entitled the holder to be issued with 1 free attaching listed option for every ordinary share purchased at $0.030. The issue of the free attaching options was subject to shareholder approval and the options were therefore issued post shareholder approval in November 2020. (iii) The Company issued 7,766,398 options to various brokers for their assistance in relation to the Entitlement Issue issue. Details of these options are disclosed in Note 19. 22002222 $$ 11,,777777,,225511 ((4433,,776600)) 11,,773333,,449911 2021 $ 1,705,106 (157,212) 1,547,894 Note 18: Reserves Share based payments reserve Foreign currency translation reserve Nature and purpose of reserves SShhaarree bbaasseedd ppaayymmeennttss rreesseerrvvee FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee statements of foreign subsidiaries. Movement in reserves SShhaarree--bbaasseedd ppaayymmeennttss rreesseerrvvee This reserve is used to record the value of equity benefits provided to directors and executives as part of their remuneration, as well as to consultants and advisors for provision of services. The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial Opening balance Conversion on issue of shares to be granted for past services to employees and consultants Performance rights granted to Directors Performance rights granted under Plan 2: Incentive Share Option Plan Options granted to private investors Conversion of performance shares to ordinary shares Options granted under Plan 2: Incentive Share Option Plan Options granted to Lead Manager and Advisory on Entitlement Options to be granted for corporate and investor relation fees Shares to be granted to employees and consultants Closing balance FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee Note 17 19 19 17,19 17 17,19 17, 19 19 19 22002222 $$ 2021 $ 11,,770055,,110066 1,867,682 ((222288,,773399)) 118899,,001144 6655,,997766 1188,,990022 2266,,999922 -- -- -- -- 11,,777777,,225511 - - - - (533,334) 16,991 46,598 78,430 228,739 1,705,106 Currency translation differences arising during the year Opening balance Closing balance ((115577,,221122)) 111133,,445522 ((4433,,776600)) (155,275) (1,937) (157,212) PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 61 Note 18: Reserves Share based payments reserve Foreign currency translation reserve Nature and purpose of reserves SShhaarree bbaasseedd ppaayymmeennttss rreesseerrvvee 22002222 $$ 11,,777777,,225511 ((4433,,776600)) 11,,773333,,449911 2021 $ 1,705,106 (157,212) 1,547,894 This reserve is used to record the value of equity benefits provided to directors and executives as part of their remuneration, as well as to consultants and advisors for provision of services. FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. Movement in reserves SShhaarree--bbaasseedd ppaayymmeennttss rreesseerrvvee Opening balance Conversion on issue of shares to be granted for past services to employees and consultants Performance rights granted to Directors Performance rights granted under Plan 2: Incentive Share Option Plan Options granted to private investors Conversion of performance shares to ordinary shares Options granted under Plan 2: Incentive Share Option Plan Options granted to Lead Manager and Advisory on Entitlement Issue Options to be granted for corporate and investor relation fees Shares to be granted to employees and consultants Closing balance FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee Note 17 19 19 17,19 17 17,19 17, 19 19 19 22002222 $$ 2021 $ 11,,770055,,110066 1,867,682 ((222288,,773399)) 118899,,001144 6655,,997766 1188,,990022 -- 2266,,999922 -- -- -- 11,,777777,,225511 - - - - (533,334) 16,991 46,598 78,430 228,739 1,705,106 Opening balance Currency translation differences arising during the year Closing balance ((115577,,221122)) 111133,,445522 ((4433,,776600)) (155,275) (1,937) (157,212) PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 62 Note 19: Share-based payment plans Performance rights The Company has entered into the following performance rights based payment arrangements with directors during the year. Approval for the issue, as required under Listing Rule 10.14, was obtained at the Company’s 2021 Annual General Meeting. NNuummbbeerr GGrraanntt ddaattee EExxppiirryy ddaattee FFaaiirr vvaalluuee aatt ggrraanntt ddaattee VVeessttiinngg ddaattee CCllaassss AA TTrraanncchhee 11 Bryan Carr Warren Barry Grant Pestell 1,650,000 29 November 2021 1 December 2024 990,000 29 November 2021 1 December 2024 440,000 29 November 2021 1 December 2024 Ye (Shenny) Ruan 220,000 29 November 2021 1 December 2024 CCllaassss AA TTrraanncchhee 22 Bryan Carr Warren Barry Grant Pestell 1,650,000 29 November 2021 1 December 2024 990,000 29 November 2021 1 December 2024 440,000 29 November 2021 1 December 2024 Ye (Shenny) Ruan 220,000 29 November 2021 1 December 2024 CCllaassss AA TTrraanncchhee 33 Bryan Carr Warren Barry Grant Pestell 1,650,000 29 November 2021 1 December 2024 990,000 29 November 2021 1 December 2024 440,000 29 November 2021 1 December 2024 Ye (Shenny) Ruan 220,000 29 November 2021 1 December 2024 CCllaassss BB TTrraanncchhee 11 Bryan Carr Warren Barry Grant Pestell 3,350,000 29 November 2021 1 December 2024 2,010,000 29 November 2021 1 December 2024 893,333 29 November 2021 1 December 2024 Ye (Shenny) Ruan 446,677 29 November 2021 1 December 2024 CCllaassss BB TTrraanncchhee 22 Bryan Carr Warren Barry Grant Pestell 3,350,000 29 November 2021 1 December 2024 2,010,000 29 November 2021 1 December 2024 893,333 29 November 2021 1 December 2024 Ye (Shenny) Ruan 446,677 29 November 2021 1 December 2024 CCllaassss BB TTrraanncchhee 33 Bryan Carr Warren Barry Grant Pestell 3,350,000 29 November 2021 1 December 2024 2,010,000 29 November 2021 1 December 2024 893,333 29 November 2021 1 December 2024 Ye (Shenny) Ruan 446,677 29 November 2021 1 December 2024 CCllaassss CC Bryan Carr Warren Barry Grant Pestell 3,750,000 29 November 2021 1 December 2024 2,250,000 29 November 2021 1 December 2024 1,000,000 29 November 2021 1 December 2024 Ye (Shenny) Ruan 500,000 29 November 2021 1 December 2024 $36,300 $21,780 $9,680 $4,840 $36,300 $21,780 $9,680 $4,840 $36,300 $21,780 $9,680 $4,840 $73,700 $44,220 $19,653 $9,827 $73,700 $44,220 $19,653 $9,827 $73,700 $44,220 $19,653 $9,827 $41,250 $24,750 $11,000 $5,500 31 August 2022 31 August 2022 31 August 2022 31 August 2022 31 August 2023 31 August 2023 31 August 2023 31 August 2023 31 August 2024 31 August 2024 31 August 2024 31 August 2024 31 August 2022 31 August 2022 31 August 2022 31 August 2022 31 August 2023 31 August 2023 31 August 2023 31 August 2023 31 August 2024 31 August 2024 31 August 2024 31 August 2024 (i) (i) (i) (i) CCllaassss DD Bryan Carr Warren Barry Grant Pestell 3,750,000 29 November 2021 1 December 2024 $82,500 29 November 2024 2,250,000 29 November 2021 1 December 2024 $49,500 29 November 2024 1,000,000 29 November 2021 1 December 2024 $22,000 29 November 2024 Ye (Shenny) Ruan 500,000 29 November 2021 1 December 2024 $11,000 29 November 2024 Note 19: Share-based payment plans (continued) Performance rights (continued) (i) Vesting dates are dependent on date of achievement of vesting condition. If the vesting condition is achieved in: • • • FY2022, the vesting date is 30 June 2022; FY2023, the vesting date is 30 June 2023; or FY2024, the vesting date is 30 June 2024. The performance rights granted were in three tranches with separate market and non-market conditions for each tranche as outlined below. The market conditions were incorporated into the measurement of fair value. VVeessttiinngg ccoonnddiittiioonnss CCllaassss AA Tranche 1 Performance Rights vest if: NNuummbbeerr 3,300,000 the Group achieves Revenue for FY2022 which exceeds the Revenue which was achieved by the Group for FY2021 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety • • • • • • • • • • • • of FY2022. of FY2023. of FY2023. of FY2024. Tranche 2 Performance Rights vest if: 3,300,000 the Group achieves Revenue for FY2023 which exceeds the Revenue which was achieved by the Group for FY2022 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety Tranche 3 Performance Rights vest if: 3,300,000 the Group achieves Revenue for FY2024 which exceeds the Revenue which was achieved by the Group for FY2023 by 35% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2024. CCllaassss BB Tranche 1 Performance Rights vest if: the Group achieves EBITDA for FY2022 which exceeds the EBITDA which was achieved by the Group for FY2021 by 40% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2022. 6,700,000 Tranche 2 Performance Rights vest if: 6,700,000 either paragraph (i) or (ii) below is satisfied by the Group for FY2023: (i) where the Group failed to achieve positive EBITDA for FY2022 – the Group achieves positive EBITDA for FY2023; or (ii) where the Group achieved positive EBITDA for FY2022 – the Group achieves EBITDA for FY2023 which exceeds the EBITDA which was achieved by the Group for FY2022 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety Tranche 3 Performance Rights vest if: 6,700,000 the Group achieves EBITDA for FY2024 which exceeds the EBITDA which was achieved by the Group for FY2023 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety PAGEANNUAL REPORT 2022 63 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Performance rights (continued) (i) Vesting dates are dependent on date of achievement of vesting condition. If the vesting condition is achieved in: • • • FY2022, the vesting date is 30 June 2022; FY2023, the vesting date is 30 June 2023; or FY2024, the vesting date is 30 June 2024. The performance rights granted were in three tranches with separate market and non-market conditions for each tranche as outlined below. The market conditions were incorporated into the measurement of fair value. VVeessttiinngg ccoonnddiittiioonnss Performance Rights vest if: • CCllaassss AA Tranche 1 Tranche 2 Tranche 3 CCllaassss BB Tranche 1 • • • • the Group achieves Revenue for FY2022 which exceeds the Revenue which was achieved by the Group for FY2021 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2022. Performance Rights vest if: • the Group achieves Revenue for FY2023 which exceeds the Revenue which was achieved by the Group for FY2022 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2023. Performance Rights vest if: • the Group achieves Revenue for FY2024 which exceeds the Revenue which was achieved by the Group for FY2023 by 35% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2024. Performance Rights vest if: • the Group achieves EBITDA for FY2022 which exceeds the EBITDA which was achieved by the Group for FY2021 by 40% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2022. NNuummbbeerr 3,300,000 3,300,000 3,300,000 6,700,000 Tranche 2 Performance Rights vest if: • either paragraph (i) or (ii) below is satisfied by the Group for FY2023: (i) where the Group failed to achieve positive EBITDA for FY2022 – the Group 6,700,000 achieves positive EBITDA for FY2023; or (ii) where the Group achieved positive EBITDA for FY2022 – the Group achieves EBITDA for FY2023 which exceeds the EBITDA which was achieved by the Group for FY2022 by 50% or more; and • the Related Party has remained employed or engaged by the Group for the entirety of FY2023. Tranche 3 Performance Rights vest if: • the Group achieves EBITDA for FY2024 which exceeds the EBITDA which was achieved by the Group for FY2023 by 50% or more; and the Related Party has remained employed or engaged by the Group for the entirety of FY2024. • 6,700,000 PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Note 19: Share-based payment plans (continued) Performance rights (continued) 64 CCllaassss CC VVeessttiinngg ccoonnddiittiioonnss All of the Class C Performance Rights will vest if, at the end of either FY2022, FY2023 or FY2024: • the VWAP for the previous 90 Trading Days was at any time during the applicable FY equal to $0.05 or more; and the Related Party has remained employed or engaged by the Group for the entirety of the applicable FY. • For the avoidance of doubt, the Class C Performance Rights can only vest once (notwithstanding the above Vesting Conditions may be achieved in multiple FYs). CCllaassss DD • All of the Class D Performance Rights will vest if, on the date which is 3 years after the date of the Meeting (being 29 November 2024): in either FY2022, FY2023 or FY2024, the Group achieved: • • NPAT of at least $1,000,000; and • An NPAT margin (measured as NPAT/Revenue) of at least 10%; and the Related Party has remained employed or engaged by the Group for the entirety of the 3-year period. NNuummbbeerr 7,500,000 CCllaassss ooff ppeerrffoorrmmaannccee sshhaarreess oonn iissssuuee dduurriinngg pprriioorr yyeeaarr.. Performance shares 7,500,000 half of which are directly revenue generative). The Group has also entered into performance rights based payment arrangements with employees and consultants during the year. A total of 14,327,271 performance rights have been issued with non-market performance conditions as agreed by the Board. The fair value of the rights on grant date was $0.014 for a total fair value of $200,582. MMoovveemmeenntt iinn ppeerrffoorrmmaannccee sshhaarreess MMoovveemmeenntt iinn ppeerrffoorrmmaannccee rriigghhttss 3300 JJuunnee 22002222 Details Opening balance Shares issued Shares converted to ordinary shares Shares lapsed on cessation of employment Closing balance Number Class A Number Class B Number Class C Number Class D Number Employee NNuummbbeerr TToottaall - 9,900,000 - 20,100,000 - 7,500,000 - 7,500,000 - 14,327,271 -- 5599,,332277,,227711 - - - - - -- - 9,900,000 - 20,100,000 - 7,500,000 - 7,500,000 - 14,327,271 -- 5599,,332277,,227711 Performance shares comprise of the following classes and conversion details for each class in prior year are as follows: CCllaassss AA Convert to ordinary shares upon the Company achieving within five years of issue annualised gross revenue exceeding $3.5m (measured over any three-consecutive month period) or achieving 20m users (at least half of which are directly revenue generative). CCllaassss BB Convert to ordinary shares upon the Company achieving within five years of issue annualised gross revenue exceeding $7.5m (measured over any three-consecutive month period) or achieving 30m users (at least CCllaassss CC Convert to ordinary shares upon the Company achieving within five years of issue annualised gross revenue exceeding $12m (measured over any three-consecutive month period) or achieving 50m users (at least half of which are directly revenue generative). TTrraanncchhee Convert to ordinary shares upon CHOOSE Digital Pty Ltd and RooLife Pty Ltd (previously RooLife Limited) businesses first achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). TTrraanncchhee Convert to ordinary shares upon CHOOSE Digital Pty Ltd and RooLife Limited businesses first achieving aggregate revenue of $3 million in a rolling 12-month period (as confirmed by audited financial statements). 11 22 3300 JJuunnee 22002211 Details Opening balance Shares converted to ordinary shares Shares lapsed on cessation of employment Closing balance Number Class A Number Class B Number Class C Number Number Tranche 1 Tranche 2 NNuummbbeerr TToottaall 1,200,000 1,200,000 1,100,000 15,238,095 15,238,095 3333,,997766,,119900 (15,238,095) (15,238,095) ((3300,,447766,,119900)) (1,200,000) (1,200,000) (1,100,000) - - - - - - - ((33,,550000,,000000)) -- PAGEANNUAL REPORT 2022 65 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Performance shares CCllaassss ooff ppeerrffoorrmmaannccee sshhaarreess oonn iissssuuee dduurriinngg pprriioorr yyeeaarr.. Performance shares comprise of the following classes and conversion details for each class in prior year are as follows: CCllaassss AA CCllaassss BB CCllaassss CC TTrraanncchhee 11 TTrraanncchhee 22 Convert to ordinary shares upon the Company achieving within five years of issue annualised gross revenue exceeding $3.5m (measured over any three-consecutive month period) or achieving 20m users (at least half of which are directly revenue generative). Convert to ordinary shares upon the Company achieving within five years of issue annualised gross revenue exceeding $7.5m (measured over any three-consecutive month period) or achieving 30m users (at least half of which are directly revenue generative). Convert to ordinary shares upon the Company achieving within five years of issue annualised gross revenue exceeding $12m (measured over any three-consecutive month period) or achieving 50m users (at least half of which are directly revenue generative). Convert to ordinary shares upon CHOOSE Digital Pty Ltd and RooLife Pty Ltd (previously RooLife Limited) businesses first achieving aggregate revenue of $1.8 million in a rolling 12-month period (as confirmed by audited financial statements). Convert to ordinary shares upon CHOOSE Digital Pty Ltd and RooLife Limited businesses first achieving aggregate revenue of $3 million in a rolling 12-month period (as confirmed by audited financial statements). MMoovveemmeenntt iinn ppeerrffoorrmmaannccee sshhaarreess 3300 JJuunnee 22002211 Details Opening balance Shares converted to ordinary shares Shares lapsed on cessation of employment Closing balance Number Class A Number Class B Number Class C Number Tranche 1 Number Tranche 2 NNuummbbeerr TToottaall 1,200,000 1,200,000 1,100,000 15,238,095 15,238,095 3333,,997766,,119900 (15,238,095) (15,238,095) ((3300,,447766,,119900)) (1,200,000) - (1,200,000) - (1,100,000) - - - - - ((33,,550000,,000000)) -- PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Note 19: Share-based payment plans (continued) 66 Share-based payment expense Recorded directly in equity: Options granted under Plan 1: Special Purpose Share Option Plan (i) Note Recognised as a share-based payment expense: Vested component of options issued in previous financial period Options issued to private investors Options granted under Plan 2: Incentive Share Option Plan Options to be granted under Plan 1: Special Purpose Share Option Plan Remeasurement of shares granted/ to be granted to employees and consultants for services rendered Performance rights issued to directors, employees and consultants Shares issued to employees for services rendered (ii) 18 (iii) (iv) 22002222 $$ -- -- 2266,,999922 1188,,990022 -- -- ((7766,,000000)) 225544,,999900 1111,,226666 223366,,115500 223366,,115500 2021 $ 46,598 46,598 - - 16,991 78,430 228,739 - - 324,160 370,758 (i) Options issued to consultants assisting in the Entitlement issue / placements during the year. As the options were issued in connection with capital raisings, the value attributed to the options has been recorded directly in equity. (ii) Options issued to directors in FY2020 were cancelled on issue of performance rights which results in an acceleration of the vesting with the full option value expensed in current financial year. (iii) The Company was required to issue options as consideration for corporate, investor and public relations services. As at 30 June 2022, the options had not been issued as the Company was awaiting formal acceptance of offers. Details regarding the valuation of the options, which were expensed in the year of service, are disclosed further below. (iv) The Company was required to issue shares as consideration for employment and consulting services provided in the financial year ended 30 June 2021. As at 30 June 2021, the shares had not been issued as the Company was awaiting formal acceptance of offers. As the service had been provided, the shares were valued at the closing share price of $0.025 at balance date. The subsequent issue of these shares occurred on 9 September 2021 and 16 March 2022. There was no difference between the actual and original valuation share price for the issue on 9 September 2021. The actual share price for the 16 March 2022 issue was $0.013. The Company therefore performed a reassessment of the fair value with the subsequent difference of $76,000 being recorded through the statement of profit or loss and other comprehensive income in the current financial year. Share Options The Company has an Incentive Share Option Plan (“ISOP”) under which options to subscribe for the Company's shares have been granted to certain directors and executives. In addition, further options were issued to certain directors and executives outside of the ISOP, but substantially on the same terms and conditions. The Company refers to these as Special Purpose Options and whilst no formal plan has been adopted for these options, the Company refers to any issues outside of the shareholder approval ISOP as being issued under the Special Purpose Option Plan (“SPP”). The purpose of both the SPP and ISOP is to Special Purpose Share Option Plan (‘SPP’) is to: • assist in the reward, retention and motivation of eligible participants; • link the reward of eligible participants and the creation of shareholder value; • align interests of eligible participants more closely with the interest of shareholders by providing an opportunity for eligible participants to receive shares; • provide eligible participants with the opportunity to share in any future growth in value of the Company; and • provide greater incentive for eligible participants to focus on the Company’s longer-term goals. The following share option based payment arrangements were in place during the current and prior periods: 3300 JJuunnee 22002222 UUnnlliisstteedd OOppttiioonnss:: UUnnlliisstteedd PPeerrffoorrmmaannccee OOppttiioonnss:: Corporate, investor and public relations NNuummbbeerr GGrraanntt ddaattee EExxppiirryy ddaattee VVeessttiinngg ddaattee Private investors 4,807,691 30 December 2021 30 November 2024 $0.05 $18,902 30 December EExxeerrcciiss ee pprriiccee $$ FFaaiirr vvaalluuee aatt ggrraanntt ddaattee $$ 2021 (i) (ii) Private investors 30,000,000 30 December 2021 30 November 2024 $0.05 $117,948 consultant (ii) 20,000,000 16 March 2022 16 June 2022 $0.05 $50,859 (i) 1,000,000 Incentive Options will vest for every $1,000,000 revenue (minimum $100,000 Gross Margin), commencing when an initial $200,000 Gross Margin has been achieved. As the minimum gross margin has not been achieved at balance date, the incentive options are considered to have not vested and accordingly no expense has been recorded through the statement of profit or loss and other comprehensive income. (ii) The performance options converted to unlisted options following the expiry of 3 months and satisfaction of service conditions. The unlisted options to be received upon conversion of the Performance options were to have an exercise price of $0.05 with a 3-year expiry. The Performance Options lapsed on conclusion of the corporate mandate. Accordingly, no expense has been recorded through the statement of profit or loss and other comprehensive income. The fair value of the equity settled unlisted share options, with non-market conditions, granted to private investors are estimated at grant date using the Black & Scholes model, taking into account the terms and conditions upon which the options were granted, as follows: Expected volatility (%) Risk-free interest rate (%) Expected life of option (days) Exercise price (cents) Grant date share price (cents) NNoottee (i) (ii) (iii) 74.83% 0.96% 426 5.0 2.1 PAGEANNUAL REPORT 2022 67 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Share Options The Company has an Incentive Share Option Plan (“ISOP”) under which options to subscribe for the Company's shares have been granted to certain directors and executives. In addition, further options were issued to certain directors and executives outside of the ISOP, but substantially on the same terms and conditions. The Company refers to these as Special Purpose Options and whilst no formal plan has been adopted for these options, the Company refers to any issues outside of the shareholder approval ISOP as being issued under the Special Purpose Option Plan (“SPP”). The purpose of both the SPP and ISOP is to Special Purpose Share Option Plan (‘SPP’) is to: • assist in the reward, retention and motivation of eligible participants; • • align interests of eligible participants more closely with the interest of shareholders by providing an opportunity for link the reward of eligible participants and the creation of shareholder value; eligible participants to receive shares; • provide eligible participants with the opportunity to share in any future growth in value of the Company; and • provide greater incentive for eligible participants to focus on the Company’s longer-term goals. The following share option based payment arrangements were in place during the current and prior periods: 3300 JJuunnee 22002222 UUnnlliisstteedd OOppttiioonnss:: Private investors NNuummbbeerr GGrraanntt ddaattee EExxppiirryy ddaattee EExxeerrcciiss ee pprriiccee $$ FFaaiirr vvaalluuee aatt ggrraanntt ddaattee $$ 4,807,691 30 December 2021 30 November 2024 $0.05 $18,902 UUnnlliisstteedd PPeerrffoorrmmaannccee OOppttiioonnss:: Private investors Corporate, investor and public relations consultant (ii) 30,000,000 20,000,000 30 December 2021 30 November 2024 $0.05 $117,948 16 March 2022 16 June 2022 $0.05 $50,859 VVeessttiinngg ddaattee 30 December 2021 (i) (ii) (i) 1,000,000 Incentive Options will vest for every $1,000,000 revenue (minimum $100,000 Gross Margin), commencing when an initial $200,000 Gross Margin has been achieved. As the minimum gross margin has not been achieved at balance date, the incentive options are considered to have not vested and accordingly no expense has been recorded through the statement of profit or loss and other comprehensive income. (ii) The performance options converted to unlisted options following the expiry of 3 months and satisfaction of service conditions. The unlisted options to be received upon conversion of the Performance options were to have an exercise price of $0.05 with a 3-year expiry. The Performance Options lapsed on conclusion of the corporate mandate. Accordingly, no expense has been recorded through the statement of profit or loss and other comprehensive income. The fair value of the equity settled unlisted share options, with non-market conditions, granted to private investors are estimated at grant date using the Black & Scholes model, taking into account the terms and conditions upon which the options were granted, as follows: Expected volatility (%) Risk-free interest rate (%) Expected life of option (days) Exercise price (cents) Grant date share price (cents) NNoottee (i) (ii) (iii) 74.83% 0.96% 426 5.0 2.1 PAGEANNUAL REPORT 2022 68 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Note 19: Share-based payment plans (continued) Share Options (continued) Share Options (continued) (i) The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may The following table illustrates the movement (number) in share options issued under share based payment arrangements: also not necessarily be the actual outcome. (ii) The expected life of the options is not based on historical data and is not necessarily indicative of exercise patterns that may occur. The number of days is calculated by the number of days between the grant date and expiry date of the option. (iii) The options have been valued at grant date which was 30 December 2021. 3300 JJuunnee 22002211 LLiisstteedd OOppttiioonnss:: Lead Manager – Entitlement Issue Advisory – Entitlement Issue Advisory – Entitlement Issue UUnnlliisstteedd OOppttiioonnss:: Corporate, investor and public relations consultant NNuummbbeerr GGrraanntt ddaattee EExxppiirryy ddaattee 4,966,398 1,800,000 1,000,000 24 November 2020 24 November 2020 24 November 2020 10,000,000 30 June 2021 31 October 2021 31 October 2021 31 October 2021 31 March 2023 EExxeerrcciissee pprriiccee $$ FFaaiirr vvaalluuee aatt ggrraanntt ddaattee $$ $0.05 $29,798 $0.05 $10,800 $0.05 $6,000 VVeessttiinngg ddaattee 24 November 2020 24 November 2020 24 November 2020 $0.05 $78,430 30 June 2021 The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. There has been no alteration of the terms and conditions of the above share-based payment arrangement since grant date. The fair value of the equity settled listed share options granted under the option plan is calculated with reference to the listed market price of the option on grant date, being $0.006. Those options are not issued yet but the service was provided at vesting date. The fair value of the equity settled unlisted share options, with non-market conditions, to be granted under the option plan is estimated at grant date using the Black & Scholes model, taking into account the terms and conditions upon which the options were granted, as follows: Expected volatility (%) Risk-free interest rate (%) Expected life of option (days) Exercise price (cents) Grant date share price (cents) NNoottee (i) (ii) (iii) 90.2% 0.08% 698 5.0 3.2 (iv) The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. (v) The expected life of the options is not based on historical data and is not necessarily indicative of exercise patterns that may occur. The number of days is calculated by the number of days between the grant date and expiry date of the option. (vi) The options have been valued at grant date, being the date that the service was deemed to be provided. The options will be issued subsequent to year end. 22002222 NNuummbbeerr 2021 Number 6600,,222299,,339944 6644,,880077,,669911 ((4400,,000000,,000000)) ((3377,,222299,,339944)) 4477,,880077,,669911 4477,,880077,,669911 58,062,996 7,766,398 - (5,600,000) 60,229,394 60,229,394 Outstanding at the beginning of year Granted during the year Lapsed during the year Expired during the year Outstanding at the end of year Exercisable at the end of year The weighted average exercise price for all options noted above was $0.07 (2021: $0.07). The weight average remaining life of options is 1.98 years. Note 20: Financial instruments Capital risk management The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. None of the Group’s entities are subject to externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. Categories of financial instruments FFiinnaanncciiaall aasssseettss Cash and cash equivalents Trade and other receivables Other current assets Other financial assets FFiinnaanncciiaall lliiaabbiilliittiieess Trade and other payables 22002222 $$ 22,,441144,,229999 33,,997799,,444499 339999,,999944 113300,,000000 2021 $ 3,815,089 1,097,301 339,624 - 33,,113344,,554400 1,948,205 PAGEANNUAL REPORT 2022 69 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 19: Share-based payment plans (continued) Share Options (continued) The following table illustrates the movement (number) in share options issued under share based payment arrangements: Outstanding at the beginning of year Granted during the year Lapsed during the year Expired during the year Outstanding at the end of year Exercisable at the end of year 22002222 NNuummbbeerr 2021 Number 6600,,222299,,339944 6644,,880077,,669911 ((4400,,000000,,000000)) ((3377,,222299,,339944)) 4477,,880077,,669911 4477,,880077,,669911 58,062,996 7,766,398 - (5,600,000) 60,229,394 60,229,394 The weighted average exercise price for all options noted above was $0.07 (2021: $0.07). The weight average remaining life of options is 1.98 years. Note 20: Financial instruments Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. None of the Group’s entities are subject to externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. Categories of financial instruments FFiinnaanncciiaall aasssseettss Cash and cash equivalents Trade and other receivables Other current assets Other financial assets FFiinnaanncciiaall lliiaabbiilliittiieess Trade and other payables 22002222 $$ 22,,441144,,229999 33,,997799,,444499 339999,,999944 113300,,000000 2021 $ 3,815,089 1,097,301 339,624 - 33,,113344,,554400 1,948,205 PAGEANNUAL REPORT 2022 70 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 Note 20: Financial instruments (continued) Financial risk management objectives Note 20: Financial instruments (continued) FFoorreeiiggnn ccuurrrreennccyy sseennssiittiivviittyy aannaallyyssiiss ((ccoonnttiinnuueedd)) The Group is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. Market risk (ii) This is mainly as a result of the restating of the intercompany loans between the Company and its foreign subsidiaries, where on consolidation the exchange rate difference on restating loans into their AUD equivalent is transferred to the foreign exchange translation reserve in equity. The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates. Interest rate risk management Foreign currency risk management The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows: Great British Pounds (GBP or £) United State Dollars (USD or US$) Singapore Dollars (SGD or S$) Hong Kong Dollars (HKD or H$) Chinese Yuan (CNY) Liabilities Assets 22002222 $$ -- ((11,,552299,,339966)) -- -- ((22,,116688)) 2021 $ - - (9,101) - (2,060) 22002222 $$ -- 33,,772266,,883300 22,,558855 2233,,992233 77,,779988 2021 $ 50,333 - 3,004 23,591 13,350 FFoorreeiiggnn ccuurrrreennccyy sseennssiittiivviittyy aannaallyyssiiss The Group is exposed to USD, SGD, HKD and CNY currency fluctuations. The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. The Group is limited in its exposure to interest rate risk as entities in the Group do not borrow any funds. The only exposure to interest rate risk is on the Group’s exposures on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group has no non-derivative financial liabilities. Fair value of financial instruments A positive number indicates an increase in profit or loss and other equity where the Australian Dollar strengthens against the respective currency. For a weakening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and other equity and the balances below would be negative. The Group has a number of financial instruments which are not measured at fair value in the statement of financial position. The directors consider that the carrying value of the financial assets and financial liabilities are considered to be a reasonable approximation of their fair values. GBP Impact USD Impact SGD Impact HKD Impact CNY Impact Profit or loss (i) 22002222 $$ -- 119999,,776677 223355 22,,117755 551122 2021 $ 4,575 - (555) 2,144 1,026 Equity (ii) 22002222 $$ -- ((221199,,778899)) ((338855,,662211)) ((33,,336655)) ((22,,002255)) 2021 $ (265,354) - (365,595) (2,782) (2,025) (i) This is mainly attributable to the exposure outstanding on foreign currency denominated net assets at year-end in the Group. PAGEANNUAL REPORT 2022 71 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 20: Financial instruments (continued) FFoorreeiiggnn ccuurrrreennccyy sseennssiittiivviittyy aannaallyyssiiss ((ccoonnttiinnuueedd)) (ii) This is mainly as a result of the restating of the intercompany loans between the Company and its foreign subsidiaries, where on consolidation the exchange rate difference on restating loans into their AUD equivalent is transferred to the foreign exchange translation reserve in equity. Interest rate risk management The Group is limited in its exposure to interest rate risk as entities in the Group do not borrow any funds. The only exposure to interest rate risk is on the Group’s exposures on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group has no non-derivative financial liabilities. Fair value of financial instruments The Group has a number of financial instruments which are not measured at fair value in the statement of financial position. The directors consider that the carrying value of the financial assets and financial liabilities are considered to be a reasonable approximation of their fair values. PAGEANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS (continued) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 For the year ended 30 June 2022 72 Note 21: Commitments and contingencies Lease commitments – Group as lessee The Group has entered into commercial leases on certain premises. These leases have an average life of less than 1 year with no renewal option included in the contracts. There are no restrictions placed upon the lessee by entering into these leases. These leases have not been accounted for under AASB 16 as they are exempt due to the short term nature of the leases. Future minimum rentals payable under the leases are as follows: 22002222 $$ -- -- -- -- 2021 $ 48,228 - - 48,228 Within one year After one year but not more than five years More than five years Capital commitments As at 30 June 2022 and 30 June 2021 the Group has no capital commitments. Note 22: Related party disclosure Parent entity RooLife Group Ltd is the ultimate Australian parent entity and ultimate parent of the Group. Subsidiaries Interests in subsidiaries are set out in Note 23 below. Key management personnel compensation The aggregate compensation made to directors and other key management personnel of the Group is set out below: Short-term employee benefits Post-employment benefits Share-based payments 22002222 $$ 11,,220077,,000055 7700,,113300 223311,,000000 11,,550088,,113355 2021 $ 1,371,057 74,641 49,719 1,495,417 During the year ended 30 June 2022 and 30 June 2021, no share options were exercised by, and no loans were made to, key management personnel. Key management personnel transactions Related party transactions with key management personnel are described below. These payments were made based on normal commercial terms and conditions. The following amounts were paid to Murcia Pestell Hillard Pty Ltd, a company related to Mr. G Pestell: Provision of general legal services 22002222 $$ 2233,,113344 2233,,113344 2021 $ 46,972 46,972 Note 23: Interests in subsidiaries The consolidated financial statements include the financial statements of RooLife Group Ltd and the subsidiaries listed in the following table. Name of entity Country of incorporation OpenDNA (UK) Limited United Kingdom OpenDNA (Singapore) Pte Ltd Singapore CHOOSE Digital Pty Ltd RooLife Pty Limited RooLife (HK) Limited Blackglass Pty Ltd QBID Pty Ltd QBID Holdings Pty Ltd Qualis Pty Ltd Qualis Brands Pty Ltd RooLife China Kiwi Health Pty Ltd Remedy Drinks China Pty Ltd Australia Australia Hong Kong Australia Australia Australia Australia Australia China Australia Australia % Equity interest Investment 2022 % 2021 % 2022 $ 2021 $ 100 100 100 100 100 100 100 100 100 100 100 - 100 100 100 100 100 100 100 100 100 100 100 100 100 - 4,865,516 4,865,516 98 658,333 558,334 300,000 652,851 - - - - - - - 98 658,333 558,334 300,000 652,851 - - - - - - - RooLife Group Ltd is the ultimate Australia parent entity and the ultimate parent of the Group. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation. Note 24: Parent entity disclosures Financial position Current assets Non-current assets – equipment Current liabilities Net assets Non-current assets – investments in, and loans to, subsidiaries Equity Issued capital, net of capital raising costs Share-based payments reserve Accumulated losses Total equity Financial performance Loss for the year Other comprehensive loss Total comprehensive loss 22002222 $$ 552288,,992255 44,,336600 66,,117722,,229999 ((663333,,660088)) 66,,007711,,997766 2021 $ 2,841,219 7,233 3,570,557 (721,205) 5,697,804 3300,,441111,,442266 11,,777777,,225511 27,574,463 1,705,106 ((2266,,111166,,770011)) (23,581,765) 66,,007711,,997766 5,697,804 ((22,,553344,,993366)) (4,993,319) -- - ((22,,553344,,993366)) (4,993,319) PAGEANNUAL REPORT 2022 73 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 23: Interests in subsidiaries The consolidated financial statements include the financial statements of RooLife Group Ltd and the subsidiaries listed in the following table. Name of entity OpenDNA (UK) Limited OpenDNA (Singapore) Pte Ltd CHOOSE Digital Pty Ltd RooLife Pty Limited RooLife (HK) Limited Blackglass Pty Ltd QBID Pty Ltd QBID Holdings Pty Ltd Qualis Pty Ltd Qualis Brands Pty Ltd RooLife China Kiwi Health Pty Ltd Remedy Drinks China Pty Ltd Country of incorporation United Kingdom Singapore Australia Australia Hong Kong Australia Australia Australia Australia Australia China Australia Australia % Equity interest 2022 % 2021 % Investment 2022 $ 2021 $ 100 100 100 100 100 100 100 100 100 100 100 - 100 100 100 100 100 100 100 100 100 100 100 100 100 - 4,865,516 98 658,333 558,334 - 300,000 652,851 - - - - - - 4,865,516 98 658,333 558,334 - 300,000 652,851 - - - - - - RooLife Group Ltd is the ultimate Australia parent entity and the ultimate parent of the Group. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation. Note 24: Parent entity disclosures Financial position Current assets Non-current assets – equipment Non-current assets – investments in, and loans to, subsidiaries Current liabilities Net assets Equity Issued capital, net of capital raising costs Share-based payments reserve Accumulated losses Total equity Financial performance Loss for the year Other comprehensive loss Total comprehensive loss 22002222 $$ 552288,,992255 44,,336600 66,,117722,,229999 ((663333,,660088)) 66,,007711,,997766 2021 $ 2,841,219 7,233 3,570,557 (721,205) 5,697,804 3300,,441111,,442266 11,,777777,,225511 ((2266,,111166,,770011)) 66,,007711,,997766 27,574,463 1,705,106 (23,581,765) 5,697,804 ((22,,553344,,993366)) -- ((22,,553344,,993366)) (4,993,319) - (4,993,319) PAGEANNUAL REPORT 2022 74 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2022 Note 24: Parent entity disclosures (continued) Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 1, except for the following: • • • Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity; Investments in associates are accounted for at cost, less any impairment, in the parent entity; an indicator of an impairment of the investment. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries As at 30 June 2022, the Company has not entered into any cross guarantees with any of its subsidiaries (30 June 2021: Nil). Contingent liabilities of the parent entity As at 30 June 2022 the Company has no contingent liabilities (30 June 2021: Nil). Capital commitments As at 30 June 2022 the Company has no capital commitments (30 June 2021: Nil). Note 25: Auditor’s remuneration The auditor of RooLife Group Ltd is HLB Mann Judd. Auditor of the parent entity Audit or review of the financial statements Other assurance service Network firm of the parent Company auditor Other services for RooLife (HK) Limited 22002222 $$ 2021 $ 4488,,887722 -- 4488,,887722 51,960 5,000 56,960 11,,555577 5500,,442299 2,350 59,310 Note 26: Events subsequent to the reporting date There has been no matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. PAGEANNUAL REPORT 2022 75 DIRECTORS’ DECLARATION 1. In the opinion of the directors of RooLife Group Ltd (‘the Company’): a. the accompanying financial statements and notes are 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 2022 and of its performance for the year then ended; and ii. complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements. b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. c. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2022. This declaration is signed in accordance with a resolution of the board of directors. Bryan Carr Managing Director and Chief Executive Officer Dated: 29 August 2022 PAGEANNUAL REPORT 2022INDEPENDENT AUDITOR’S REPORT To the Members of RooLife Group Ltd Report on the Audit of the Financial Report Opinion We have audited the financial report of RooLife Group Ltd (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year then ended; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We 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. We have determined the matters described below to be the key audit matters to be communicated in our report. INDEPENDENT AUDITOR’S REPORT To the Members of RooLife Group Ltd Report on the Audit of the Financial Report Opinion We have audited the financial report of RooLife Group Ltd (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. Act 2001, including: Basis for Opinion In our opinion, the accompanying financial report of the Group is in accordance with the Corporations (a) giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year then ended; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We 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. We have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How our audit addressed the key audit matter Carrying Value of Intangible Assets including Goodwill Notes 13 and 14 of the financial report In accordance with AASB 136 Impairment of Assets, the Group was required to assess at balance date whether there was any indication that the Group’s intangible assets may have been impaired. If any such indication existed, the Group was required to estimate the recoverable amount of the asset. The Group was also required to test goodwill for impairment. We focused on this area as the intangible assets including goodwill represent significant assets of the Group. We planned our work to address the audit risk that the intangible assets including goodwill may have been impaired. Going concern Note 1(e) of the financial report The financial report is prepared on the going concern basis, which contemplates continuity of normal business and the realisation of assets and settlement of liabilities in the ordinary course of business. If the going concern basis of preparation of the financial statements was inappropriate, the carrying amount of certain assets and liabilities may have significantly differed. The going concern basis of accounting was a key audit matter due to the significance to users of the financial report and the significant judgement involved with forecasting cash flows. Our procedures included, but were not limited to the following: - We reviewed management’s assessment of whether any impairment indicators existed that would require the definite life intangibles to be tested for impairment; - We critically evaluated the assumptions used in management’s value-in-use model to support the carrying value of the goodwill and the basis for key assumptions; - We reviewed the mathematical accuracy of the value-in-use model; - We performed sensitivity analyses around the key inputs used in the model; and - We examined the disclosures made in the financial report. Our procedures included but were not limited to the following: - We considered the appropriateness of the going concern basis of accounting by evaluating the underlying assumptions in cash flow projections prepared by the Group including sensitivity analysis and subsequent events. Our responsibilities in respect of the going concern basis of accounting are included below under Auditor’s responsibilities for the audit of the financial report. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. − Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. − Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. − Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. − Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of RooLife Group Ltd for the year ended 30 June 2022 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. HLB Mann Judd Chartered Accountants Perth, Western Australia 29 August 2022 D I Buckley Partner Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. − Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. − Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. − Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. − Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 80 ADDITIONAL SECURITIES EXCHANGE INFORMATION The shareholders information set out below was applicable as at 29 August 2022. (a) Distribution of equity securities The following is a distribution schedule for fully paid ordinary shares: Range Total holders 38 33 62 697 527 Units 5,826 136,761 534,208 30,663,872 670,890,196 1,357 702,230,863 % of Issued Capital 0.00 0.02 0.08 4.37 95.54 -0.01 100.00 1 - 1,000 1,001 - 5,000 5001-10,000 10,001-100,000 100,001 Over Rounding Unmarketable Parcels Minimum $ 500.00 parcel at $0.0140 per unit 35,715 494 8,447,023 Minimum Parcel Size Holders Units PAGEANNUAL REPORT 2022ADDITIONAL SECURITIES EXCHANGE INFORMATION (continued) 81 (b) Equity security holders The following is a listing of the top 20 holders of fully paid ordinary shares. Rank Name Units % Units 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 17 19 20 MEGA HOLDINGS PTY LTD MR JAY SHAH PASSIO PTY LTD BNP PARIBAS NOMINEES PTY LTD LC ALLIANCE PTY LTD BARRY CONSULTING PTY LTD MS XIAODAN WU MR GARY ROGER KNIGHTS MR BRYAN EDWARD CARR BNP PARIBAS NOMS PTY LTD MR WARREN LESLIE BARRY + MRS SONIA ANNE BARRY MR GUOXIAN ZHENG PELLICCIONE SF PTY LTD NEXT GENERATION FISHERIES PTY LTD MR ERWAN NGUYEN MR MARK AUGUST NICKEL MR SIMON (SUI HEE) LEE SPINDRIFT 272 PTY LTD WONGS WAY OUT PTY LTD MR BRADLEY SAXBY 83,304,472 32,338,332 22,796,020 16,241,521 15,384,615 15,159,890 14,562,988 13,000,001 12,250,000 11,559,338 10,165,377 9,615,385 8,963,782 8,245,614 8,145,841 7,400,000 7,000,000 7,000,000 6,578,947 6,400,000 11.86 4.61 3.25 2.31 2.19 2.16 2.07 1.85 1.74 1.50 1.45 1.37 1.28 1.17 1.16 1.05 1.00 1.00 0.94 0.91 Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total) Total Remaining Holders Balance 316,112,123 386,118,740 45.02 54.98 PAGEANNUAL REPORT 2022ADDITIONAL SECURITIES EXCHANGE INFORMATION (continued) 82 (c) Options, Performance Options and Performance Rights on Issue The following unlisted options are on issue: Number of Options Number of holders Option Terms 3,000,000 10,000,000 4,807,691 17,807,691 3 6 6 Options exercisable at $0.40 expiring 30 June 2023. Options exercisable at $0.05 expiring 31 March 2023. Options exercisable at $0.05 expiring 30 November 2024. The following performance unlisted options are on issue: Number of Options Number of holders Option Terms 30,000,000 6 Performance Options exercisable on vesting at $0.05 expiring 30 November 2024. 30,000,000 The following performance rights are on issue: Number of Options Number of holders Option Terms 9,900,000 20,100,000 7,500,000 7,500,000 14,327,271 59,327,271 4 4 4 4 5 Performance Rights convert to ordinary shares on vesting, expiring 1 December 2024. Performance Rights convert to ordinary shares on vesting, expiring 1 December 2024. Performance Rights convert to ordinary shares on vesting, expiring 1 December 2024. Performance Rights convert to ordinary shares on vesting, expiring 1 December 2024. Performance Rights convert to ordinary shares on vesting, expiring 15 March 2029. PAGEANNUAL REPORT 2022ADDITIONAL SECURITIES EXCHANGE INFORMATION (continued) 83 (d) Restricted Securities There are no Restricted Securities on Issue (e) Voting rights Every ordinary shareholder present in person or by proxy at meetings of shareholders shall have one vote for every share held. Option holders and Performance Share Holders have the right to attend meetings but have no voting rights until the options are exercised. (f) Substantial holders The following shareholders are considered substantial shareholders of the Company: • Mega Holdings Pty Ltd: 83,304,472 Shares (Representing 11.86% of total issued shares) (g) Corporate governance statement In accordance with ASX Listing Rule 4.10.3, the Company’s Corporate Governance Statement can be found on its website at www.roolifegroup.com.au. PAGEANNUAL REPORT 2022CONTACT US Unit B9, 1st Floor, 431 Roberts Road Subiaco WA 6008 info@roolifegroup.com.au www.roolifegroup.com.au 

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