APPENDIX 4E
FOR THE YEAR ENDED 30 JUNE 2018
D
Name of entity:
1.
ABN or equivalent company
reference:
98 084 370 669
Yowie Group Ltd
Reporting period:
Year ended 30 June 2018
Previous corresponding
period:
Year ended 30 June 2017
2.
Results for announcement to the market
2.1 Revenue from ordinary activities
down
10%
to
US$
17,519,314
2.2 Loss from ordinary activities for the period after
tax attributable to members
2.3 Net loss for the period attributable to members
reduced
by
reduced
by
32%
to
(4,926,820)
32%
to
(4,926,820)
2.4 Dividends
Final dividend
Interim dividend
Amount per security
Franked amount per
security
Nil
Nil
N/A
N/A
2.5 Record date for determining entitlements to the
dividends
N/A
2.6 Brief explanation of any of the figures reported above to enable the figures to be understood:
The decrease in revenue from ordinary activities for the period by 10% compared to the previous
corresponding period is primarily due to a stock adjustment claim from the Group’s major US
retail customer of US$1.99 million.
Excluding the stock adjustment claim, the revenue from ordinary activities is 0.2% above the prior
year, in line with revised guidance in February 2018.
Excluding stock adjustment claim
After stock adjustment claim
2018
US$
19.51 million
17.52 million
2017
US$
19.48 million
19.48 million
YoY
%
+0.2%
-10%
Further commentary on the results for the period can be found in the Annual Report
accompanying this Appendix 4E.
YOWIE GROUP LTD
ABN 98 084 370 669
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2018
CONTENTS
Company Directory
Chairman’s Message
Chief Executive Officer’s Report
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
D
Page
1
2
3
5
34
35
36
37
38
39
72
73
77
(Expressed in US Dollars (US$), unless stated otherwise)
D
COMPANY DIRECTORY
DIRECTORS:
Mr Louis Carroll
Mr Mark Schuessler
Mr Glen Watts
Mr William Johnson
KEY MANAGEMENT:
Mr Cove Overley
COMPANY
SECRETARY:
REGISTERED AND
PRINCIPAL OFFICE:
Mr Neville Bassett
Level 4
216 St Georges Terrace
Perth WA 6000
Telephone: (08) 6268 2640
ABN:
98 084 370 669
COMPANY WEBSITE ADDRESS:
AUDITORS:
SHARE REGISTRY:
www.yowiegroup.com
www.yowieworld.com
www.yowbrands.com
Deloitte Touche Tohmatsu
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
Link Market Services Limited
Level 12, QV1 Building
250 St Georges Terrace
Perth WA 6000
Telephone: 1300 554 474 or +61 2 8280 7111
ASX CODE:
YOW
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CHAIRMAN’S MESSAGE
Fellow Shareholders,
The 2018 financial year was a ‘reset’ year for Yowie. Your Board believes that the Company has
laid the foundations for future success during the last six months and is now moving towards
operating profitably.
I was appointed Chairman in September 2017. At the end of that year, it became apparent that
notwithstanding the Company’s early successes, the Company would not meet its previously
published FY2018 growth guidance. Board and management changes were made in early
January 2018 and in February we told you that we would recover the revenue decline and
match the previous year’s revenues. I am now pleased to confirm that not only have we
successfully delivered on this front, we did so while at the same time aggressively reigning in
costs across the board. In this financial year, which started in July 2018, the company expects
to generate positive cash from operations and trade profitably.
Your Board has been disappointed that the Company’s share price does not reflect what has
been achieved in the last six months. As indicated above, costs have been brought under tight
control on all fronts, headcount has been reduced, gross margins have been maintained and
the revenue decline has been arrested and modest growth restored.
Our major customer in the US has seen its sales of Yowie rebound more than 20% from the
levels to which they were reduced when a major competitor first arrived in that market. This
has been achieved despite very high promotional expenditure by that major competitor.
Woolworths in Australia has supported our products strongly and has recently confirmed that
it will expand its distribution of Yowie to all 950 of its stores in October. Distribution increases
in the US are continuing and our market share is growing.
We still have US$19.5 million in cash and profitable trading is in sight. We strongly believe that
these are grounds for the stock to be rerated. The current share price is approximately 70% of
the cash backing per share.
Your Board and management are making significant progress on all fronts. Mark Schuessler’s
CEO report contains more details of our operating successes. On behalf of the Board, I would
like to thank management for their achievements and you as shareholders for your continued
support. We look forward to justifying your confidence during this financial year.
Louis Carroll
Non-Executive Chairman
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CHIEF EXECUTIVE OFFICER’S REPORT
Financial year 2018 was a transitional year for Yowie and we are pleased with our progress in
getting back to sales growth trajectory and on the path to profitability. Net sales reaching
US$19.5 million, excluding the retail inventory adjustment, resulting in flat sales versus 2017.
Yowie made a Board and management change mid-year, resulting in a major re-tooling of the
company focusing on accelerating distribution in the US, affecting significant cost reductions,
re-evaluating marketing expenditures and realigning personnel to better service our
customers. Annual revenue guidance was revised mid-year and the Company met the revised
sales targets. We had a very strong Q4 with a 17% growth in sales (38% in the US) and an
increase in US market share despite a very competitive category.
The resetting of priorities is critical to the Company getting to profitability and a positive cash
flow. We focused on the following fundamentals:
1. Accelerating distribution
in the US markets through more aggressive customer
engagement, broadening our resources to address the Grocery and Convenience
channels and increased trade spending.
2. Aggressive cost cutting across the company including headcount reduction, restructuring
the company sales and distribution network, infrastructure changes, and closing the
Hong Kong office. Admin expense reductions totalled US$1.3 million in FY2018
compared to FY2017.
3. Reducing significantly marketing expenditures to focus on direct consumer engagement
through social media and less on content development resulting in a US$1.4 million
reduction in H2 spending compared to H1.
4. Realigning our team based on skill sets to maximize customer touchpoints and eliminate
outside resources.
We were successful in implementing the above, resulting in:
1. Gained US distribution across all channels to 43.1% share of stores carrying Yowie based
on ACV (All Commodity Volume) xAOC (eXtended All Outlets Combined: Food, Drug,
Mass Convenience). This was an increase 34.2% versus a year ago. This equates to an
increase to 50k retail outlets versus 39k a year ago.
- Food Channel increased to 20.5% from 13.7%
- Convenience Channel increased to 21.9% from 10.6%
- Drug Channel increased to 27.4% from 16.3%
2. Secured ranging in half Woolworth’s Australia store base with excellent results. National
ranging will take place in October.
3. Met re-calibrated annual sales guidance with a strong Q4 (+18% versus previous period)
driven by increased distribution and trade programs. This is despite the aggressive
launch in the US by a major global competitor. We also reduced our cash burn rate in
the second half of the year.
4. Reduced and realigned personnel to better focus on our customers.
5. Continued excellent gross margins, before the retail inventory adjustment.
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CHIEF EXECUTIVE OFFICER’S REPORT
6. Released Webisode series in conjunction with Icon Animation and began selling books in
Australia. This is our move to build the Yowie character base with consumers and
expand the brand outside of confectionary.
7. Initiated launch of the Wildlife Conservation Society inspired Series 4 in the US adding to
our credibility as a brand dedicated to “Save the Natural World”.
In our key US market, sales declined 4% YoY due to the aggressive competitive launch by a
major global player that impacted our business considerably at our largest retail customer.
However, our Q4 US number was up 38% due to accelerated distribution in the Food, Drug and
Convenience channels. Additionally, our market share as reported by Nielsen is .8845%, an
increase of .0124% versus previous corresponding period, despite the competitive situation.
Critical to note is our relationship with our largest customer is strong and our business has
stabilized at a level considerably higher than their benchmarks.
Going forward, management’s focus is to get the Company back on a sales growth trajectory
along with new product development, continued cost reductions, prudent marketing
investments and financial discipline. Our revised strategies plan on the following to achieve
profitability:
1. Develop and bring to market new items consistent with our brand mission to educate
consumers about the natural world, including in the publishing sector.
2. Continue to launch new series at least 2 times per year.
3. Grow distribution in the US, ANZ and Canada across all channels of trade to provide
more buying opportunities for consumers.
4. Evaluate marketing investments on a continual basis and look to execute more direct to
consumer events.
5. We expect a further reduction in admin costs YoY in excess of US$1 million.
6. Improve the supply chain through better planning and procurement to reduce cost and
inventory.
7. Expanding into select international markets.
With continued focus on the core fundamentals and expanding our availability to consumers,
we expect to grow top line sales and improve our financial results. The business has stabilized
and we anticipate turning cash flow positive in the foreseeable future. After FY2018’s
challenging year, we have successfully transitioned to a leaner, more efficient and effective
Yowie and we are excited about returning to growth, while improving financial results. We
appreciate the support of our shareholders as we build the Yowie brand.
Mark Schuessler
Managing Director & Global Chief Executive Officer
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DIRECTORS’ REPORT
Your Directors submit their report together with the financial report of Yowie Group Limited
(“the Company”) and the consolidated entity (“the Group”) for the year ended 30 June 2018.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until
the date of this report are as follows. Directors were in office for this entire period unless
otherwise stated.
As at the date of this report, the Company does not have an Audit, Remuneration or
Nomination Committee of the Board of Directors. The full Board assumes the responsibilities
of these individual committees. Given the size of the Company, it is felt that separate
committees cannot be warranted but as the Company grows, these committees may be
established.
Mr Louis Carroll
Non-Executive Chairman (appointed 18 September 2017)
Qualifications: BA (Hons) in English
Mr Carroll has had a successful international career, culminating in CEO and Chair roles, across
a range of private and publicly owned companies.
He has had executive roles with Mars in Australia and the United Kingdom, and is also a former
General Manager of AFTA Travel Insurance. He established the TeleTech business in Australia
which grew to become TeleTech Asia Pacific with revenues of more than A$200 million and
more than 4,000 employees in six countries under his leadership. He was a Director of Cover-
More through its Initial Public Offering in 2013, becoming Chairman two years later and driving
that Company’s successful sale in 2017 to Zurich. He now chairs Cover-More as a wholly
owned subsidiary of Zurich.
He also has numerous early stage technology investments and acts as an advisor to some of
these.
Mr Mark Schuessler
Global Chief Executive Officer (appointed 2 January 2018)
Managing Director (appointed 5 January 2018)
Qualifications: BSBA, MBA Finance
Mr Schuessler is an experienced senior executive leader with more than 30 years’ U.S. and
international markets experience. Mr Schuessler has extensive cross discipline and cross
category operational leadership experience in the consumer packaged goods industry with
Doumak Inc., The Campbell Soup Company, Procter and Gamble and early financial roles in
the printing and banking industries.
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DIRECTORS’ REPORT
DIRECTORS (continued)
Mr Mark Schuessler (continued)
Mr Schuessler was President and Chief Operating Officer of Doumak Inc. from 2013, a
privately held US$100+ million confectionery manufacturer of the Campfire brand, private
label marshmallows distributed throughout the U.S. and the Rocky Mountain brand
distributed in more than 70 countries globally. During his leadership period, the Company
experienced annual top line double digit growth and a significant increase in the bottom line
through increased productivity, new item launches and a global market focus. Prior to being
President and Chief Operating Officer, Mr Schuessler was Vice President and Chief Operating
Officer of Sales and Marketing with significant sales and profit growth.
Mr Glen Watts
Non-Executive Director (appointed 5 January 2018)
Qualifications: BEng (Chemical)
Mr Watts is a highly strategic and commercial Senior Executive with a strong track record of
driving transformational business performance and profitability across multiple geographies
within a leading multinational across the fast-moving consumer goods (“FMCG”) and
manufacturing sectors.
In his 26-year career with the FMCG multi-national company, Kimberly-Clark, he has lived and
worked in ANZ, Europe and North America and had direct responsibility of business across
South Asia. His last executive role was as Managing Director for Kimberly-Clark Australia and
New Zealand, a billion dollar business driven by optimising the potential of iconic (Huggies and
Kleenex) and emerging (U by Kotex and Depend) brands to be one of the most successful
regions for Kimberly-Clark globally.
He currently is Chairman of the Centre of Perinatal Excellence, a NFP organisation focused on
perinatal mental health. He is also a Director of the Australian Mitochondrial Disease
Foundation.
Mr William Johnson
Non-Executive Director (appointed 10 April 2018)
Qualifications: MA(Engineering), MBA, MAICD
Mr Johnson is a highly-experienced public company director and has considerable depth of
experience in corporate governance, business strategy and operations, investment analysis,
finance and execution.
His 30-year business career spans multiple industries and countries, with Executive and CEO
experience in mineral exploration and investment (Australia, Peru, Chile, Saudi Arabia, Oman,
North Africa and Indonesia), telecommunications infrastructure investment (New Zealand,
India, Thailand and Malaysia) and information technology and internet ventures (New Zealand,
Philippines and Australia).
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DIRECTORS’ REPORT
DIRECTORS (continued)
Mr Bert Alfonso
Managing Director and Global Chief Executive Officer (resigned 2 January 2018)
Qualifications: Bachelor of Accounting, CPA, MBA Marketing
Mr Alfonso has more than 30 years of experience in improving operating performance and
building extraordinary global teams that work together to create a winning culture.
Mr Trevor Allen
Non-Executive Director (resigned 5 January 2018)
Qualifications: BCom (Hons), CA, FF, FAICD
Mr Allen has been an Independent Non-Executive Director since 26 March 2015. He has more
than 30 years of corporate and commercial experience, primarily as a Corporate and Financial
Adviser to Australian and international corporates.
Ms Patricia Fields
Executive Director (resigned 5 January 2018)
Qualifications: Graduate Diploma (Marketing)
Ms Fields has more than 30 years of commercial and brand experience in consumer goods
industries.
Directorships of other listed companies during the past three years
Name
Company
Mr L Carroll
Mr M Schuessler
Mr G Watts
Mr W Johnson
Cover-More Group Limited
No other directorships
No other directorships
Strike Resources Limited
Bentley Capital Limited
Keybridge Capital Limited
Molopo Energy Limited
Commenced
2 Dec 2013
-
-
14 Jul 2006
13 Mar 2009
29 Jul 2016
31 May 2018
Ceased
13 Apr 2017
-
-
-
-
-
-
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DIRECTORS’ REPORT
DIRECTORS (continued)
Interests in the shares and options of the Company
As at the date of this report, the Directors (including their personal related parties) held the
following ordinary shares, options and rights over ordinary shares in the Company as set out
below.
Name
Mr L Carroll
Mr M Schuessler
Mr G Watts
Mr W Johnson
Total
Number of
Ordinary Shares
Number of Options
750,000
942,398
83,083
-
1,775,481
-
-
-
-
-
Number of Rights
815,217
1,094,431
500,001 1
-
2,409,649
1
Subject to shareholders’ approval at AGM
COMPANY SECRETARY
Mr Neville Bassett AM
Qualifications: BCom, FCA
Mr Bassett is a chartered accountant with more than 30 years of experience. He has been
involved with a diverse range of Australian public listed companies in directorial, company
secretarial and financial roles.
SENIOR EXECUTIVES
Mr Cove Overley
Global Chief Marketing Officer
Qualifications: BA (Toy Design) and AD (Industrial Design)
Prior to joining Yowie as Global Chief Marketing Officer, Mr Overley worked as Chief
Commercial Officer and General Manager developing 25 unique experiential shopping
locations around the globe for KidZania Sa de Cv (Mexico City). In that time, he developed
more than 800 unique product SKUs (SKU refers to a specific item stored to a specific
location) per year and shipped more than 50 million experiential themed products to
locations including Mexico, Japan, Dubai, United Kingdom, Europe and South East Asia. With
an investment of US$3.9 million, he transformed the wholesale, retail and distribution
business into a total of US$75 million within 5 years. Previous to this, Mr Overley headed the
Product Innovations and Communications Department for the Asian office for Recreation Plc
(United Kingdom) as well as developing a strategic electronics distribution and marketing
company called Street Value Limited which had turned a minimum profit increase of 20% per
year for the past 9 years.
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DIRECTORS’ REPORT
SENIOR EXECUTIVES (continued)
Mr Cove Overley (continued)
He is currently a Director and shareholder at Street Value Limited (Hong Kong) and XTRA
Brands Limited (Hong Kong). Mr Overley was previously a Director at KidZania Sa De Cv
(Mexico) until he resigned his post in May 2016.
PRINCIPAL ACTIVITY
Yowie Group Limited is a global brand licensing Company, specialising in the development of
consumer products designed to promote learning, understanding and engagement with the
natural world through the adventures and exploits of six endearing Yowie characters.
Educating children and adults about the environment and ecology and ‘Save the Natural
World’ is at the heart of the Yowie proposition. Yowie Group Limited employs its company-
owned intellectual property rights to supply Yowie branded chocolate confectionery product, a
digital platform and Yowie branded licensed consumer products. The Group’s vision for the
Yowie brand is to distribute on a widening basis the Yowie product in the US (United States of
America) and ANZ (Australia and New Zealand) with further international expansion.
OPERATING AND FINANCIAL REVIEW
During the financial year the Group focused on building a strong sales and distribution network
both in the US and ANZ markets, with some important key milestones achieved.
Sales and Distribution
Global
The Group achieved annual revenue guidance provided in February 2018.
Global net sales for the year ended 30 June 2018, before one-off stock adjustment
claim*, were US$19.51 million, a 0.2% increase over the previous corresponding period
(US$19.48 million).
Global net sales, after the stock adjustment claim, were US$17.52 million for the year
ended 30 June 2018, 10% lower than the previous corresponding period (US$19.48
million).
* Please refer to ‘Operations’ section below for further details on the one-off stock adjustment claim.
The Group continued to make significant progress in broadening its distribution network
and growing market share, discussed further below.
North America
North America net sales for the year ended 30 June 2018, before one-off stock
adjustment claim, were US$16.84 million, a decrease of 4% compared to previous
corresponding period (US$17.57 million). This is primarily due to the impact of an
aggressive launch by a global competitor in the US market, partially offset by improved
distribution in other distribution networks.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Sales and Distribution (continued)
North America (continued)
North America net sales, after the stock adjustment claim, were US$14.85 million for the
year ended 30 June 2018, 15% lower than the previous corresponding period (US$17.57
million).
Expansion in the Grocery, Convenience, Mass and Specialty consumer channels,
including:
- Grocery: addition of Albertson’s, expansion of Safeway and Brookshire Bros, and new
key accounts on both the east and west coasts of the United States;
- A significant expansion in Target to 1,250 stores, following the successful sales results
from a 300-Target store trial;
- Convenience: sales expansion into Circle K, 7-Eleven, Speedway, Travel Centers of
America, Sunoco and AMPM; and
- Specialty: addition of Bed Bath and Beyond, Five Below and Michael’s.
The percentage of US stores carrying Yowie as reported by Nielsen effective 16 June
2018 increased to 44.5%* from 36.7%* during the reporting period.
* Percentage relates to the Nielsen measurement of the numbers of stores that carry Yowie brand,
indicating product availability to the consumer based on ACV (All Commodity Volume) and xAOC
(eXtended All Outlets Combined: Food, Drug, Mass and Convenience)
US market share was reported by Nielsen at .8845%, an increase of .0124% versus
previous corresponding period, despite the aggressive launch by a major global
competitor that invested heavily to enter the US market for the first time.
Discovery World fell short of budget as retailers were hesitant to bring on more, lower
priced offerings to the crowded set. The Group created a provision for write-downs on
raw materials relating to Discovery World.
Australia and New Zealand (ANZ)
ANZ net sales for the year ended 30 June 2018 were US$2.67 million, an increase of
more than 40% over the previous corresponding period. This is attributable to full year
sales in the market and important placement in a major Australian retailer, Woolworths.
Yowie successfully launched Series 2, the Ranger Series, before the critical Easter holiday
period in Australia. The Group continues to expand distribution throughout Australia
and expansion into New Zealand has begun as well.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Marketing
The Group has revamped its marketing plans to utilise available digital assets to
accelerate brand recognition and character development, focus on public relation
opportunities and reduce spending significantly.
Marketing spending for the reporting period was US$3.52 million, with a significant
reduction in spending for the second half of the year of US$1.08 million, compared
US$2.44 million in the first half. This was the result of more specific and targeted
spending to brand recognition and drive distribution.
The Group successfully launched Yowie books and Yowie cartoon series to build
awareness of the Yowie character. To view the cartoon series, please visit our website
www.yowieworld.com.
Launch of US Series 4 in support of the Wildlife Conservation Society (WCS) reflects
Yowie’s continued commitment to innovation and bringing more collectability to the
market. The release of this new series was timed with the release of Yowie’s latest app,
YowieScopeTM where children, families and collectors will be able to learn more about
the species they collect with updated information, photos, videos and fun facts. Each
animal or character collected can be scanned and placed in a virtual collection gallery.
This breakthrough technology provides new experiences and after-sales engagement.
Operations
An agreement was reached with Whetstone regarding the packaging equipment that
had been the subject of a lawsuit between the parties. On 17 October 2017, Yowie
successfully recovered the contested packaging equipment and have utilised the
equipment to meet increased production requirements.
In January 2018, the Group’s major US retail customer claimed a chargeback of $1.99
million. The claim followed the retailer’s periodic internal supplier audit based on stock
adjustments arising during the previous two years. Negotiations on the quantum and
merits of the claim were conducted in January 2018 and the Group agreed to repay
chargeback of US$1.99 million over the next twelve months. The amount of the claim
has been recognised against ‘Sale of goods’ in the Consolidated Statement of Profit or
Loss in the current reporting period.
The Board is satisfied that this event will not adversely affect the trading relationship
with the customer and that the underlying issues that resulted in the claim have been
satisfactorily addressed to reduce the likelihood of a future claim.
The Group continues to focus on improvements to packaging and the supply chain in
order to eliminate future stock claims.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Corporate
Mr Louis Carroll joined the Board as Non-Executive Chair in September 2017. Mr Carroll
has a distinguished international career in CEO, Senior Executive Management and Chair
roles across a range of founder-backed, entrepreneurial organisations and public
companies.
Mr Bert Alfonso resigned from his position as Global Chief Executive Officer and
Managing Director on 2 January 2018.
Mr Mark Schuessler, formerly the Global Chief Operating Officer and Chief Executive
Officer of Yowie North America assumed the role of Global Chief Executive Officer
effective on that date and the role of Managing Director effective on 5 January 2018.
Mr Glen Watts was appointed to the Board as Non-Executive Director on 5 January
2018. Mr Watts has a strong track record of transforming business performance and
profitability in global FMCG and manufacturing.
Ms Patricia Fields and Mr Trevor Allen resigned as directors effective 5 January 2018.
Outlook and Cost Saving
The Group’s main focus continues to be to gain distribution across all channels in North
America and ANZ with more competitive promotional and merchandising activity to
engage retailers and provide the consumer with easier access to Yowie.
During the second half of the year, the Group focused on realigning resources and
spending on activities that would expand distribution, reduce overhead and drive the
Group to profitability.
Corporate
infrastructure has been restructured to maximise retail, broker, and
distributor touchpoints, and take advantage of the Group’s experience. During the
second half, the Group implemented initiatives that reduced administrative costs by
US$1.3 million compared to the previous corresponding period, excluding non-recurring
and non-cash expenses.
FY2018
US$
Administration
Add back non-recurring/non-cash expenses:
Share-based expenses/(reversal)
Depreciation and amortisation
Adjusted EBITDA Loss
(1.16 million)
0.25 million
(5.01 million)
(4.10 million)
FY2017
US$
(11.04 million)
4.59 million
0.19 million
(6.26 million)
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Outlook and Cost Saving (continued)
Despite the improvements in sales and significant cost reduction in the second half of
the year, there is more work to be done. Given the operating results in the current year,
the Board has not paid any management bonuses or other incentives.
The total remuneration for Key Management Personnel (KMP) including share-based
compensation has significantly decreased to US$0.6 million from US$6.5 million in the
previous period. During the year, unvested rights previously awarded to directors and
KMP were cancelled due to resignation and forfeiture, resulting in an expense of US$1.1
million in credit position, compared to an expense of $4.3 million in the previous
corresponding period. Please refer to the Remuneration Report for additional details.
The Group is committed to executing its plans for expanded distribution and cost control
in order to deliver positive growth and improved financial performance.
Financial Overview
The Group generated net sales of US$17.52 million during the year ended 30 June 2018.
Total net sales, before stock adjustment claim, were US$19.51 million, a 0.2% increase
over the previous corresponding period and in line with revised guidance in February
2018.
Excluding the stock adjustment claim, the Group’s gross margin remains in excess of
50%. The Group continues to focus on cost reduction efforts in order to maintain gross
margin despite the significant competitive and pricing challenges in the space.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Financial Overview (continued)
D
The Group’s adjusted EBITDA loss for the year ended 30 June 2018 was US$1.92 million,
an improvement of almost 40% as compared to the previous corresponding period.
FY2018
US$
(3.88 million)
EBITDA Loss
Add back non-recurring/non-cash expenses:
Share-based expenses/(reversal)
Stock adjustment claim
Inventory write-downs
Adjusted EBITDA Loss
(1.16 million)
1.99 million
1.13 million
(1.92 million)
FY2017
US$
(7.97 million)
4.59 million
-
0.23 million
(3.15 million)
Marketing costs for the year were US$3.52 million, with second half spending reduced
to US$1.08 million, down from US$2.44 million in the first half.
The Group wrote off its intangible assets by US$1.2 million. The write-off mostly relates
to the development of Yowie book and Yowie cartoon. The Board reviewed the
expected future economic benefits from these assets and determined that it was highly
unlikely that any future economic benefits would exceed the net book value and,
therefore, the assets have been written off. The Group will continue to utilise these
assets to broaden brand awareness and develop the Yowie character.
Net loss after tax for the year ended 30 June 2018 is US$4.9 million compared to a net
loss after tax of US$7.3 million in the previous corresponding period.
The net assets of the Group decreased by 18% to US$29.6 million as at 30 June 2018,
down from US$36.2 million as at 30 June 2017.
As at 30 June 2018 the Group’s consolidated cash position was US$19.5 million (30 June
2017: US$26.9 million).
Capital, funding and liquidity are managed at the corporate level. A summary of the cash
flows for the Group is as follows:
Cash flows used in:
- Operating activities
-
Investing activities
- Financing activities
Net cash flows for the year
US$
(5.49 million)
(1.79 million)
(0.01 million)
(7.29 million)
Opening cash
Effect of foreign exchange movements
Closing cash balance
26.88 million
(0.12 million)
19.47 million
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DIRECTORS’ REPORT
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors, there were no matters that significantly affected the state of
affairs of the Group during the financial year, other than those referred to in the review of
operations.
DIVIDENDS
The Directors recommend that no amount be paid by way of dividend. No dividend has been
paid or declared since the end of the financial year.
DIRECTORS' MEETINGS
The number of meetings attended by each Director during the year was as follows:
Director
Mr L Carroll
Mr M Schuessler 1
Mr G Watts
Mr W Johnson
Mr B Alfonso
Mr T Allen
Ms P Fields
Eligible to Attend
6
4
4
2
5
5
4
Attended
6
4
4
2
5
5
4
1 This indicates the number of Directors’ meetings Mr M Schuessler is eligible to attend after his appointment to
the Board.
SHARES UNDER OPTION
Unissued ordinary shares under options and rights outstanding at 30 June 2018 are as follows:
Number of Options
100,000
200,000
75,000
125,000
500,000
Exercise Price
(A$)
1.510
1.630
1.400
1.510
Expiry Date
24 Aug 2018
24 Aug 2018
8 Sep 2018
8 Sep 2018
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DIRECTORS’ REPORT
SHARES UNDER OPTION (continued)
Service and
Performance Rights
Service rights
Service rights
Service rights
Service rights
Service rights
Service rights
Service rights
Service rights
Service rights
Performance rights STI
Performance rights LTI
Performance rights LTI
Number of
Securities
132,925
142,511
132,925
271,739
166,667
271,739
166,667
271,739
166,667
600,000
588,052
1,531,039
4,442,670
Exercise Price
(A$)
-
-
-
-
-
-
-
-
-
-
-
-
Expiry Date
12 Jun 2019
12 Dec 2019
12 Jun 2020
18 Sep 2023
8 Jan 2024
18 Sep 2024
8 Jan 2025
18 Sep 2025
8 Jan 2026
30 Jun 2018
30 Jun 2020
30 Jun 2021
Shares issued as a result of the exercise of options
No shares were issued as a result of the exercise of options during the year ended 30 June
2018, including the period up to the date of this report.
EVENTS SUBSEQUENT TO BALANCE DATE
No circumstances or events have arisen subsequent to the end of the period that have had, or
are likely to have, a material impact on the financial statements.
LIKELY DEVELOPMENTS
Information on likely developments in the operations of the Group is contained within the
operating and financial review.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited)
This Remuneration Report outlines the Director and Executive remuneration arrangements of
the Company and the Group in accordance with the requirements of the Corporations Act
2001 and its Regulations. For the purposes of this report, Key Management Personnel (KMP) of
the Group are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any Director (whether Executive or otherwise) of the parent company.
The Directors present the Yowie Group Limited FY2018 remuneration report, outlining key
aspects of our remuneration policy and framework, and remuneration awarded this year.
The report is structured as follows:
(a)
(b)
(c)
(d)
(e)
(f)
Key management personnel (KMP) covered in this report
Remuneration policy and link to performance
Elements of remuneration
Remuneration expenses for KMP
Contractual arrangements for KMP
Equity instrument disclosures relating to Key Management Personnel
(a)
Key Management Personnel (KMP) covered in this report
Name
Mr Louis Carroll
Mr Mark Schuessler
Mr Glen Watts
Mr William Johnson
Mr Cove Overley
Mr Bert Alfonso
Mr Trevor Allen
Ms Patricia Fields
Mr Salvador Alvarez
Position
Non-Executive Chairman (appointed 18 September 2017)
Global Chief Executive Officer (appointed 2 January 2018)
Managing Director (appointed 5 January 2018)
Non-Executive Director (appointed 5 January 2018)
Non-Executive Director (appointed 10 April 2018)
Global Chief Marketing Officer
Managing Director (resigned 2 January 2018)
Global Chief Executive Officer (resigned 2 January 2018)
Non-Executive Director (resigned 5 January 2018)
Executive Director (resigned 5 January 2018)
Chief Executive Officer of Yowie North America (resigned 13 July 2017)
(b)
Remuneration policy and link to performance
The Board of Directors
is responsible for determining and reviewing compensation
arrangements for the Directors and Executive officers. The Board will assess the
appropriateness of the nature and amount of emoluments of such officers on a periodic basis
by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality Board and Executive team.
From time to time, the Board engages an external remuneration consultant to assist with
reviewing of the Group’s remuneration policy.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(b)
Remuneration policy and link to performance (continued)
D
In particular, the Board aims to ensure that remuneration practices are:
competitive and reasonable, enabling the Company to attract and retain key talent;
aligned to the Company’s strategic and business objectives and the creation of
shareholder value;
transparent and easily understood; and
acceptable to shareholders.
To assist in achieving these objectives, the Board has linked the nature and amount of
executive KMP remuneration to the Company’s financial and operational performance.
Remuneration paid to the Company's Directors and Executives is also determined having
regard to the cash available to the Company.
At the Annual General Meeting (“AGM”) held on 16 November 2017, shareholders holding
approximately 72% of eligible votes cast a ‘No’ vote in relation to the adoption of the
remuneration report for the year end 30 June 2017. The Company, therefore, received what is
known as a ‘Second Strike’ under the Amendments to the Corporations Act. Shareholders
voted against the requirement to hold a ‘spill resolution’.
Following the vote at the 2017 AGM, the Board, at its discretion, decided not to pay out any
Short Term Incentives or Long Term Incentives vesting during the year ended 30 June 2018.
Total remuneration expenses for KMP have decreased significantly to US$0.6 million, down
from US$6.5 million, after reversing the expense of $1.1 million related to the cancellation of
unvested rights due to resignation and forfeiture. Please refer to point (d) for details of KMP
remuneration expenses.
Executive KMP are those directly accountable for the operational management and strategic
direction of the Company.
Having regard to the number of members currently comprising the Company’s Board and the
stage of the Company’s development, the Company does not have a separately established
remuneration committee. The functions that would be performed by a remuneration
committee are currently performed by the full Board.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(b)
Remuneration policy and link to performance (continued)
Remuneration framework
Element
Fixed annual
remuneration
(FR)
Short-term
incentives
(STI)
Long-term
incentives
(LTI)
Purpose
Provide competitive market salary
monetary benefits.
including superannuation and non-
Reward available for meeting pre-determined performance hurdles within a
12-month time period.
Performance pay is ‘at risk’ such that if performance hurdles are not met, the
payment is not made, other than at the discretion of Directors to cover
unforeseen circumstances.
Performance pay may be paid in cash or in the form of share-based
compensation at the Board’s absolute discretion through participation in the
YOW Employee Incentive Plan (EIP) through participation in the annual grants
of service rights or performance rights where vesting are subject to
performance hurdles.
Performance hurdles are aligned to long-term shareholder value.
Performance rights are ‘at risk’ such that if performance hurdles are not met,
the performance rights do not vest.
The long term incentive once determined will be paid in cash or awarded as
fully vested service rights.
Performance rights are paid in the form of share-based compensation
through participation in the YOW Employee Incentive Plan (EIP).
Service Rights One off issuance subject to Board’s discretion to attract and retain high
calibre employee. Vesting of rights subject to Employee remaining employed
by the Company on the vesting date.
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D
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(b)
Remuneration policy and link to performance (continued)
Balancing short-term and long-term performance
Annual incentives are set at a maximum of 100% of fixed remuneration, in order to drive
performance without encouraging undue risk-taking. Long-term incentives are assessed over a
two or three year period and are designed for the achievement of long-term growth in
shareholder returns.
Assessing performance
The Board is responsible for assessing performance against KPIs and determining the STI and
LTI to be paid. To assist in this assessment, the Board receives detailed reports on performance
from management, which are based on independently verifiably data such as financial
measures, market share and data from independently run surveys.
Minimum shareholding and holding conditions
All Directors and employees are encouraged to own Yowie shares. The Company does not have
a formal minimum shareholding policy or mandatory holding condition on awarded shares.
However, it is important to note that the nominal value of share rights is determined at the
commencement of the performance period motivating executives to hold shares and grow
shareholder value.
Use of remuneration consultants
On an as-needed basis, the Non-Executive Director engages Crichton + Associates Pty Ltd
(“Crichton”) to provide various services in relation to executive KMP remuneration and the
Yowie Employee
(EIP). Crichton did not make any remuneration
recommendations to the Board during the year. Notwithstanding, the Corporations Act
protocols to ensure independence were adopted.
Incentive Plan
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(c)
Elements of remuneration
(i)
Fixed annual remuneration (FR)
Fixed remuneration consists of a base remuneration package, which includes Directors’ fees (in
the case of Directors), salaries, consulting fees, employer contributions to superannuation
funds and non-monetary benefits such as health insurance and tax advisory services.
Fixed remuneration levels for Directors and Executive officers will be reviewed annually, or on
promotion by the Board through a process that considers the
individual’s personal
development, achievement of key performance objectives for the year, industry benchmarks
wherever possible and CPI data.
Total remuneration for Non-Executive Directors is determined by resolution of shareholders.
The Board determines actual payments to Directors and reviews their remuneration annually,
based on market relativities and the duties and accountabilities of the Directors. The maximum
available aggregate remuneration approved for Non-Executive Directors is A$200,000. Non-
Executive Directors do not receive any other retirement benefits other than a superannuation
guarantee contribution required by government regulation, which was 9.5% of their fees for
the year ended 30 June 2018.
Non-Executive Directors may provide specific consulting advice to the Company upon direction
from the Board. Remuneration for this work is made at market rates. No such advice was
provided in the year ended 30 June 2018.
(ii)
Short-term incentives (STI)
Feature
Max opportunity
Performance metrics
100% of fixed remuneration or as stipulated in the respective employment contract.
Description of STI
The STI metrics align with our strategic priorities of market competitiveness, achieving
financial budget, operational excellence, shareholder value and fostering talented and
engaged people.
Achievement of award
and Board’s discretion
The Board has discretion to adjust remuneration outcomes up or down to prevent any
inappropriate reward outcomes, including reducing (down to zero, if appropriate) any
deferred STI award.
Delivery of STI
Exercise price
Forfeiture and
termination
100% of the STI award is paid in cash or equity, subject to meeting vesting conditions of
performance hurdles. The mode of delivery is at the discretion of the Board and subject
to shareholders’ approval at AGM.
Exercise price of options is determined based on premium to share price at which the
company’s shares are traded on the Australian Stock Exchange on date of the grant.
Exercise price of performance rights are generally nil.
Options and performance rights will lapse if performance conditions are not met.
Options and performance rights will be forfeited on cessation of employment unless the
Board determines otherwise in its sole and absolute discretion, e.g. in the case of
retirement due to injury, disability, death or redundancy.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(c)
Elements of remuneration (continued)
(iii)
Long-term incentives (LTI)
Feature
Max opportunity
100% of fixed remuneration or as stipulated in the respective employment contract.
Description of LTI
Performance metrics
The LTI metrics align with our strategic priorities of market competitiveness, achieving
financial budget, operational excellence and long-term shareholder value.
Delivery of LTI
Exercise price
Forfeiture and
termination
100% of the LTI award is paid in cash or equity, subject to meeting vesting conditions of
performance hurdles. The mode of delivery is at the discretion of the Board and subject
to shareholders’ approval at AGM.
Exercise price of options is determined based on premium to share price at which the
company’s shares are traded on the Australian Stock Exchange on date of the grant.
Exercise price of service rights and performance rights are generally nil.
Options and performance rights will lapse if performance conditions are not met. Options
and performance rights will be forfeited on cessation of employment unless the Board
determines otherwise in its sole and absolute discretion, e.g. in the case of retirement
due to injury, disability, death or redundancy.
(vi)
Service rights (SR)
Feature
Max opportunity
Description of SR
One off issuance subject to Board’s discretion to attract and retain high calibre
employee.
Performance metrics
Subject to employee remains employed by the Company on the vesting date.
Delivery of SR
Exercise price
Forfeiture and
termination
100% of the SR award is paid in cash or equity, subject to meeting vesting conditions of
performance hurdles. The mode of delivery is at the discretion of the Board and subject
to shareholders’ approval at AGM.
Exercise price of options is determined based on premium to share price at which the
company’s shares are traded on the Australian Stock Exchange on date of the grant.
Exercise price of service rights and performance rights are generally nil.
Options and service rights will lapse if performance conditions are not met. Options and
performance rights will be forfeited on cessation of employment unless the Board
determines otherwise in its sole and absolute discretion, e.g. in the case of retirement
due to injury, disability, death or redundancy.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(c)
Elements of remuneration (continued)
Company performance
The table below shows the performance of the Company for the past five financial years.
2018
2017
2016
2015
2014
Total Income (US$)
17,606,600
19,896,944
13,062,662
2,376,983
119,409
Net Loss (US$)
(4,926,820)
(7,297,601)
(7,397,939)
(2,791,076)
(5,913,790)
Closing Share Price (A$)
0.07
0.31
0.93
0.98
0.56
Number of Shares
216,744,323
214,055,365
206,372,375
139,230,199
117,824,223
Market Capitalisation (A$)
14,738,614
66,357,163
191,926,309
136,445,595
65,981,565
(d)
Remuneration expenses for KMP
Remuneration packages may contain the following key elements:
a) Short-term benefits, including salary and fees, bonus and other benefits;
b) Post-employment benefits, including superannuation; and
c) Share-based payments, including options and rights granted as remuneration.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(d)
Remuneration expenses for KMP (continued)
The following table discloses the remuneration of the key management personnel during the financial year:
2018
Short-Term Benefits
Salary and
Fees 1
(US$)
Bonus
(US$)
Post-
Employment
Superannuation
(US$)
Share-based Payments 2
Performance-
based
(US$)
Service-
based
(US$)
Options
Termination
Payments 9
(US$)
(US$)
D
Total
(US$)
Performance
based
(%)
Directors
Mr L Carroll 3
Mr M Schuessler
Mr G Watts 4
Mr W Johnson 5
Mr B Alfonso 6
Mr T Allen 7
Ms P Fields 7
Senior Executives
Mr C Overley
Mr S Alvarez 8
Total
60,952
522,600
22,632
3,741
186,300
34,976
64,537
275,000
41,667
1,212,405
-
-
-
-
-
-
-
-
-
-
5,790
-
2,150
355
-
3,323
5,704
-
(84,329)
-
-
(304,395)
-
(82,540)
54,463
85,090
17,913
-
(661,530)
-
-
1,184
-
18,506
(118,912)
-
(590,176)
-
-
(504,064)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
93,150
-
121,205
523,361
42,695
4,096
(686,475)
38,299
(12,299)
-
375,000
468,150
157,272
416,667
604,821
-
-
-
-
-
-
-
-
-
1 This includes annual leave where applicable.
2 Calculated in accordance with AASB 2 Share-based Payments. Refer to Note 15.
Credit amounts refer to reversal of share-based payments expense in respect of the options or rights which have not vested due to resignation or forfeiture.
3 Appointed as Non-Executive Chairman on 18 September 2017.
4 Appointed as Non-Executive Director on 5 January 2018
5 Appointed as Non-Executive Director on 10 April 2018
6 Resigned on 2 January 2018
7 Resigned on 5 January 2018
8 Resigned on 13 July 2017
9
Termination payments were made in cash based on contractual terms
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(d)
Remuneration expenses for KMP (continued)
2017
Short-Term Benefits
Salary and
Fees 1
(US$)
Bonus
(US$)
Post-
Employment
Superannuation
(US$)
Share-based Payments 2
Performance-
based
(US$)
Service-
based
(US$)
Options
Termination
Payments
(US$)
(US$)
D
Total
(US$)
Performance
based
(%)
Directors
Mr T Allen 3
Mr B Alfonso 4
Ms P Fields
Mr W Loxton 5
Senior Executives
Mr M Schuessler
Mr C Overley 6
Mr S Alvarez
Total
56,748
351,346
151,133
292,397
501,923
224,231
500,000
2,077,778
-
-
-
-
-
-
32,000
32,000
5,391
-
12,542
23,876
-
3,183
-
44,992
-
517,436
669,866
646,556
-
1,367,376
-
-
163,244
-
-
-
234,579
308,539
-
2,376,976
255,458
-
-
1,622,834
-
-
143,854
307,098
-
-
-
-
-
-
-
-
225,383
2,236,158
833,541
962,829
991,960
535,953
675,854
6,461,678
-
23
80
67
24
58
5
1 This includes annual leave where applicable.
2 Calculated in accordance with AASB 2 Share-based Payments. Refer to Note 15.
3 Appointed as Non-Executive Chairman on 6 April 2017.
4 Appointed as Managing Director on 22 March 2017.
5 Retired on 6 April 2017. Any share-based payments expense previously recognised under AASB 2 in respect of the options or rights which have not
vested has been reversed.
6 Appointed as Global Chief Marketing Officer on 8 September 2016.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(d)
Remuneration expenses for KMP (continued)
Share-based compensation to key management personnel
Shareholders approved the YOW Employee Incentive Plan (EIP) at the Annual General Meeting
held on 23 November 2015. The EIP is developed to meet contemporary equity design
standards and to provide the greatest flexibility in the design and offer choices available in the
various new equity schemes. The EIP enables the Company to offer employees a range of
different employee share scheme (“ESS”) interests. These ESS interests or awards include
options, performance rights, service rights, deferred shares, exempt shares, cash rights and
stock appreciation rights.
Whenever Shares are acquired under the EIP, they may be acquired and held by an Employee
Share Trust (“EST”). The EST will be governed by a trust deed (“EST Trust Deed”) outlining the
rules of the EST and the responsibilities of the Trustee, the Company and participants.
The Board believes that the grant of incentives under the EIP to eligible participants will
underpin the employment strategy of attracting and retaining high calibre staff capable of
executing the Company’s strategic plans, and will maximise the retention of key management
and operational staff; enhance the Company’s ability to attract quality staff in the future, link
the rewards of key staff with the achievement of strategic goals and the long term
performance objectives of the Company, and provide incentives to participants of the EIP to
deliver superior performance that creates shareholder value.
Where the participant is a Director or related party of the Company, specific shareholder
approval will have to be sought under the ASX Listing Rules prior to the grant of incentives
under EIP to such an individual.
The exercise price, if any will be determined by the Board in its discretion and set out in the
related invitation. The exercise price may be any amount and may be as low as zero, in which
case a statement to that effect will be set out in the related invitation.
Securities issued under the EIP will lapse or be forfeited on the earliest of:
a) Any expiry date applicable to the securities;
b) Any date which the Board determines that vesting conditions applicable to the
securities are not met or cannot be met;
c) The participant dealing in respect of the securities in contravention of the EIP; and
d) The Board determining that a participant has committed an act of fraud, is ineligible to
hold the office for the purposes of Part 2D.6 of the Corporations Act, or is found to
have acted in a manner that the Board considers to constitute gross misconduct.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(d)
Remuneration expenses for KMP (continued)
Share-based compensation to key management personnel (continued)
Options and rights granted to key management personnel as remuneration during the year:
Name
Security
Grant
Date
Exercise
Price
Vesting Date
Expiry Date
1 Jul 2017
1 Jul 2017
1 Jul 2017
Performance
Rights STI
Performance
Rights LTI
Performance
Rights STI
Performance
Rights LTI
Performance
Rights STI
Performance
Rights LTI
Service Rights 16 Nov 2017
1 Jul 2017
1 Jul 2017
1 Jul 2017
Mr B
Alfonso
Mr M
Schuessler
Mr C
Overley
Mr L
Carroll
Mr G
Watts
Service Rights
8 Jan 2018
500,001
No of
Securities
Granted
TBD 1
1,468,120 2
TBD 3
629,194
TBD 3
901,845
815,217
Fair Value
per Security
at Grant
Date
N/A
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
30 Jun 2018
30 Jun 2019
30 Jun 2020
30 Jun 2021
A$0.31
30 Jun 2018
30 Jun 2019
N/A
30 Jun 2020
30 Jun 2021
A$0.31
30 Jun 2018
30 Jun 2019
N/A
30 Jun 2020
30 Jun 2021
A$0.31
18 Sep 2018 to
18 Sep 2020
8 Jan 2019 to
8 Jan 2021
18 Sep 2023 to
18 Sep 2025
8 Jan 2024 to
8 Jan 2026
A$0.18
A$0.16
1 The number of rights vested would be calculated based on the 5-day VWAP after the release of the annual
financial results for the year ending 30 June 2018. However, the rights were subsequently cancelled due to
cessation of employment during the year.
2
Subsequently cancelled due to cessation of employment during the year.
3 The number of rights vested would be calculated based on the 5-day VWAP after the release of the annual
financial results for the year ending 30 June 2018. However, the rights were subsequently forfeited during the
year at Board’s discretion in light of shareholder sentiment.
The assessed fair value at grant date of options or rights granted is allocated equally over the
period from grant date to vesting date, and the amount is included in the remuneration table.
Refer to Note 15 for further details of the valuation of options and rights.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(d)
Remuneration expenses for KMP (continued)
Share-based compensation to key management personnel (continued)
No options held by key management personnel were exercised during the year ended 30 June
2018
Details of options and rights that vested or lapsed during the year are set out below:
Name
Grant Date
Vesting
Date
Number of
Options/Rights
Vested
Mr M Schuessler
13 Jun 2016
12 Jun 2018
132,925
Number of
Options/Rights
Lapsed/Forfeited
-
Mr B Alfonso
Mr T Allen
Ms P Fields
13 Jun 2016
30 Jun 2018
1 Jul 2017
30 Jun 2018
15 Jun 2016
14 Jun 2018
15 Jun 2016
14 Jun 2019
15 Jun 2016
30 Jun 2018
15 Jun 2016
30 Jun 2019
1 Jul 2017
30 Jun 2018
1 Jul 2017
30 Jun 2020
23 Nov 2015
31 Dec 2015
23 Nov 2015
31 Dec 2016
23 Nov 2015
30 Jun 2017
28 Nov 2014
28 Nov 2014
23 Nov 2015
31 Aug 2017
23 Nov 2015
31 Aug 2018
7 Nov 2016
31 Aug 2019
Mr C Overley
8 Sep 2016
30 Jun 2018
Mr S Alvarez
16 Jun 2015
31 Dec 2015
1 Jul 2017
30 Jun 2018
16 Jun 2015
31 Dec 2016
16 Jun 2015
30 Jun 2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
199,387
TBD 1
1,000,000
1,000,000
468,349
468,349
TBD 2
1,468,120
275,000
375,000
425,000
1,000,000
106,833
106,833
347,222
388,665
TBD 1
550,000
750,000
850,000
1 The number of rights vested would be calculated based on the 5-day VWAP after the release of the annual
financial results for the year ending 30 June 2018. However, the rights were forfeited during the year at Board’s
discretion in light of shareholder sentiment.
2 The number of rights vested would be calculated based on the 5-day VWAP after the release of the annual
financial results for the year ending 30 June 2018. However, the rights were cancelled due to cessation of
employment during the year.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(e)
Contractual arrangements for KMP
D
Remuneration and other terms of employment for Executives are formalised in a service
agreement. The KMP are remunerated on a total fixed remuneration (TFR) basis inclusive of
superannuation and allowances.
Position
Executive
Total Annual Fixed
Remuneration
Contract
Duration
Termination Clause
Non-Executive
Chairman
Managing Director
and Global Chief
Executive Officer
Non-Executive
Director
Non-Executive
Director
Global Chief
Marketing Officer
Louis Carroll
A$110,000
Ongoing
Mark Schuessler
US$522,600
Ongoing
Glen Watts
A$65,700
Ongoing
William Johnson
A$24,300
Ongoing
Duration of the contract
is ongoing.
14 days written notice.
Three months of base
salary as severance pay in
the event of termination
by the Company
Duration of the contract
is ongoing
Duration of the contract
is ongoing
Cove Overley
US$277,300
Ongoing One month written notice
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D
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(f)
Equity Instrument Disclosures relating to Key Management Personnel
(i)
Option Holdings
The number of options over ordinary shares in the Company held during the financial year by
each KMP, including their personally related parties, is set out in the following table.
Name
Directors
Mr L Carroll
Mr M Schuessler
Mr G Watts
Mr W Johnson
Mr B Alfonso
Mr T Allen
Ms P Fields
Senior Executives
Mr C Overley
Mr S Alvarez
Total
Balance at
Start of
Year
(No)
Granted as
Remuneration
Exercised
Lapsed/
Forfeited
Balance at
End of Year
(No)
(No)
(No)
(No)
Options Vested
and Exercisable
at End of Year
(No)
-
-
-
-
-
1,075,000
1,000,000
-
2,150,000
4,225,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,075,000)
(1,000,000)
-
(2,150,000)
(4,225,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 |
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D
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(f)
Equity Instrument Disclosures relating to Key Management Personnel (continued)
(ii)
Rights Holdings
The number of performance rights and service rights in the Company held during the financial
year by each KMP, including their personally related parties, is set out in the following table.
Name
Directors
Mr L Carroll
Balance at
Start of
Year
(No)
Granted as
Remuneration
Exercised
Lapsed/
Forfeited
Balance at End
of Year
(No)
(No)
(No)
(No)
-
815,217
-
-
Mr M Schuessler
897,549
1,338,667 1
(342,398)
(199,387)
Mr G Watts
Mr W Johnson
-
-
500,001 2
-
-
-
-
-
Mr B Alfonso
3,936,698
2,924,153 3
(2,456,033)
(4,404,818)
Mr T Allen
Ms P Fields
-
560,888
-
-
-
(560,888)
815,217
1,694,431
500,001
-
-
-
-
Senior Executives
Mr C Overley
Mr S Alvarez
Total
777,330
901,845
-
-
(388,665)
1,290,510
-
-
6,172,465
6,479,883
(2,798,431)
(5,553,758)
4,300,159
1
2
3
This includes 709,473 rights from STI FY2017 which vested at 30 June 2017 but the number of rights were
only determined subsequently based on the 5-day VWAP after the release of the annual financial results for
the year ending 30 June 2017. The share-based expenses relating to this were already expensed in the
financial year ending 30 June 2017.
Subject to shareholders’ approval.
This includes 1,456,033 rights from STI FY2017 which vested at 30 June 2017 but the number of rights were
only determined subsequently based on the 5-day VWAP after the release of the annual financial results for
the year ending 30 June 2017. The share-based expenses relating to this were already expensed in the
financial year ending 30 June 2017.
31 |
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-
-
-
-
D
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(f)
Equity Instrument Disclosures relating to Key Management Personnel (continued)
(iii)
Share Holdings (Ordinary Shares)
The number of shares in the Company held during the financial year by each KMP, including
their personally related parties, is set out in the following table. No shares were granted during
the reporting year as compensation.
Name
Directors
Mr L Carroll
Mr M Schuessler
Mr G Watts
Mr W Johnson
Mr B Alfonso
Mr T Allen
Ms P Fields
Senior Executives
Mr C Overley
Mr S Alvarez
Total
Balance at
Start of
Year
(No)
Granted as
Remuneration
Acquisition
(No)
(No)
Exercise of
Options/
Rights
(No)
Other
Changes 1
Balance at
End of Year
(No)
(No)
-
-
27,694
-
276,700
150,000
4,547,790
-
-
5,002,184
-
-
-
-
-
-
-
-
-
-
750,000
-
-
-
-
342,398
-
-
-
-
-
-
600,000
1,000,000
(1,876,700)
330,000
-
-
-
-
-
-
-
(480,000)
(4,547,790)
-
-
750,000
342,398
27,694
-
-
-
-
-
-
1,680,000
1,342,398
(6,904,490)
1,120,092
1
This movement refers to the resignation of KMP during the year. Disclosure of a KMP’s equity holding is not
required subsequent to his resignation.
Loans to and other transactions with key management personnel
There were no loans outstanding or other transactions with key management personnel and
their related parties during the year ended 30 June 2018.
END OF AUDITED REMUNERATION REPORT
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D
DIRECTORS’ REPORT
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company maintained an insurance policy which indemnifies the
Directors and Officers of Yowie Group Limited in respect of any liability incurred in connection
with the performance of their duties as Directors or Officers of the Company to the extent
permitted by the Corporations Act 2001. The Company's insurers have prohibited disclosure of
the amount of the premium payable and the level of indemnification under the insurance
contract.
NON-AUDIT SERVICES
Details of amounts paid or payable to the auditor for non-audit services provided during the
year are outlined in Note 19 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 integrity and objectivity of the auditor and none of the services undermine the general
principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professional & Ethical Standards Board.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 34 of the financial report.
Signed in accordance with a resolution of the Directors.
Louis Carroll
Non-Executive Chairman
27 August 2018
33 |
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Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Directors
Yowie Group Limited
Level 4, 216 St Georges Tce
Perth WA 6000
27 August 2018
Dear Directors,
Yowie Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Yowie Group Limited.
As lead audit partner for the audit of the financial statements of Yowie Group Limited for the year
ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Ian Skelton
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
D
Sale of goods
Cost of sales
Gross profit
Selling and distribution
Marketing
Administration
Finance cost
Other income
Foreign exchange gains / (losses)
Write-down of inventory
Net reversal of impairment of plant and equipment
Impairment of intangible assets
Loss before income tax
Income tax (expense) / benefit
Note
Consolidated
2018
US$
2017
US$
17,519,314
(9,077,116)
8,442,198
19,475,621
(8,788,982)
10,686,639
(3,823,039)
(3,515,736)
(4,099,925)
-
87,286
145,914
(1,134,364)
472,859
(1,203,393)
(3,157,498)
(4,420,646)
(11,044,358)
(621)
421,323
(138,618)
(224,774)
-
-
(4,628,200)
(298,620)
(7,878,553)
580,952
5
4
10
11
12
6
Loss after income tax for the year
(4,926,820)
(7,297,601)
Other comprehensive income for the year
Items that may be reclassified subsequently to profit or loss
Movement in foreign currency translation reserve
(275,306)
681,693
Total comprehensive loss for the year
net of tax attributable to members of the Company
(5,202,126)
(6,615,908)
Loss per share attributable to members of the Company
Basic loss per share (cents)
Diluted loss per share (cents)
7
7
(2.29)
(2.29)
(3.50)
(3.50)
This consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes to the financial statements.
35 |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
D
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible assets
Deferred tax assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Current tax liabilities
Unearned income
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Note
Consolidated
2018
US$
2017
US$
16(a)
8
9
10
19,466,956
2,870,777
1,621,423
3,307,782
27,266,938
26,877,580
1,522,537
1,171,411
3,721,390
33,292,918
11
12
6
13
4,447,954
860,931
680,604
5,989,489
3,512,987
1,139,520
1,042,061
5,694,568
33,256,427
38,987,486
3,566,675
3,548
51,298
45,684
3,667,205
2,678,035
28,223
175
87,487
2,793,920
3,667,205
2,793,920
29,589,222
36,193,566
14(a)
14(d)
55,635,991
23,383
(26,070,152)
29,589,222
55,198,677
5,107,475
(24,112,586)
36,193,566
This consolidated statement of financial position should be read in conjunction
with the accompanying notes to the financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
D
Consolidated
Note
Issued
capital
US$
Share-
based
payment
reserve
US$
Foreign
currency
translation
reserve
US$
Accumulated
losses
Total
US$
US$
Balance as at 1 July 2016
52,631,418
5,825,069
(2,937,966)
(18,541,945)
36,976,576
Loss for the year
Other comprehensive income
Foreign currency translation
Total comprehensive loss for
the year
Transactions with owners
recorded directly in equity
Shares issued
Shares issued under YOW
Employee Incentive Plan
Share issue transaction costs
Share-based payments
Expired options and rights
14(b)
14(b)
14(b)
-
-
-
792,227
-
-
-
-
1,790,385
(15,353)
-
-
(1,790,385)
-
5,056,024
(1,726,960)
-
(7,297,601)
(7,297,601)
681,693
-
681,693
681,693
(7,297,601)
(6,615,908)
-
-
-
-
-
-
792,227
-
-
-
1,726,960
-
(15,353)
5,056,024
-
Balance as at 30 June 2017
55,198,677
7,363,748
(2,256,273)
(24,112,586)
36,193,566
Balance as at 1 July 2017
55,198,677
7,363,748
(2,256,273) (24,112,586)
36,193,566
Loss for the year
Other comprehensive income
Foreign currency translation
Total comprehensive loss for
the year
Transactions with owners
recorded directly in equity
Shares issued
Shares issued under YOW
Employee Incentive Plan
Share issue transaction costs
Share-based payments
Expired options and rights
14(b)
14(b)
14(b)
-
-
-
-
-
-
-
-
441,824
(4,510)
-
-
(675,197)
-
(1,164,335)
(2,969,254)
-
(4,926,820)
(4,926,820)
(275,306)
-
(275,306)
(275,306)
(4,926,820)
(5,202,126)
-
-
-
-
-
-
-
-
-
-
2,969,254
(233,373)
(4,510)
(1,164,335)
-
Balance as at 30 June 2018
55,635,991
2,554,962
(2,531,579) (26,070,152)
29,589,222
This consolidated statement of changes in equity should be read in conjunction
with the accompanying notes to the financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 30 JUNE 2018
D
Cash flow from operating activities
Receipts from customers
Other receipts
Payments to suppliers and employees
Interest received
Income taxes paid
Net cash flows used in operating activities
Cash flow from investing activities
Payments for security deposit
Payments for plant and equipment
Payments for intangible assets
Net cash flows used in investing activities
Cash flow from financing activities
Proceeds from shares issued
Proceeds from exercise of options
Payment of share issue transaction costs
Net cash inflows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of foreign exchange movements
Cash and cash equivalents at end of the year
16(a)
Note
Consolidated
2018
US$
2017
US$
17,752,274
9,344
(23,501,214)
79,231
164,634
(5,495,731)
19,185,159
10,405
(24,232,917)
455,555
(490,143)
(5,071,941)
16(b)
-
(728,863)
(1,059,241)
(1,788,104)
(8,381)
(536,976)
(537,848)
(1,083,205)
-
-
(9,712)
(9,712)
-
792,239
(11,912)
780,327
(7,293,547)
26,877,580
(117,077)
19,466,956
(5,374,819)
31,693,265
559,134
26,877,580
This consolidated statement of cash flows should be read in conjunction
with the accompanying notes to the financial statements.
38 |
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D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
1.
CORPORATE INFORMATION
Yowie Group Limited (“the Company”) is a company limited by shares incorporated and
domiciled in Australia, whose shares are publicly traded on the Australian Securities
Exchange.
These financial statements are presented in United States Dollar. The financial report was
authorised for issue by the Directors on 27 August 2018 in accordance with a resolution of
the Directors.
The nature of the operations and principal activities of the Company are described in the
Directors’ Report on page 9.
2.
BASIS OF PREPARATION
The financial statements are a general purpose financial report which has been prepared in
accordance with the requirements of the Corporations Act 2001 and Australian Accounting
Standards and Accounting Interpretations. The financial statements have been prepared on
a historical cost basis. Yowie Group Limited is a for-profit entity for the purpose of
preparing these financial statements.
The financial statements of the Group also comply with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
3.
SEGMENT REPORTING
The Group has only one reportable segment, which relates to the operations of its
confectionery business, with production carried out under a contract manufacturing
arrangement. The net result is presented on a consolidated basis.
Major customer information
The revenue from major customers set out below arises from the sale of Yowie chocolate
confectionery product.
Major customer 1 (after stock adjustment claim)
% of Total Net Sales
Major customer 2
% of Total Net Sales
Consolidated
2018
US$
7,964,114
45%
2,598,147
15%
2017
US$
12,272,026
63%
1,886,544
10%
39 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4.
OTHER INCOME
Interest income
Other income
5.
ADMINISTRATION
Administration expenses include:
Employee benefits
Business development and travel
Legal, tax, listing, compliance and insurance
Share-based payments (refer to Note 15)
Depreciation and amortisation
Other administrative expenses
6.
TAXATION
(a)
The major components of income tax expense are:
Current income tax
Adjustments for current tax of prior periods
Total current tax expense
Deferred income tax
Decrease/(increase) in deferred tax assets
Income tax (benefit)/expense reported in the
statement of profit and loss and other comprehensive
income
D
Consolidated
2018
US$
79,520
7,766
87,286
2017
US$
412,412
8,911
421,323
Consolidated
2018
US$
2017
US$
2,390,587
1,185,222
874,443
(1,164,335)
245,691
568,317
4,099,925
2,671,926
1,890,895
1,155,832
4,589,883
195,399
540,423
11,044,358
Consolidated
2018
US$
25,363
(88,200)
(62,837)
2017
US$
359,303
101,806
461,109
361,457
361,457
(1,042,061)
(1,042,061)
298,620
(580,952)
40 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6.
TAXATION (continued)
D
(b)
The prima facie tax on operating loss differs from the income tax provided in the
accounts as follows:
Loss from ordinary activities before tax
Prima facie tax benefit on loss at 30%
Effect of different tax rates on overseas losses
Income tax benefit not recognised
Income tax benefit / (expense)
Consolidated
2018
US$
(4,628,200)
1,388,460
188,741
(1,875,821)
(298,620)
2017
US$
(7,878,553)
2,363,566
954,948
(2,737,562)
580,952
(c) Deferred income tax at 30 June relates to the following:
Deferred tax assets
Share issue and acquisition costs
Plant and equipment
Inventory
Intercompany loans – unrealised foreign exchange losses
Provisions and accruals
Revenue tax losses
Deferred tax assets used to offset deferred tax liabilities
Deferred tax assets not brought to account 1
Deferred tax liabilities
Plant and equipment
Other assets
Intercompany loans – unrealised foreign exchange gains
Deferred tax assets used to offset deferred tax liabilities
Consolidated
2018
US$
2017
US$
479,438
163,522
254,708
461,182
230,035
6,835,432
(752,723)
(6,990,990)
680,604
579,335
-
173,388
(752,723)
-
775,170
-
476,224
-
49,075
7,578,954
(807,826)
(7,029,536)
1,042,061
246,828
19,273
541,725
(807,826)
-
1 Deferred tax assets have not been brought to account to the extent that it is not probable within
the immediate future that taxable profits will be available against which deductible temporary
differences can be utilised. This also applies to deferred tax assets for unused tax losses carried
forward.
The Group’s unrecognised tax losses in Australia of US$2,773,812 and Hong Kong of
US$3,646,039 are available indefinitely for offset against future profits subject to
continuing to meet the relevant statutory tests. The Parent Company and its Australian
subsidiary have formed a tax consolidated group. Unrecognised tax losses in the US of
US$415,581 can be used for up to 20 years.
41 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
7.
LOSS PER SHARE
Classification of securities as ordinary shares
D
The Company has only one category of ordinary shares included in basic earnings per share.
Classification of securities as potential ordinary shares
There are currently no securities to be classified as dilutive potential ordinary shares on
issue, as the options on issue are anti-dilutive.
Weighted average number of ordinary shares used
in the calculation of basic and diluted earnings per
share
Basic loss attributable to ordinary equity holders of
the parent
Consolidated
2018
Number
2017
Number
215,123,720
208,341,352
US$
US$
(4,926,820)
(7,297,601)
This calculation does not include instruments that could potentially dilute basic earnings
per share in the future as these instruments are anti-dilutive, since their inclusion would
reduce the loss per share.
8.
TRADE AND OTHER RECEIVABLES
Current
Trade debtors
Other debtors
Security deposit
GST receivable
Consolidated
2018
US$
2,761,897
-
73,822
35,058
2,870,777
2017
US$
1,400,669
723
75,619
45,526
1,522,537
Trade debtors generally have 30 day terms. GST receivables have repayment terms
applicable under the relevant government authority. No amounts are past due or impaired.
The maximum exposure to credit risk at the reporting date is the carrying amount of each
class of receivables mentioned above. The Group’s exposure to risks are summarised in
Note 22.
42 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
9.
PREPAYMENTS
Current
Prepayments – raw materials
Prepayments – other
10.
INVENTORIES
Current
Raw materials
Work in progress
Finished goods
Provision for disposal
D
Consolidated
2018
US$
993,686
627,737
1,621,423
2017
US$
816,446
354,965
1,171,411
Consolidated
2018
US$
1,386,136
159,368
2,140,424
(378,146)
3,307,782
2017
US$
1,671,145
-
2,134,245
(84,000)
3,721,390
(i)
(ii)
Inventories are valued at the lower of cost or net realisable value.
Inventories recognised as an expense to cost of sales during the year ended 30 June 2018
amounted to US$9,077,116 (2017: US$8,788,982).
(iii) Write-downs of inventories to net realisable value during the year ended 30 June 2018
amounted to US$1,134,364 (2017: US$224,774). The large write-downs during the year ended
30 June 2018 is due to disposal (and provision for disposal) of raw materials relating to
Discovery World and outdated Yowie Series.
11. PLANT AND EQUIPMENT
Manufacturing plant and equipment
Cost
Accumulated depreciation
Manufacturing plant and equipment under
construction
Cost
Office equipment
Cost
Accumulated depreciation
Consolidated
2018
US$
2017
US$
4,356,315
(420,136)
3,936,179
3,726,352
(224,952)
3,501,400
506,462
-
24,640
(19,327)
5,313
40,128
(28,541)
11,587
Total plant and equipment
4,447,954
3,512,987
43 |
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D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
11. PLANT AND EQUIPMENT (continued)
Movements in the carrying amount of each class are set out below.
Consolidated
Manufacturing plant and equipment
Balance at the beginning of the year
Additions
Transfers from manufacturing plant and equipment
under construction
Depreciation
Reversal of provision for impairment 1
Impairment
Foreign exchange adjustment
Carrying amount at the end of the year
Manufacturing plant and equipment under
construction
Balance at the beginning of the year
Additions
Transfers to manufacturing plant and equipment
Impairment
Foreign exchange adjustment
Carrying amount at the end of the year
Office equipment
Balance at the beginning of the year
Additions
Depreciation
Disposals
Foreign exchange adjustment
Carrying amount at the end of the year
2018
US$
3,501,400
160,550
-
(198,630)
499,377
(26,518)
-
3,936,179
-
506,462
-
-
-
506,462
11,587
3,568
(5,328)
(4,539)
25
5,313
2017
US$
2,896,340
364,408
434,171
(193,519)
-
-
-
3,501,400
174,869
259,302
(434,171)
-
-
-
10,001
9,661
(8,195)
-
120
11,587
1 Reversal of provision for impairment is due to successful recovery of the wrapping machine from
Whetstone Chocolate Factory. Refer to Note 18 for details.
44 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
12.
INTANGIBLE ASSETS
Rights and licenses 1
Cost
Software
Cost
Accumulated amortisation
Product development 2
Cost
Accumulated amortisation
D
Consolidated
2018
US$
2017
US$
225,398
225,398
456,749
(229,406)
227,343
632,179
(223,989)
408,190
247,641
(175,796)
71,845
950,550
(108,273)
842,277
Total intangible assets
860,931
1,139,520
1 Rights and licenses relate to Yowie trademark which management has assessed as having an indefinite
useful life.
2 Product development relates to capitalised costs associated with the development of Yowie collectables.
Movements in the carrying amount of each class are set out below.
Rights and licenses
Balance at the beginning of the year
Amounts written off
Foreign exchange adjustment
Carrying amount at the end of the year
Software
Balance at the beginning of the year
Additions
Amortisation
Foreign exchange adjustment
Carrying amount at the end of the year
Product development
Balance at the beginning of the year
Additions
Amortisation
Amounts written off 1
Carrying amount at the end of the year
225,398
-
-
225,398
71,845
209,784
(53,611)
(675)
227,343
842,277
956,058
(186,752)
(1,203,393)
408,190
225,398
-
-
225,398
141,244
9,532
(78,931)
-
71,845
416,817
533,733
(108,273)
-
842,277
1 The investment in the development of Yowie book and Yowie cartoon has been written off. The Board
reviewed the expected future economic benefits from these investments and determined that it was highly
unlikely that any future economic benefits would exceed the net book value and, therefore, the investment
has been written off. The Group will continue to utilise these assets to broaden brand awareness and
develop the Yowie character.
45 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
13.
TRADE AND OTHER PAYABLES
Current
Trade payables and accruals
Other
D
Consolidated
2018
US$
3,564,791
1,884
3,566,675
2017
US$
2,676,080
1,955
2,678,035
Trade creditor amounts represent liabilities for goods and services provided to the Group
prior to the end of the financial year and which are unpaid. The amounts are unsecured and
are usually paid within 30 days of recognition. The Group’s exposure to risks are
summarised in Note 22.
14.
ISSUED CAPITAL AND RESERVES
(a)
Issued capital
Ordinary shares, fully paid
(b) Movements in share capital
As at 1 June 2016
Exercise of options
Conversion of rights
Share issue costs
As at 30 June 2017
Conversion of rights
Share issue costs
As at 30 June 2018
Consolidated
2018
US$
2017
US$
55,635,991
55,198,677
US$
52,631,418
792,227
1,790,385
(15,353)
55,198,677
441,824
(4,510)
55,635,991
Number
206,372,375
3,650,000
4,032,990
-
214,055,365
2,688,958
-
216,744,323
(c)
Terms and conditions of issued capital
Holders of ordinary shares are entitled to receive dividends as declared from time to time
and are entitled to one vote per share at shareholders’ meetings.
In the event of winding up of the Company, ordinary shareholders rank after all other
shareholders and creditors and are fully entitled to any proceeds of liquidation.
46 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
14.
ISSUED CAPITAL AND RESERVES (continued)
(d) Nature and purpose of reserves
D
Share-based payment reserve
The share-based premium reserve is used to recognise the value of options, service rights
and performance rights issued as share-based payments.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from
the translation balances of entities which have functional currency other than USD.
Share-based payment reserve
Foreign currency translation reserve
(e)
Capital management
Consolidated
2018
US$
2,554,962
(2,531,579)
23,383
2017
US$
7,363,748
(2,256,273)
5,107,475
When managing capital, management’s objective is to ensure the entity continues as a
going concern as well as to maintain optimal returns to shareholders and benefits for other
stakeholders. Management also aims to maintain a capital structure that ensures the
lowest cost of capital available to the entity. The Company under the direction of
management may issue new shares to provide for future development activity. The Group
currently has no debt other than trade payables.
15.
SHARE-BASED PAYMENTS
(a) Weighted average exercise prices
The following table illustrates the number and weighted average exercise prices (WAEP) of
share options granted as share-based payments during the year.
Outstanding at 1 July
Granted during the year
Exercised during the year
Lapsed/forfeited during the year
Outstanding as at 30 June
2018
Number
10,585,000
100,000
-
(10,185,000)
500,000
2018
WAEP (A$)
0.973
0.373
-
0.938
1.552
2017
Number
14,785,000
-
(3,650,000)
(550,000)
10,585,000
2017
WAEP (A$)
0.777
-
0.285
0.285
0.973
Vested and exercisable at 30 June
500,000
1.552
10,060,000
0.939
Rights granted as share-based payments during the year have weighted average exercise
prices of nil (2017: nil).
47 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15.
SHARE-BASED PAYMENTS (continued)
(b)
Remaining contractual life
D
The weighted average remaining contractual life for the share-based payment options
outstanding as at 30 June 2018 was 0.17 years (2017: 0.55 years).
The weighted average remaining contractual life for the share-based payment rights
outstanding as at 30 June 2018 was 3.31 years (2017: 2.15 years).
(c) Outstanding share options and rights under share-based payments
Share options outstanding at the end of the year have the following expiry date and
exercise prices:
Grant Date
Vesting Date
Expiry Date
30 Jun 2014
30 Jun 2014
30 Jun 2014
28 Nov 2014
30 Jan 2015
12 Mar 2015
12 Mar 2015
12 Mar 2015
09 Apr 2015
09 Apr 2015
09 Jun 2015
09 Jun 2015
09 Jun 2015
29 Jul 2015
29 Jul 2015
23 Nov 2015
23 Nov 2015
23 Nov 2015
23 Dec 2015
23 Dec 2015
23 Dec 2015
23 Dec 2015
23 Dec 2015
23 Dec 2015
30 Jun 2014
30 Apr 2015
30 Apr 2016
28 Nov 2014
30 Jan 2015
01 May 2015
01 Sep 2015
01 Feb 2016
30 Sep 2015
30 Sep 2016
31 Dec 2015
31 Dec 2016
30 Jun 2017
30 Sep 2016
30 Sep 2016
31 Dec 2015
31 Dec 2016
30 Jun 2017
30 Sep 2016
30 Sep 2016
24 Aug 2016
24 Aug 2017
08 Sep 2016
08 Sep 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
31 Dec 2017
24 Aug 2018
24 Aug 2018
08 Sep 2018
08 Sep 2018
Exercise
Price
(A$)
Share Options
30 June 2018
Share Options
30 June 2017
0.900
0.900
1.050
0.766
0.766
0.766
0.900
1.050
0.900
1.050
0.766
0.900
1.050
1.150
1.250
0.766
0.900
1.050
1.150
1.250
1.510
1.630
1.400
1.510
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
200,000
75,000
125,000
500,000
50,000
150,000
300,000
2,000,000
300,000
500,000
1,000,000
1,000,000
100,000
200,000
550,000
750,000
850,000
260,000
520,000
275,000
375,000
425,000
60,000
120,000
200,000
400,000
75,000
125,000
10,585,000
48 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15.
SHARE-BASED PAYMENTS (continued)
D
(c) Outstanding share options and rights under share-based payments (continued)
The range of exercise prices for share-based payment options outstanding as at the end of
the year was A$1.400 to A$1.630 (2017: A$0.766 to A$1.630).
Service rights and performance rights outstanding at the end of the year have the following
expiry date:
Type
Performance rights LTI
Performance rights LTI
Service Rights
Service Rights
Service Rights
Service Rights
Performance rights LTI
Performance rights LTI
Service Rights
Service Rights
Service Rights
Performance rights LTI
Performance rights LTI
Performance rights STI
Performance rights STI
Performance rights LTI
Performance rights LTI
Performance rights STI
Performance rights LTI
Performance rights LTI
Performance rights LTI
Service rights
Service rights
Performance rights LTI
Service rights
Service rights
Service rights
Service rights
Service rights
Service rights
Grant Date
23 Nov 2015
23 Nov 2015
13 Jun 2016
13 Jun 2016
13 Jun 2016
13 Jun 2016
13 Jun 2016
13 Jun 2016
15 Jun 2016
15 Jun 2016
15 Jun 2016
15 Jun 2016
15 Jun 2016
1 Jul 2016
8 Sep 2016
8 Sep 2016
8 Sep 2016
1 Nov 2016
1 Nov 2016
1 Nov 2016
7 Nov 2016
20 Feb 2017
12 Jun 2017
1 Jul 2017
16 Nov 2017
16 Nov 2017
16 Nov 2017
8 Jan 2018
8 Jan 2018
8 Jan 2018
Vesting Date
31 Aug 2017
31 Aug 2018
12 Jun 2017
12 Jun 2017
12 Jun 2018
12 Jun 2019
30 Jun 2018
30 Jun 2019
14 Jun 2017
14 Jun 2018
14 Jun 2019
30 Jun 2018
30 Jun 2019
30 Jun 2017
30 Jun 2017
30 Jun 2018
30 Jun 2019
30 Jun 2017
30 Jun 2018
30 Jun 2019
31 Aug 2019
20 Feb 2019
12 Dec 2018
30 Jun 2020
18 Sep 2018
18 Sep 2019
18 Sep 2020
8 Jan 2019
8 Jan 2020
8 Jan 2021
Expiry Date
30 Sep 2017
30 Sep 2018
12 Jun 2018
12 Jun 2018
12 Jun 2019
12 Jun 2020
30 Jun 2019
30 Jun 2020
14 Jun 2018
14 Jun 2019
14 Jun 2020
30 Jun 2019
30 Jun 2020
30 Jun 2018
30 Jun 2018
30 Jun 2019
30 Jun 2020
30 Jun 2018
30 Jun 2019
30 Jun 2020
31 Aug 2020
20 Feb 2020
12 Dec 2019
30 Jun 2021
18 Sep 2023
18 Sep 2024
18 Sep 2025
8 Jan 2024
8 Jan 2025
8 Jan 2026
30 June 2018 30 June 2017
106,833
106,833
100,000
132,925
132,925
132,925
199,387
199,387
1,000,000
1,000,000
1,000,000
468,349
468,349
TBD 1
TBD 1
388,665
388,665
TBD 1
152,542
152,542
347,222
248,513
142,511
-
-
-
-
-
-
-
6,868,573
-
-
-
-
132,925
132,925
-
199,387
-
-
-
-
-
600,000
-
-
388,665
-
-
-
-
-
142,511
1,531,039
271,739
271,739
271,739
166,667
166,667
166,667
4,442,670
1 The number of rights vested was calculated based on the 5-day VWAP after the release of the annual
financial results for the year ending 30 June 2017. Total value of the STI vested is US$556,648, out of which
US$220,898 was settled in cash while the remaining US$335,750 was settled in fully vested rights
(equivalent to 2,165,506 rights). During the year ended 30 June 2018, 1,565,506 of these rights were
converted to shares and the remaining 600,000 rights are still outstanding as at 30 June 2018.
49 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15.
SHARE-BASED PAYMENTS (continued)
D
(d)
Expenses arising from share-based payment transactions
As a result of the options and rights cancelled due to resignation and forfeiture, the share-
based payments expense for the year is a credit of US$1,164,335 (2017: an expense of
US$4,589,883). The Group recognises the share-based payments expense over the vesting
period for any options and rights granted.
Options and rights issued to KMPs
Options and rights issued to other employees
Options and rights issued to consultants
Consolidated
2018
US$
(1,094,240)
(70,095)
-
(1,164,335)
2017
US$
4,306,908
268,792
14,183
4,589,883
Options and rights issued to KMPs, other employees and consultants were issued as
remuneration for future services. The Group fair valued the instruments granted.
(e)
Fair values
The weighted average fair value of options and rights granted during the year ended 30
June 2018 was A$0.264 (2017: A$0.615).
i)
Share-based payments during the year ended 30 June 2018
Management has estimated that all options and rights are expected to vest during the
vesting period. On the vesting date, management will revise the estimate to equal the
number of options and rights that ultimately vested and accordingly share-based payments
expense will be adjusted.
The following tables list the inputs to the models used for the valuation of options and
rights issued during the year ended 30 June 2018.
Options1
Service Rights
Service Rights2
Number of securities
Exercise price (A$)
Grant date
Expiry date
Share price at grant date (A$)
Expected volatility
Risk-free rate
Fair value per security (A$)
Valuation method
100,000
0.373
1 Jul 2017
30 Jun 2019
0.31
63%
1.78%
0.08
Binomial
815,217
-
16 Nov 2017
18 Sep 2023 -
18 Sep 2025
0.18
67%
1.80%
0.18
Binomial
500,001
-
8 Jan 2018
8 Jan 2024 -
8 Jan 2026
0.16
83%
1.92%
0.16
Binomial
1 The options were cancelled during the year due to termination of contract.
2
Subject to shareholders’ approval at AGM
50 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15.
SHARE-BASED PAYMENTS (continued)
(e)
Fair values (continued)
D
i)
Share-based payments during the year ended 30 June 2018 (continued)
Performance Rights STI
Performance Rights LTI
Number of securities
Exercise price (A$)
Grant date
Expiry date
Share price at grant date (A$)
Expected volatility
Risk-free rate
Fair value per security (A$)
Valuation method
TBD 1
-
1 Jul 2017
30 Jun 2019
N/A
N/A
N/A
N/A
N/A
2,999,1592
-
1 Jul 2017
30 Jun 2021
0.31
72%
1.78%
0.31
Binomial
1 The number of rights vested will be calculated based on the 5-day VWAP after the release of the
annual financial results for the year ending 30 Jun 2018. These rights were granted to Mr B
Alfonso, Mr M Schuessler and Mr C Overley. The rights for Mr B Alfonso were subsequently
cancelled during the year due to his cessation of employment. The rights for Mr M Schuessler
and Mr C Overley were subsequently forfeited during the year at Board’s discretion in light of
shareholder sentiment.
2 1,468,120 of these rights were granted to Mr B Alfonso and were subsequently cancelled during
the year due to his cessation of employment.
ii)
Share-based payments during the year ended 30 June 2017
The following tables list the inputs to the models used for the valuation of options and
rights issued during the year ended 30 June 2017.
Performance Rights STI
Performance Rights STI
Number of securities
Exercise price (A$)
Grant date
Expiry date
Share price at grant date (A$)
Expected volatility
Risk-free rate
Fair value per security (A$)
Valuation method
TBD 1
-
1 Jul 2016 - 1 Nov 2016
30 Jun 2018
N/A
N/A
N/A
N/A
N/A
1,041,666
-
7 Nov 2016
7 Dec 2017
0.61
56%
1.66%
0.61
Binomial
1 The number of rights vested will be calculated based on the 5-day VWAP after the release of the
annual financial results for the year ending 30 Jun 2017. Total value of the STI vested is
US$556,648.
Number of securities
Exercise price (A$)
Grant date
Expiry date
Share price at grant date (A$)
Expected volatility
Risk-free rate
Fair value per security (A$)
Valuation method
Performance Rights LTI
Service Rights
2,124,080
-
8 Sep 2016 - 7 Nov 2016
30 Sep 2019 - 30 Jun 2020
0.59 - 0.72
56% - 64%
1.51% - 1.70%
0.59 - 0.72
Binomial
391,024
-
20 Feb 2017 and 12 Jun 2017
12 Dec 2019 and 20 Feb 2020
0.326 and 0.524
58% and 62%
1.63% and 1.81%
0.326 and 0.524
Binomial
51 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
16.
CASH FLOW RECONCILIATION
(a)
Cash and cash equivalents
D
For the purposes of the statement of cash flows, cash and cash equivalents include cash at
bank and deposits at call.
Cash and cash equivalents at the end of the year as shown in the cash flow statement are
reconciled to the related item in the statement of financial position as follows:
Cash at bank
Short-term deposits
Consolidated
2018
US$
2017
US$
12,670,097
6,796,859
26,108,980
768,600
19,466,956
26,877,580
(b)
Reconciliation of operating loss after income tax to net cash used in operating
activities
Operating loss after income tax
Adjusted for:
Depreciation and amortisation as per profit or loss
Depreciation and amortisation in cost of sales and
closing inventories
Share-based payments
Cash-settled share-based payments
Foreign exchange (gain)/loss
Loss on disposal of asset
Net impairment of non-current asset
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
(Increase)/decrease in inventories
(Increase)/decrease in deferred tax assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in current tax liability
Increase/(decrease) in provisions
Increase/(decrease) in unearned revenue
Net cash used in operating activities
Consolidated
2018
US$
(4,926,820)
2017
US$
(7,297,601)
245,691
195,399
198,630
(1,164,335)
(233,374)
(132,780)
4,539
730,534
(1,358,450)
(450,012)
413,608
361,457
830,936
51,123
(24,675)
(41,803)
(5,495,731)
193,519
4,589,883
-
5,660
-
-
(256,049)
494,857
(2,587,715)
(1,042,061)
561,497
(6,204)
(10,613)
87,487
(5,071,941)
(c) Non-cash investing and financing activities
During the year there were no reportable non-cash financing and investing activities.
52 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
17. RELATED PARTY DISCLOSURES
(a)
Compensation of key management personnel
Short-term benefits
Post-employment benefits
Share-based payments expensed
Termination payments
D
Consolidated
2018
US$
1,212,405
18,506
(1,094,240)
468,150
604,821
2017
US$
2,109,778
44,992
4,306,908
-
6,461,678
(b) Other transactions with key management personnel
There are no other transactions with key management personnel.
18. COMMITMENTS AND CONTINGENCIES
(a) Commitments
The Group had no significant commitments at the end of the reporting year.
(b)
Contingencies
As reported previously, Yowie North America Inc (“YNA”), a wholly owned subsidiary of the
Group, had brought claims against Whetstone Chocolate Factory (“WCF”) and Atlantic
Candy Company (“ACC”) for the release and return of the RASCH “Type FI” wrapping
machine (“Wrapper”) owned by the Group and located at ACC’s facility, as well as for
monetary damages. YNA negotiated a settlement agreement with ACC for the release and
return of the wrapper and the wrapper has been returned. Consequently, the provision for
impairment relating to the wrapping machine that was previously recognised has been
reversed during the year ended 30 June 2018.
In this same case, ACC has filed a counterclaim alleging that YNA has breached the
Manufacturing Agreement between the parties and sent a Notice of Default to YNA alleging
that YNA is also in default under the Patent and Technology License Agreement. The
Company has disclaimed liability and is defending the action. The Company considers no
provision is warranted in relation to this counterclaim. No trial date is currently set for this
matter so YNA cannot make a determination as to when this matter will be resolved.
53 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
18. COMMITMENTS AND CONTINGENCIES (continued)
(b)
Contingencies (continued)
D
In a related matter, Mr. Whetstone, on 4 November 2016, filed suit in the Circuit Court for
the Seventh Judicial Circuit in and for St. John’s County, Florida against YNA. Whetstone
alleges that YNA owes him royalty fees from the present until 2027 under the Patent
Technology and License Agreement regardless of whether the Company uses Whetstone’s
patent. Because the Company is no longer using Mr Whetstone’s patent in its
manufacturing process, it believes that there is no legal basis under YNA’s contract with Mr.
Whetstone to pay him any royalty. Both parties filed and argued cross-motions for
summary judgment on this issue in October 2017. The Court has not issued a ruling yet, but
YNA anticipates a ruling in the 2019 financial year.
On 16 November 2017, Whetstone Industries and Mr. Whetstone filed tortious interference
claims against the Group, Wayne Loxton, Patricia Fields, and Trevor Allen in Middle District
of Florida. The Group, Wayne Loxton, Patricia Fields, and Trevor Allen were served with
copies of these lawsuits in February 2018 and filed motions to dismiss for lack of personal
jurisdiction in April 2018. On 25 July 2018, the court found jurisdiction in Florida. The
parties are considering appellate options, but also intend to file an additional motion to
dismiss challenging the legal validity of the claims brought against the parties. The Group
cannot make a determination as to when this matter will be resolved.
Management is not able to reliably estimate the ultimate settlement amounts at this time
nor does management believe any material payments would be made as a result of these
cases, and therefore no provision in relation to the claim has been recognised in the
financial statements. The Company will incur ongoing legal costs due to these cases.
However, due to inherent uncertainties, no accurate quantification of any cost, or timing of
such cost, which may arise from the legal proceedings, we have not made any provision for
legal costs.
54 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
19.
AUDITOR’S REMUNERATION
The auditor of the Group is Deloitte Touche Tohmatsu Perth.
D
Amounts received or due and receivable:
Deloitte Touche Tohmatsu Perth
Audit and review of financial reports
Tax consulting
Network firms of Deloitte Touche Tohmatsu Perth
Tax consulting
Other non-audit services
Non Deloitte Touche Tohmatsu Perth and its
network firms
Audit and review of financial reports
Tax consulting
Consolidated
2018
US$
2017
US$
49,754
69,011
118,765
60,960
-
60,960
10,883
11,535
22,418
48,840
74,788
123,628
95,815
3,351
99,166
15,339
14,202
29,541
20. PARENT ENTITY AND SUBSIDIARY INFORMATION
(a)
Parent Entity Financial Information (Yowie Group Limited)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
2018
US$
8,711,524
21,414,686
30,126,210
536,988
-
536,988
2017
US$
18,622,350
18,092,561
36,714,911
1,120,103
-
1,120,103
29,589,222
35,594,808
57,206,301
(1,112,527)
(26,504,552)
29,589,222
56,768,987
4,767,420
(25,941,599)
35,594,808
Loss of the parent entity
Total comprehensive loss of the parent entity
(3,532,206)
(4,603,366)
(8,369,875)
(7,214,666)
55 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
20. PARENT ENTITY AND SUBSIDIARY INFORMATION (continued)
(b)
Commitment and Contingencies of the Parent Entity
D
The parent entity had no significant commitments or contingent liabilities as at 30 June
2018 or 30 June 2017. Refer to Note 18 for a discussion of contingencies of the Group.
(c)
Subsidiaries
Name
Country of Incorporation
Yowie Enterprises Pty Ltd
Yowie North America, Inc.
Yowie Natural World, Inc.
Yowie Equipment Holding, Inc
Yowie Hong Kong Holdings Limited
Yowie Hong Kong Enterprises Limited
YOW Brands Limited
Australia
USA
USA
USA
Hong Kong (China)
Hong Kong (China)
Hong Kong (China)
Percentage Interest
2017
%
100
100
100
100
100
100
100
2018
%
100
100
100
- 1
100
100
100
1 Yowie Equipment Holding, Inc. merged with and into Yowie Natural World, the surviving corporation.
The intention of the merger is for reorganisation of the Group’s structure.
21.
SUBSEQUENT EVENTS
No circumstances or events have arisen subsequent to the end of the period that have had,
or are likely to have, a material impact on the financial statements.
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and cash equivalents, receivables
and payables.
The net fair values of the financial assets and liabilities at reporting date of the Group
approximate the carrying amounts in the financial statements, except where specifically
stated.
The Group manages its exposure to key financial risks, including interest rate, foreign
currency risk, credit risk and liquidity risk in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s
financial targets whilst protecting future financial security.
The main risks arising from the Group's financial instruments are interest rate risk, foreign
currency risk, credit risk and liquidity risk. The Group uses different methods to measure
and manage different types of risks to which it is exposed. These include monitoring levels
of exposure to interest rate and foreign exchange risk and assessments of market forecasts
for interest rate and foreign exchange rates. Liquidity risk is monitored through the
development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised
below.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
D
Primary responsibility for identification and control of financial risks rests with the Board.
The Board reviews and agrees policies for managing each of the risks identified below.
Risk exposures and responses
Interest rate risk
The Group's exposure to market interest rates relates primarily to the Group’s cash and
short-term deposits.
At reporting date, the Group had the following financial assets exposed to Australian
variable interest rate risk that are not designated in cash flow hedges:
Consolidated
Cash at bank
2018
US$
7,101,243
2017
US$
6,456,345
The following sensitivity analysis is based on the interest rate risk exposures in existence at
the reporting date.
At reporting date, if interest rates had moved as illustrated in the table below, with all
other variables held constant, post tax loss and equity would have been affected as follows:
+0.5% (2017: +0.5%)
-0.5% (2017: -0.5%)
Post tax loss
Higher / (lower)
2018
US$
35,506
(35,506)
2017
US$
32,282
(32,282)
Equity
Higher / (lower)
2018
US$
35,506
(35,506)
2017
US$
32,282
(32,282)
The movements are due to higher or lower interest revenue from cash balances. A
sensitivity of 0.5% is considered reasonable given the current level of both short term and
long term Australian Dollar interest rates.
Foreign currency risk
As a result of the Australian entities having a functional currency in Australian Dollar which
is different to the Group’s presentation currency of US Dollar, the Group’s statement of
financial position can be affected significantly by movements in the Australian Dollar/US
Dollar exchange rate.
The Group also has transactional currency exposures. Such exposure arises from sales or
purchases by an operating entity in currencies other than the functional currency.
57 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Risk exposures and responses (continued)
D
Operational transactions are denominated in US Dollar. The Group’s approach is to target
specific levels at which to convert Australian Dollar to United States Dollar by entering into
either spot or short term forward exchange contracts. The Group does not enter into
transactions that qualify as hedging for hedge accounting purposes, with the exception of a
number of spot and short term forward exchange contracts in relation to working capital
management.
The financial assets and liabilities of the US and Hong Kong subsidiaries are held in the
functional currency of these subsidiaries, which is US Dollar.
At 30 June, the US Dollar equivalence of assets and liabilities held in Australian Dollar and
subject to foreign exchange risk are as follows:
Consolidated
Assets and liabilities of entities with AUD functional
currencies
Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Plant and equipment
Total Assets
Liabilities
Trade and other payables
Provisions
Total Liabilities
2018
US$
2017
US$
8,941,634
100,119
30,696
14,647
9,087,096
18,840,593
115,424
19,562
3,636
18,979,215
533,439
3,549
536,988
1,091,881
28,222
1,120,103
Intercompany loans are denominated in Australian Dollar and US Dollar. These loans are
eliminated upon consolidation.
At 30 June, the effects on post tax profit or loss and equity from a change in the Australian
Dollar/US Dollar exchange rate would be as follows:
Exchange Rate + 10% (2017: +10%)
Exchange Rate - 10% (2017: -10%)
Profit or loss
Higher / (lower)
2018
US$
483,674
(483,674)
2017
US$
1,124,790
(1,124,790)
Equity
Higher / (lower)
2018
US$
190,066
(190,066)
2017
US$
626,024
(626,024)
58 |
Page
D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Risk exposures and responses (continued)
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash
equivalents and trade and other receivables. The Group's exposure to credit risk arises from
potential default of the counter party, with a maximum exposure equal to the carrying
amount of these instruments.
The Group does not hold any credit derivatives to offset its credit exposure. It holds its cash
deposits with major banks with high credit ratings.
Cash at bank and short-term bank deposits
AAA rated banks
AA rated banks
A rated banks
Liquidity risk
Consolidated
2018
US$
3,500,744
13,430,113
2,536,099
19,466,956
2017
US$
-
19,792,848
7,084,732
26,877,580
Liquidity risk is the risk that the Group may encounter difficulty in meeting its financial
obligations. The Group’s objective is to maintain adequate funding to meet its needs,
currently represented by cash and short-term deposits sufficient to meet the Group’s
current cash requirements.
Maturity analysis for financial liabilities
Within one year
Between one and five years
Consolidated
2018
US$
3,566,675
-
3,566,675
2017
US$
2,678,035
-
2,678,035
Contractual cash flows for financial liabilities are the same as carrying value.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D
(a) New and amended accounting standards adopted by the Group
The Group has adopted all of the new and revised Standards and Interpretations, including
amendments to the existing standards issued by the Australian Accounting Standards Board
(the AASB) that are relevant to their operations and effective for the current reporting
period.
The adoption of these amendments has not resulted in any significant changes to the
Group’s accounting policies nor any significant effect on the measurement or disclosure of
the amounts reported for the current or prior periods.
(b) New accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or
amended but are not yet mandatory, have not been early adopted by the Group for the
annual reporting period ended 30 June 2018. Those which may be relevant to the Group are
set out below.
(i)
AASB 16 Leases (2016)
Effective for annual reporting periods beginning on or after 1 January 2019
AASB 16 introduces a single lessee accounting model and requires a lessee to recognise
assets and liabilities for all leases with a term of more than 12 months, unless the
underlying asset is of low value. A lessee is required to recognise a right of use asset
representing its right-to-use the underlying leased asset and a lease liability representing its
obligations to make lease payments. Management are in the process of assessing the
impacts of the changes to AASB 16, however, does not believe the changes to the standard
will have a material impact on the financial performance and financial position of the Group
given the current level of operating lease commitments.
(ii)
AASB 15 Revenue from Contracts with Customers (2015)
Effective for annual reporting periods beginning on or after 1 January 2018
The new standard replaces AASB 118 which covers the revenues arising from the sale of
goods and the rendering of services and AASB 111 which covers construction contracts. The
new standard is based on the principle that revenue is recognised when control of a good
or service transfers to a customer. Management is in the process of assessing the likely
impact of the changes to AASB 15 and does not believe the changes to the standard will
have a material impact on the financial performance and financial position of the Group.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
D
(b) New accounting standards and interpretations issued but not yet effective
(continued)
(iii) AASB 9 Financial Instruments (2014)
Effective for annual reporting periods beginning on or after 1 January 2018
AASB 9 will replace AASB 139: Financial Instruments: Recognition and Measurement. The
key changes that may affect the Group on initial application of AASB 9 and associated
amending Standards include:
- simplifying the general classifications of financial assets into those carried at
amortised cost and those carried at fair value;
-
- permitting entities to irrevocably elect on initial recognition to present gains and
losses on an equity instrument that is not held for trading in other comprehensive
income (OCI);
requiring an entity that chooses to measure a financial liability at fair value to present
the portion of the change in its fair value due to changes in the entity’s own credit
risk in OCI, except when it would create an ‘accounting mismatch’;
introducing a new model for hedge accounting that permits greater flexibility in the
ability to hedge risk, particularly with respect to non-financial items; and
requiring impairment of financial assets carried at amortised cost based on an
expected loss approach.
-
-
Management are in the process of assessing the impact of AASB 9, however, does not
believe the changes to the standard will have a material impact on the financial
performance and financial position of the Group.
(c)
Basis of consolidation
The consolidated financial statements comprise the financial statements of Yowie Group
Limited and its subsidiaries (“the Group”) as at 30 June 2018.
Subsidiaries are entities over which the Group has the power to govern the financial and
operating policies so as to obtain benefits from their activities. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when
assessing whether the group controls another entity.
The financial statements of the subsidiaries are prepared for the same reporting period as
the parent company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and
transactions, income and expenses and profits and losses resulting from intra-group
transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group
and cease to be consolidated from the date on which control is transferred out of the
Group.
61 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Basis of consolidation (continued)
D
The acquisition of subsidiaries is accounted for using the acquisition method of accounting.
The acquisition method of accounting involves recognising at acquisition date, separately
from goodwill, the identifiable assets acquired, the liabilities assumed and any non-
controlling interest in the acquiree. The identifiable assets acquired and the liabilities
assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of consideration (including the
fair value of any pre-existing investment in the acquiree) is goodwill or discount on
acquisition.
Non-controlling interests not held by the Group are allocated their share of net profit after
tax in the statement of profit or loss and other comprehensive income and are presented
within equity in the consolidated statement of financial position, separately from parent
shareholders’ equity.
(d)
Foreign currency translation
Functional and presentation currency
The functional currency of Yowie Group Limited and Yowie Enterprises Pty Ltd is Australian
Dollar (AUD). The functional currency of the other entities is United States Dollar (USD).
The presentation currency of Yowie Group Limited is United States Dollar (USD).
Transactions and balances
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 reporting date.
All exchange differences in the consolidated financial report are taken to the statement of
profit or loss and other comprehensive income.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
Foreign currency translation (continued)
D
Group companies
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated
at the closing rate at the date of that statement of financial position;
income and expenses for each statement of profit or loss and other comprehensive
income are translated at average exchange rates, unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the
transactions; and
all resulting exchange differences are recognised in the statement of profit or loss and other
comprehensive income.
(e)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and
in hand and short-term deposits with an original maturity of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.
For the 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. Bank
overdrafts are included within interest-bearing loans and borrowings in current liabilities on
the statement of financial position.
(f)
Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised initially at fair
value and subsequently measured at amortised cost using the effective interest method,
less an allowance for any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to
be uncollectible are written off when identified. An allowance for doubtful debts is raised
when there is objective evidence that the Group will not be able to collect the debt.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Inventories
D
Inventories are measured at the lower of cost or net realisable value. Raw material
inventories are accounted for at purchase cost on a weighted average cost basis. Finished
goods and work in progress are accounted for at the purchase cost of direct materials plus
manufacturing costs, including depreciation of manufacturing equipment. Net realisable
value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to make the sale.
(h)
Property, plant and equipment
Plant and equipment is stated at cost, less accumulated depreciation and accumulated
impairment losses.
The carrying amount of plant and equipment is reviewed annually to ensure it is not in
excess of the recoverable amount from these assets. The recoverable amount is assessed
on the basis of the expected net cash flows that will be received from the assets
employment and subsequent disposal. The expected net cash flows have been discounted
to their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to profit or loss during the financial period in
which they are incurred.
Depreciation is calculated over the useful lives to the Group of the assets, commencing
from the time the asset is held ready for use, as follows:
Class
Manufacturing plant and equipment
Office equipment
Depreciation method
Units of production basis
Straight line basis over 2.5 years
(i)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation
and accumulated impairment losses. Internally generated intangible assets, excluding
capitalised development costs, are expensed to profit and loss as incurred.
Intangible assets with finite lives are amortised over the useful economic life and assessed
for impairment whenever there is an indication that the intangible asset may be impaired.
Rights and licenses
The Group made cash payments to purchase rights and licenses and they are valued at cost.
They are assessed as having an indefinite useful life.
64 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Intangible assets (continued)
D
Product development
Expenditure on product development is recognised as an intangible asset when the Group
can demonstrate:
the technical feasibility of completing the intangible asset so that it will be available
for use or sale
its intention to complete and its ability to use or sell the asset
how the asset will generate future economic benefits
the availability of resources to complete the asset
the ability to reliably measure expenditure during development.
Product development costs are recorded as intangible assets and amortised using the units
of production method from the point at which the asset is available for use.
Software
Costs associated with maintaining software programmes are recognised as an expense as
incurred.
Development costs that are directly attributable to the design and testing of identifiable
and unique software products controlled by the group are recognised as intangible assets
when the following criteria are met:
it is technically feasible to complete the software so that it will be available for use
management intends to complete the software and use or sell it
there is an ability to use or sell the software
it can be demonstrated how the software will generate probable future economic
benefits
adequate technical, financial and other resources to complete the development and
to use or sell the software are available, and
the expenditure attributable to the software during its development can be reliably
measured.
Other directly attributable costs that are capitalised as part of the software include
employee costs and an appropriate portion of other directly attributable costs.
Software costs are recorded as intangible assets and amortised from the point at which the
asset is available for use over 3 years.
(j)
Trade and other payables
Trade payables and other payables are carried at amortised cost. They 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. The amounts are unsecured and are usually paid
within 30 days of recognition.
65 |
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k)
Provisions
D
Provisions are recognised when the Group has a present obligation (legal or constructive) as
a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the
expenditure required to settle the present obligation at the reporting date. If the effect of
the time value of money is material, provisions are discounted using a current pre-tax rate
that reflects the time value of money and the risks specific to the liability.
(l)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(m) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or
receivable to the extent it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured. The following specific recognition criteria must also
be met before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods
have passed to the buyer and the costs incurred or to be incurred in respect of the
transaction can be measured reliably. Risks and rewards of ownership are considered
passed to the buyer at the time of delivery of the goods to the customer. Revenue is
recognised net of trade discounts and volume rebates.
Interest revenue
Revenue is recognised as interest accrues using the effective interest method. This is a
method of calculating the amortised cost of a financial asset and allocating the interest
revenue over the relevant period using the effective interest rate, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
Royalties
Revenue is recognised when the right to receive payments is established.
(n)
Income tax and other taxes
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 based on the
current period’s taxable income. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted by the reporting date.
66 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Income tax and other taxes (continued)
D
Deferred income tax is provided on all temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill
or of an asset or liability in a transaction that is not a business combination and that,
at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; or
when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the
temporary differences 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 credits and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences and the
carry-forward of unused tax credits and unused tax losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the deductible temporary difference is associated with investments in
subsidiaries, associates or interests in joint ventures, in which case a deferred tax
asset is only recognised to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and taxable profit will be available
against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profit will allow
the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at the reporting date.
67 |
Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Income tax and other taxes (continued)
D
Current and deferred income tax is recognised in the Statement of Financial Position,
except to the extent that it relates to items recognised in other comprehensive income or
direct in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity respectively.
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.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless
the GST incurred is not recoverable from the taxation authority. In this case, it is recognised
as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST recoverable or payable.
The net amount of GST recoverable from, or payable to, the taxation authority is included
with other receivables or payables in the statement of financial position.
Cash flows are included in the consolidated statement of cash flows on a gross basis. The
GST components of cash flows arising from investing and financing activities which are
recoverable from or payable to taxation authorities are classified as operating cash flows.
(o)
Share-based payment transactions
The Group provides benefits to directors, employees and consultants in the form of share-
based payment transactions, whereby services are rendered in exchange for shares or
rights over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with directors, employees and consultants is
measured by reference to the fair value at the date at which they are granted. The fair
value is determined using an appropriate valuation model.
No expense is recognised for awards that do not ultimately vest, except for equity-settled
transactions for which vesting is conditional upon a market or non-vesting condition. These
are treated as vesting irrespective of whether or not the market or non-vesting condition is
satisfied, provided that all other performance and/or service conditions are satisfied.
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.
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. An additional expense is recognised for
any modification that increases the total fair value of the share- based arrangement, or is
otherwise beneficial to the recipient, as measured at the date of modification.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Share-based payment transactions (continued)
D
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.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in
the computation of diluted loss per share.
(p)
Earnings / loss per share
Basic earnings / loss per share is calculated as net profit or loss attributable to members of
the parent entity, adjusted to exclude any costs of servicing equity (other than dividends),
divided by the weighted average number of ordinary shares of the Company, adjusted for
any bonus element.
Diluted loss per share is calculated as net profit or loss attributable to members of the
parent, adjusted for:
costs of servicing equity (other than 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.
(q)
Financial instruments
Financial instruments are initially measured at cost on trade date, which includes
transaction costs, when the related contractual rights or obligations exist. Subsequent to
initial recognition these instruments are measured as set out below.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are stated at amortised cost using
the effective interest rate method. They are included in current assets, except for those
maturities greater than 12 months after the reporting date, which are classified as non-
current assets. Loans and receivables are included in trade and other receivables. They are
measured initially at fair value and subsequently at amortised cost.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
Impairment of assets
D
At each reporting date, the Group reviews the carrying values of tangible assets and
intangible assets to determine whether there is any indication that those assets have been
impaired. If such an indication exists, the recoverable amount of the asset, being the higher
of the asset’s fair value less costs to sell and value in use, is compared to the asset’s
carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
(s)
Segment disclosures
Operating segments are presented in a manner consistent with the management reports
provided to the chief operating decision makers, which are currently represented by the full
Board.
The Group has only one reportable segment, which relates to the operations of its
confectionery business. All production and sales to date have taken place in the United
States, with production carried out under a contract manufacturing arrangement. The net
result is presented on a consolidated basis.
(t)
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts in the
financial statements. Management bases its judgements and estimates on historical
experience and on other factors it believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions and conditions
and may materially affect financial results or the financial position reported in future
periods.
Management has identified the following critical accounting policies for which significant
judgements, estimates and assumptions are made.
Share-based payments
The Group measures the cost of equity-settled transactions by reference to the fair value of
the equity instruments at the date at which they are granted. Estimating fair value for
share-based payment transactions requires determining the most appropriate valuation
model, which is dependent on the terms and conditions of the grant. The estimate also
requires making assumptions about the most appropriate inputs to the valuation model,
including the expected life of the share option, volatility and dividend yield. The
assumptions and models used for estimating fair value for share-based payment
transactions are disclosed in Note 15.
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Page
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
D
(t)
Significant accounting judgements, estimates and assumptions (continued)
Income taxes
Judgement is required in assessing whether deferred tax assets are recognised in the
statement of financial position. Deferred tax assets are recognised only when it is
considered more likely than not that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Assumptions about the generation of future
taxable profits depend on management’s estimates of future cash flows. Judgements are
also required about the application of income tax legislation.
Impairment of non-financial assets
The Group tests annually whether non-financial assets have suffered any impairment, in
accordance with the accounting policy stated at Note 23(r). An impairment exists when the
carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is
the higher of its fair value less costs to sell and its value in use. The fair value less costs to
sell calculation is based on available data from binding sales transactions, conducted at
arm’s length, for similar assets or observable market prices less incremental costs for
disposing of the asset. The value in use calculation is based on a discounted cash flow
model. The assumptions used in the budget, such as growth rates, and the discount rate
used are subject to judgement and estimates.
Estimation of useful life of assets
Assessments of useful lives and estimates of remaining useful lives require significant
management judgement. Brand names are generally assessed as having an indefinite useful
life on the basis of brand strength, ongoing expected profitability and continuing support.
Rights and licenses to Yowie brands are expected to be renewed in line with business
continuity requirements.
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DIRECTORS’ DECLARATION
D
In accordance with a resolution of the directors of Yowie Group Limited, I state that:
1.
In the opinion of the Directors:
(a)
the financial statements and notes of the consolidated entity are in accordance
with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at
30 June 2018 and of its performance for the year ended on that date; and
complying with Accounting Standards, the Corporations Regulations 2001
and other mandatory professional reporting requirements; and
(b)
there are reasonable grounds to believe that the consolidated entity will be able to
pay its debts as and when they become due and payable.
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 ending 30 June 2018.
Note 2 confirms that the financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
On behalf of the Board
Louis Carroll
Non-Executive Chairman
27 August 2018
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Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members
of Yowie Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Yowie Group Limited (the “Company”) and its subsidiaries
(the “Group”), which comprises the consolidated statement of financial position as at 30 June 2018,
the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and
the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Act 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Key audit matter
Revenue recognition
As at 30 June 2018 the Group’s revenue
from the sale of goods for the year was
US$17,519,314.
Significant judgement is required in
determining the timing of revenue
recognition, given the shipping terms for the
transfer of the risks and rewards of the
Yowie products.
Carrying value of Intangible assets
As disclosed in Note 12, the carrying value of
intangible assets as at 30 June 2018 was
$860,931.
The assessment of the recoverable value of
these intangible assets requires significant
judgement of their future use.
How the scope of our audit responded to
the Key Audit Matter
Our procedures included, but were not limited
to:
obtaining an understanding of the key
controls management has in place to
assess the timing of the revenue recorded;
testing on a sample basis, revenue
transactions to confirm the timing of the
transactions are recorded in accordance
with the transfer of the risks and rewards;
and
assessing the appropriateness of the
disclosures included in Note 23(m) to the
financial statements.
Our procedures included, but were not limited
to:
assessing capitalised costs for impairment
triggers;
assessing the forecast of future use of the
intangible assets; and
assessing the appropriateness of the
disclosures included in Note 12 to the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, 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 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 has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
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
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
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.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
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 in pages 17 to 32 of the Directors’ Report for
the year ended 30 June 2018.
In our opinion, the Remuneration Report of Yowie Group Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Ian Skelton
Partner
Chartered Accountants
Perth, 27 August 2018
ASX ADDITIONAL INFORMATION
D
Additional information as required by the Australian Securities Exchange Listing Rules and not
disclosed elsewhere in this report is set out below. This information is current as at 24 August
2018.
Distribution of Quoted Securities
Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 – 100,000
100,000 and over
Total
No. of Holders of
Ordinary Shares
1,138
823
472
990
219
No. of
Ordinary Shares
321,646
2,402,638
3,830,509
34,384,569
176,404,961
3,642
217,344,323
There were 2,009 shareholders holding less than a marketable parcel of ordinary shares.
Quoted and Unquoted Equity Securities
Equity Security
Ordinary Shares
Employee Incentive Options
Exercise Price: A$1.51
Expiry Date: 24 Aug 2018
Employee Incentive Options
Exercise Price: A$1.63
Expiry Date: 24 Aug 2018
Employee Incentive Options
Exercise Price: A$1.40
Expiry Date: 8 Sep 2018
Employee Incentive Options
Exercise Price: A$1.51
Expiry Date: 8 Sep 2018
Employee Service Rights
Exercise Price: Nil
Expiry Date: 12 Jun 2019
Employee Service Rights
Exercise Price: Nil
Expiry Date: 12 Jun 2020
Employee Service Rights
Exercise Price: Nil
Expiry Date: 18 Sep 2023
Employee Service Rights
Exercise Price: Nil
Expiry Date: 18 Sep 2024
Employee Service Rights
Exercise Price: Nil
Expiry Date: 18 Sep 2025
Performance Rights LTI
Exercise Price: Nil
Expiry Date: 30 Jun 2019
Performance Rights LTI
Exercise Price: Nil
Expiry Date: 30 Jun 2020
Quoted
217,344,323
-
Unquoted
-
100,000
-
-
-
-
-
-
-
-
-
-
200,000
75,000
125,000
132,925
132,925
271,739
271,739
271,739
588,052
1,531,039
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ASX ADDITIONAL INFORMATION
Unlisted Employee/Consultant Options/Rights
Exercise Price
A$1.51
A$1.63
A$1.40
A$1.51
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Expiry Date
24 Aug 2018
24 Aug 2018
8 Sep 2018
8 Sep 2018
12 Jun 2019
12 Jun 2020
18 Sep 2023
18 Sep 2024
18 Sep 2025
30 Jun 2019
30 Jun 2020
Twenty Largest Holders of Ordinary Shares
No.
100,000
200,000
75,000
125,000
132,925
132,925
271,739
271,739
271,739
588,052
1,531,039
D
No. of Holders
1
1
1
1
1
1
1
1
1
2
2
Name
Shares Held
Percentage
%
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
REASH PTY LTD
CITICORP NOMINEES PTY LIMITED
BENTLEY CAPITAL LIMITED
KEYBRIDGE CAPITAL LIMITED
ABDULLAH HANI ABDALLAH
1
2
3
4
5
6
7
8 MR KEITH PHILLIP HUDSON & MRS ANN HUDSON
PATRICIA MARY FIELDS
9
10
J P MORGAN NOMINEES AUSTRALIA LIMITED
11 MR IAN MORTON & MRS DEBORAH MORTON
12 MR YUNG CHHUN TAING
13
14 MR MARK AVERY
15 MR DAVID C SCICLUNA & MR ANTHONY A SCICLUNA
16
17
18
19
20 MR ASOK KUMAR & MRS RENU KUMAR
BART SUPERANNUATION PTY LIMITED
AGRI EXPORT AUSTRALIA PTY LTD
SANDHURST TRUSTEES LTD
JFD ENTERPRISES PTY LTD
DR GREGORY BRYAN MAKIN
TOTAL
Substantial Shareholders
28,663,209
19,644,729
10,000,000
9,670,404
8,640,000
7,887,471
5,666,667
5,026,373
4,479,218
3,845,461
1,967,918
1,949,691
1,857,027
1,600,766
1,584,000
1,516,000
1,448,689
1,355,487
1,285,000
1,200,006
119,288,116
13.19
9.04
4.60
4.45
3.98
3.63
2.61
2.31
2.06
1.77
0.91
0.90
0.85
0.74
0.73
0.70
0.67
0.62
0.59
0.55
54.88
Substantial shareholders who have notified the Company in accordance with section 671B of
the Corporations Act 2001 are as follows:
Shareholder
FIL Limited
Bentley Capital Limited
Keybridge Capital Limited
Aurora Funds Management Limited in its capacity as responsible entity of HHY
Fund and Seventh Orion Pty Ltd as trustee of the Aurora Investments Unit Trust
No. of Shares
20,110,482
43,054,114
43,054,114
26,526,643
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D
ASX ADDITIONAL INFORMATION
Voting Rights
Ordinary shares carry one vote per share. There are no voting rights attached to the options in
the Company.
Stock Exchange
The Company is listed on the Australian Securities Exchange and has been allocated the code
“YOW”. The “Home Exchange” is Perth.
On-market Buy-back
There is no current on-market buy-back.
Other Information
Yowie Group Limited is incorporated and domiciled in Australia, and is publicly listed company
limited by shares.
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