YOWIE GROUP LTD
ABN 98 084 370 669
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2020
For personal use only
CONTENTS
Company Directory
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
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74
(Expressed in US Dollars (US$), unless stated otherwise)
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COMPANY DIRECTORY
DIRECTORS:
KEY MANAGEMENT:
COMPANY
SECRETARY:
REGISTERED AND
PRINCIPAL OFFICE:
Mr Louis Carroll
Mr Mark Schuessler
Mr Neville Bassett
Mr Wayne Brekke
Ms Cynthia Thayer
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
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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CHIEF EXECUTIVE OFFICER’S REPORT
Our financial year 2020 was incredibly challenging with the hypercompetitive confectionary
category and the unprecedented economic shutdown due to COVID-19. New product launches
and increased spending from large global competitors in both the US and Australia and the
retail shutdown in the 3rd and 4th quarter resulted in net sales of US$10.8 million, a 25%
decline versus the previous year. We did see a turnaround in June, compared to the preceding
months, that has continued in July and August as retail re-opened.
The Group improved operating cash flow with an outflow of US$1.3 million compared to last
year’s outflow of US$1.6 million, despite the sales decline.
With our key priorities, we made the following progress:
1. Distribution expansion in the US slowed overall due mainly to COVID-19 and the
country’s largest retailer reducing the number of locations in a majority of stores.
However, we made gains in our target channels of Grocery and Convenience.
US distribution across all channels at 39.3% of stores carrying Yowie based on Nielsen
ACV (All Commodity Volume) xAOC (eXtended® All Outlets Combined: Food, Drug, Mass
and Convenience) from 43.3% the previous year.
a. Food channel increased to 20.7% from 19.5%
b. Convenience channel increased to 11.4% from 10.4%
c. Drug channel decreased to 12.0% from 18.4%
d. Mass channel decreased to 86.8% from 97.0%
2. Expanded our product portfolio with the launch of single serve Gummy + Pet surprise
and a Multipack (2 Yowie + extra toy) in the US. We also launched a Bites share bag in
Australia. All new items will follow our mission of teaching children about conservation
and endangered species and broaden Yowie brand awareness. The “Colors of the Animal
Kingdom” series has launched in the US and Australia.
3. Continued fiscal discipline is critical to our achieving profitability. Our focuses are:
a. Continual evaluation of our cost structure to become more efficient, sustain
healthy margins and allow for more marketing and retail trade investment.
b. Cash management, specifically in relation to the timing associated with toys and
other raw materials purchases.
EBITDA* loss was US$2.5 million, slightly behind last year’s loss of $2.2 million, due to decrease
in sales. Reduced marketing expenses, admin salaries and travel helped to manage the losses.
*EBITDA (Earnings before interest, taxes, depreciation, amortization, share-based payments
expense, inventory write-down and impairment)
Gross Margins continue to remain healthy and above industry standards near 50% allowing
confidence in investing in retail opportunities.
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CHIEF EXECUTIVE OFFICER’S REPORT
Cash management continues to be critical for us. Here is a comparison of financial year 2020
versus the previous year, including the A$0.02/share return of capital as we became more
confident with our cash situation.
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Operating cash outflow
Inventing cash outflow
Effect of FX movement
Total
2020
US$
(1.3 million)
(0.8 million)
0.5 million
(1.6 million)
2019
US$
(1.6 million)
(1.4 million)
(0.1 million)
(3.1 million)
Financing cash outflow (including return of capital)
(2.98 million)
-
In the US market, sales declined 25% due to the competitive activity in the confectionary
category and the COVID-19 related retail shutdown. We started off the year strong with a 17%
increase in Q1 sales versus the prior year. Q2 was affected by significant competitive activity
affecting our shelf locations and display space opportunities. COVID-19 shutdowns severely
impacted our Q3 and the beginning of Q4. With re-opening, our June rebounded well with
shipments and consumptions growing year on year. Based on Nielsen data on 11 July 2020,
Yowie is still a significant part of the category, as the #2 overall novelty item in $’s per store
per week, #18 overall chocolate item and notably #6 in the Food channel.
We recorded an impairment charge of US$4.5 million as a result of impairment testing
completed during the year in accordance with Australian Accounting Standard.
The current market environment presents a high level of uncertainty. We have seen a
rebound in the month of June, compared to the preceding months, which continued through
August period after retailers opened up. Our strategic priorities for FY2021 are:
1. Focus on fiscal discipline and cash management, to keep margins healthy and allow us to
invest in the trade where appropriate;
2. Distribution in the US and Australia across all channels of trade, including eCommerce
and Club stores, to expand buying opportunities for consumers;
3. Developing and bringing to market new items consistent with our brand mission to
educate consumers about the natural world, conservation and endangered species; and
4. Launching new series 2 times per year.
We continue to search out strategic partners to better position Yowie to compete in the highly
competitive confection categories. We will continue to review the cash availability for further
returns of capital. We certainly appreciate the support of the Yowie shareholders and are
determined to provide a return on their investment.
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 2020.
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
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
Managing Director
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 Neville Bassett AM
Non-Executive Director (appointed 5 August 2019)
Company Secretary
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.
Mr Glen Watts
Non-Executive Director (resigned 5 August 2019)
Qualifications: BEng (Chemical) (Hons)
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.
Mr Tim Kestell
Non-Executive Director (resigned 5 July 2019)
Qualifications: BCom
Mr Kestell has over 20 years’ experience in capital markets.
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DIRECTORS’ REPORT
DIRECTORS (continued)
Directorships of other listed companies during the past three years
Name
Company
Mr L Carroll
Mr M Schuessler
Mr N Bassett
Cover-More Group Limited
No other directorships
PharmAust Limited
Auris Minerals Limited
Pointerra Limited
Blina Minerals NL
Metalsearch Limited
Quantify Technology Holdings Limited
Longford Resources Limited
Meteoric Resources Limited
Vector Resources Limited
Ceased
13 Apr 2017
-
Current
Current
Current
Current
16 Oct 2019
1 Mar 2017
31 Oct 2017
4 Dec 2017
4 Jan 2018
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 N Bassett
Total
Number of
Ordinary Shares
1,565,217
1,208,248
100,000
2,873,465
Number of Options
Number of Rights
-
-
-
-
-
-
-
-
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DIRECTORS’ REPORT
SENIOR EXECUTIVES
Mr Wayne Brekke
Global Chief Financial Officer
Qualifications: BBA, MBA Finance, CPA
Mr Brekke is a senior finance executive with over 30 years of broad US and international
finance experience. Mr Brekke has held extensive finance leadership positions in food,
consumer products and manufacturing with global companies such as, McDonald’s, Kraft
Foods and AC Nielsen.
Prior to joining Yowie Group Limited, Mr Brekke was the Group Controller for the Garvey
Group, a subsidiary of Orora Limited (ASX: ORA) where he successfully implemented various
operational efficiencies.
Ms Cynthia Thayer
Global Chief Marketing Officer
Qualifications: BA
Ms Thayer has over 25 years of marketing expertise in key areas including brand architecture
development, market research, consumer packaged goods (CPG) advertising across traditional
and digital channels, retail and shopper marketing, licensing, toy design and new product
development. Ms Thayer also has broad marketing expertise in food, consumer products,
manufacturing and advertising agencies with the Chamberlain Group, TPN, Flair
Communications, Creata and the Marketing Store.
Ms Thayer came from the largest global manufacturer of garage door openers, The
Chamberlain Group, managing its newest product development growth area into the smart
home category. She was a key player in bringing their newest smart technology brand to life
from the ground up, then building out and implementing its go-to-market plan across TV
advertising, digital advertising, SEO, social media, PR and retail merchandising.
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DIRECTORS’ REPORT
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 continued to focus on building a strong sales and
distribution network both in the US and ANZ markets, with some updates below.
Sales and Distribution
• Global net sales for the year ended 30 June 2020 were US$10.75 million, 25% lower than
the previous corresponding period.
Sales for the year was negatively impacted by COVID-19 related shutdowns in the US
and Australia, with the initial buying rush being focused on consumer staples, with
immediate consumption and novelty confections not being shopper’s priority. There was
a huge drop in retailer foot traffic in March and shoppers were not bringing children for
shopping, further affecting novelty sales. There was also significant competitive activity,
including the new chocolate line launch, by our largest novelty competitor.
• Yowie Multipack (2 Yowies plus an extra toy) was placed in the US’s largest retailer
starting in May, with encouraging initial sales.
• Despite the challenging environment, previously announced chain-wide front-end
distribution for core Yowie in Food Lion (>1,000 grocery stores in the US Southeast)
began as scheduled in Q4, along with several convenience chains. This will increase
distribution in Q1 of FY2021 as product hits the shelves.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Sales and Distribution (continued)
• For the 52 weeks ending 11 July 2020 compared to the same period last year, ACV%*:
2019
Channel
43.3%
Total US
10.4%
Convenience
19.5%
Food
18.4%
Drug
Mass
97.0%
* Percentage relates to the Nielsen measurement of the numbers of stores that carry Yowie brand,
Change
-4.0%
+1.0%
+1.2%
-6.4%
-10.2%
2020
39.3%
11.4%
20.7%
12.0%
86.8%
indicating product availability to the consumer based on ACV (All Commodity Volume)
Corporate
Corporate developments during the current year included:
• On 5 July 2019, the Group received an off-market takeover bid from Aurora Funds
Management Limited (“Aurora”) offering a bid price 9 cents per Yowie share. The Board
considered the unsolicited approach by Aurora to be highly opportunistic. The advised
bid price fundamentally undervalued Yowie’s business, brand, intellectual property and
significant cash balance.
Aurora had subsequently decided to not proceed with the bid.
• Mr Tim Kestell resigned from his position as Non-Executive Director on 5 July 2019.
• Mr Glen Watts resigned as Non-Executive Director on 5 August 2019 and Mr Neville
Bassett agreed to join the Board in an interim capacity.
• The Group completed a return of capital of 2 cents per share with a total of A$4.36
million (equivalent to US$2.98 million) returned to shareholders in November 2019.
• The Group announced on 25 May 2020 its intention to undertake another return of
capital at 4c per share (AUD). This resolution was approved by the shareholders on 24
June 2020 and the payment was made on 14 July 2020.
• On 24 April 2020, the Group received a request to hold a general meeting pursuant to
Section 249D of the Corporations Act from Keybridge. The result of the general meeting
which was held on 24 June 2020 showed that all resolutions were defeated.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Outlook
Though the current market environment presents a high level of uncertainty, we have seen
some encouraging results, notwithstanding the fact that our competitors continue to invest
heavily and launch new products to the market. The Group’s focus remains on the following:
• Focus on fiscal discipline and cash management, to keep margins healthy and allow us to
invest in the trade where appropriate.
• Distribution in the US and Australia across all channels of trade, including eCommerce
and Club stores, to expand buying opportunities for consumers. Retailers have begun to
slowly start reviewing category sets for adding new items.
• Develop and bring to market new items consistent with our brand mission to educate
consumers about conservation and endangered species.
Additionally, the Group continues to be in direct discussions with several potential strategic
partners to assess opportunities to better position Yowie to compete in the highly competitive
confection categories. The Group also continues to explore various avenues to realise the
inherent value of the Yowie brand.
Financial Overview
• The Group maintained a very healthy Gross Margin at 48% of net sales allowing the
Group to invest with retailers and marketing where appropriate.
• The Group’s EBITDA* loss for the year ended 30 June 2020 was US$2.53 million, 14%
higher than EBITDA loss of US$2.21 million in the previous year.
*EBITDA (Earnings before interest, taxes, depreciation, amortization, share-based
payments expense, inventory write-down and impairment)
• As mentioned under Sales and Distribution section, the Group’s net sales were affected
by COVID-19 related shutdowns as the initial buying rush was focused on consumer
staples, with immediate consumption and novelty confections not being shopper’s
priority. While the Group continues to closely monitor the situation, it is not practicable
to estimate the potential impact given the uncertain nature of the situation.
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DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (continued)
Financial Overview (continued)
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• The Group recorded an impairment of non-current assets of US$0.15 million to write off
the book value of its intangible assets associated with outdated Yowie series.
In addition to this, The Group had also completed impairment testing, as required under
the Australian Accounting Standard, following the
impairment
indicators as at 31 December 2019 and 30 June 2020. The result of these impairment
tests indicated a total impairment charge of US$4.31 million to be recorded against the
Group’s non-current assets. Refer to Note 12 for further details on the impairment
testing.
identification of
• Net loss after tax for the year ended 30 June 2020 is US$8.13 million compared to a net
loss after tax of US$5.10 million in the previous corresponding period.
• The net assets of the Group decreased by 44% to US$13.4 million as at 30 June 2020,
down from US$24.05 million as at 30 June 2019. The decrease in net assets is mainly due
to the impairment of non-current assets and return of capital completed during the
year.
• As at 30 June 2020 the Group’s consolidated cash position was US$11.8 million (30 June
2019: US$16.36 million).
• The Group made an improvement in its operating cash flow during the year.
Operating cash outflows for the year ended 30 June 2020 were US$1.3 million, a 17%
improvement compared to the previous year’s cash outflows of US$1.6 million. This was
achieved by better fiscal discipline, with a focus on cost-saving measure across all areas
of the business. The annual salary of the Group CEO was reduced from US$522,600 to
US$322,600 effective 20 April 2020.
• Capital, funding and liquidity are managed at the corporate level. A summary of the cash
flows for the Group is as follows:
Cash outflows used in:
- Operating activities
-
Investing activities
- Financing activities
Net cash outflows for the year
Opening cash
Effect of foreign exchange movements
Closing cash and cash equivalents
balance
US$
(1.32 million)
(0.79 million)
(2.98 million)
(5.09 million)
16.36 million
0.53 million
11.80 million
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DIRECTORS’ REPORT
COVID-19
The outbreak of the 2019 novel strain of coronavirus causing a contagious respiratory disease
known as COVID-19, and the subsequent quarantine measures imposed by the United States,
Australian and other governments, and related travel and trade restrictions have caused
disruption to businesses and resulted in significant global economic impacts. These factors
have had a significant impact on the Group’s financial results and operations for the year
ended 30 June 2020 as noted elsewhere within the Directors report. However, as the impact of
COVID-19 continues to evolve, including changes in government policy and business reactions
thereto, further disruption to our business may occur. Due to the continually evolving nature
of COVID-19 the Directors cannot reasonably estimate the effects that the COVID-19 pandemic
could have on future periods. However, there is uncertainty about the length and potential
impact of any resultant disturbance. As a result, we are unable to estimate the potential
impact on the Group’s future operations as at the date of these Financial Statements.
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
Mr N Bassett
Eligible to Attend
7
7
7
Attended
7
7
7
SHARES UNDER OPTION
There were no unissued ordinary shares under options.
Unissued ordinary shares under rights outstanding at 30 June 2020 are as follows:
Service and
Performance Rights
Service rights
Number of
Securities
271,739
Exercise Price
(A$)
-
Expiry Date
18 Sep 2025
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
2020, including the period up to the date of this report.
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DIRECTORS’ REPORT
EVENTS SUBSEQUENT TO BALANCE DATE
The Group announced on 25 May 2020 its intention to undertake another round of return of
capital at 4c per share (AUD). This resolution was approved by the shareholders on 24 June
2020 and the payment totalling US$6,132,376 (equivalent to A$8,731,846) was distributed to
shareholders on 14 July 2020.
While the Group continues to closely monitor the impact of COVID-19, it is not practicable to
estimate the potential impact given the uncertain nature of the situation.
Other than matters noted above, 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.
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 FY2020 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
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(a)
Key Management Personnel (KMP) covered in this report
Name
Mr Louis Carroll
Mr Mark Schuessler
Mr N Bassett
Mr Glen Watts
Mr Tim Kestell
Mr Wayne Brekke
Ms Cynthia Thayer
Position
Non-Executive Chairman
Global Chief Executive Officer
Managing Director
Non-Executive Director (appointed 5 August 2019)
Company Secretary (not considered as KMP)
Non-Executive Director (resigned 5 August 2019)
Non-Executive Director (resigned 5 July 2019)
Global Chief Financial Officer
Global Chief Marketing Officer
(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.
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 6 November 2019, shareholders holding
approximately 41% of eligible votes cast a ‘No’ vote in relation to the adoption of the
remuneration report for the year end 30 June 2019. 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’.
The Board has had careful regard to the outcome of the vote. The Group CEO has reduced his
annual salary by US$200,000. The Board has also decided that no bonus incentives were to be
granted to the KMPs during the current financial year.
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DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(b)
Remuneration policy and link to performance (continued)
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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.
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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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 Company may engage a remuneration consultant to provide
various services in relation to executive KMP remuneration and the Yowie Employee Incentive
Plan (EIP). During the year ended 30 June 2020, the Company has not engaged any
remuneration consultant.
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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 2020.
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 2020.
(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.
17 | Page
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D
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.
18 | Page
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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.
FY2020
FY2019
FY2018
FY2017
FY2016
Total Income (US$)
11,026,691
14,701,672
17,606,600
19,896,944
13,062,662
Net Loss (US$)
(8,132,605)
(5,099,511)
(4,926,820)
(7,297,601)
(7,397,939)
Return of Capital (US$)
Closing Share Price (A$)
2,981,926
0.035
-
0.05
-
0.07
-
0.31
-
0.93
Number of Shares
218,296,162
217,748,987
216,744,323
214,055,365
206,372,375
Market Capitalisation (A$)
7,640,366
11,322,947
14,738,614
66,357,163
191,926,309
(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.
19 | Page
For personal use only
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:
2020
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 L Carroll
Mr M Schuessler 3
Mr N Bassett 4
Mr G Watts 5
Mr T Kestell 6
Senior Executives
Mr W Brekke
Ms C Thayer
Total
67,427
484,138
68,997
5,532
-
207,600
222,600
1,056,294
-
-
-
-
-
-
-
-
6,406
-
3,494
526
-
-
-
10,426
-
-
-
-
-
-
-
-
14,514
-
-
-
-
-
-
14,514
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
88,347
484,138
72,491
6,058
-
207,600
222,600
1,081,234
-
-
-
-
-
-
-
1 This includes annual leave where applicable.
2 Calculated in accordance with AASB 2 Share-based Payments. Refer to Note 15.
3 Mr M Schuessler’s annual salary was reduced from US$522,600 to US$322,600 effective 20 April 2020.
4 Appointed as Non-Executive Director on 5 August 2019. Mr N Bassett’s salary and fees also include his duties as the Company Secretary.
Mr N Bassett received salary and fees in relation to his duties as the Company Secretary of US$2,794 in the month of July 2019 prior to becoming KMP and his appointment to Non-
Executive Director.
5 Resigned on 5 August 2019.
6 Resigned on 5 July 2019.
20 | Page
For personal use only
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(d)
Remuneration expenses for KMP (continued)
2019
Short-Term Benefits
Salary and
Fees 1
(US$)
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 L Carroll
Mr M Schuessler
Mr N Bassett 3
Mr G Watts 4
Mr T Kestell 5
Mr W Johnson 6
Senior Executives
Mr W Brekke 7
Ms C Thayer 8
Mr C Overley 9
Total
71,852
522,600
-
54,393
-
4,395
130,149
128,423
148,119
1,059,931
-
-
-
-
-
-
-
-
-
-
6,826
-
-
5,167
-
418
-
-
1,229
13,640
-
(46,407)
-
-
-
-
-
-
(35,095)
(81,502)
36,796
30,810
-
(17,913)
-
-
-
-
-
49,693
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,474
507,003
-
41,647
-
4,813
-
-
4,419
4,419
130,149
128,423
118,672
1,046,181
-
-
-
-
-
-
-
-
-
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 Director on 5 August 2019. Mr N Bassett’s fees as the Company Secretary is not disclosed as he was not considered as KMP prior to his appointment to
the Board.
4 Resigned on 5 August 2019. Credit amount under his share-based payments refer to service rights which were granted under his employment contract and were subsequently
defeated at the AGM.
5 Appointed as Non-Executive Director on 17 May 2019 and resigned on 5 July 2019.
6 Resigned on 8 October 2018.
7 Appointed as Global Chief Financial Officer on 14 November 2018.
8 Appointed as Global Chief Marketing Officer on 3 December 2018.
9 Resigned on 26 December 2018.
21 | Page
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D
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.
22 | Page
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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 or rights were granted to key management personnel as remuneration during the
year.
No options held by key management personnel were exercised during the year ended 30 June
2020
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 L Carroll
16 Nov 2017
18 Sep 2019
271,739
Number of
Options/Rights
Lapsed/Forfeited
-
(e)
Contractual arrangements for KMP
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
Louis Carroll
A$110,000
Ongoing
Mark Schuessler
Reduced from US$522,600
to US$322,600 effective 20
April 2020
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
Joined the Board as Non-
Executive Director on an
interim basis
Neville Bassett
Wayne Brekke
Director fees of A$65,700
and
Company secretarial fees of
A$48,000
US$207,600
Interim
Ongoing
Ongoing
14 days written notice
Cynthia Thayer
US$222,600
Ongoing
14 days written notice
23 | Page
Non-Executive
Chairman
Managing Director
and Global Chief
Executive Officer
Non-Executive
Director &
Company Secretary
Global Chief
Financial Officer
Global Chief
Marketing Officer
For personal use only
D
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
(f)
Equity Instrument Disclosures relating to Key Management Personnel
(i)
Option Holdings
No options over ordinary shares in the Company were held during the financial year by any of
the KMP and their personally related parties.
(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
Mr M Schuessler
Mr N Bassett
Mr G Watts
Mr T Kestell
Senior Executives
Mr W Brekke
Ms C Thayer
Total
Balance at
Start of
Year
(No)
543,478
132,925
-
-
-
-
-
676,403
Granted as
Remuneration
Exercised
Lapsed/
Forfeited
Balance at End
of Year
(No)
(No)
(No)
(No)
-
-
-
-
-
-
-
-
(271,739)
(132,925)
-
-
-
-
-
(404,664)
-
-
-
-
-
-
-
-
271,739
-
-
-
-
-
-
271,739
24 | Page
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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 N Bassett 2
Mr G Watts
Mr T Kestell
Senior Executives
Mr W Brekke
Ms C Thayer
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)
1,021,739
1,075,323
100,000
83,083
-
-
-
2,280,145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
271,739
132,925
-
-
-
-
-
-
-
-
1,293,478
1,208,248
100,000
(83,083)
-
-
-
-
-
-
-
404,664
(83,083)
2,601,726
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.
2 Mr Bassett holds 100,000 shares at the beginning of his employment as KMP on 5 August 2019.
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 2020.
END OF AUDITED REMUNERATION REPORT
25 | Page
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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 27 of the financial report.
Signed in accordance with a resolution of the Directors.
Louis Carroll
Non-Executive Chairman
30 September 2020
26 | Page
For personal use only
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Deloitte Touche Tohmatsu
Tower 2, Brookfield Place,
123 St Georges Tce,
Perth WA 6000, Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The Directors
Yowie Group Limited
Level 4, 216 St Georges Terrace
Perth WA 6000
30 September 2020
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 2020, 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
David Newman
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
For personal use only
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
D
Sale of goods
Cost of sales
Gross profit
Selling and distribution
Marketing
Administration
Other income
Foreign exchange gains
Write-down of inventory
Impairment of plant and equipment
Impairment of intangible assets
Loss before income tax
Income tax (expense)/benefit
Note
Consolidated
2020
US$
2019
US$
10,753,996
(5,579,766)
5,174,230
14,425,071
(7,437,662)
6,987,409
(3,611,003)
(1,186,369)
(3,280,784)
272,695
63,898
(1,282,742)
(3,919,224)
(548,067)
(4,477,735)
(1,439,933)
(3,595,710)
276,601
227,431
(633,463)
(1,698,370)
(93,695)
(8,317,366)
184,761
(4,447,465)
(652,046)
5
4
10
11
12
6
Loss after income tax for the year
(8,132,605)
(5,099,511)
Other comprehensive income for the year
Items that may be reclassified subsequently to profit or loss
Movement in foreign currency translation reserve
449,279
(415,932)
Total comprehensive loss for the year
net of tax attributable to members of the Company
(7,683,326)
(5,515,443)
Loss per share attributable to members of the Company
Basic loss per share (cents)
Diluted loss per share (cents)
7
7
(3.73)
(3.73)
(2.34)
(2.34)
This consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes to the financial statements.
28 | Page
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
D
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Current tax assets
Total Current Assets
Non-Current Assets
Plant and equipment
Intangible 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
2020
US$
2019
US$
16(a)
8
9
10
6(c)
11
12
13
4
11,796,909
813,571
337,135
2,816,604
249,573
16,013,793
16,360,661
1,219,425
1,384,994
4,193,416
-
23,158,496
93,712
17,338
111,050
3,494,835
752,097
4,246,932
16,124,843
27,405,428
2,674,162
22,007
-
31,234
2,727,403
3,316,682
16,023
23,239
-
3,355,944
2,727,403
3,355,944
13,397,440
24,049,484
14(a)
14(d)
52,747,811
(463,248)
(38,887,123)
13,397,440
55,703,545
(754,487)
(30,899,574)
24,049,484
This consolidated statement of financial position should be read in conjunction
with the accompanying notes to the financial statements.
29 | Page
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
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 2018
55,635,991
2,554,962
(2,531,579)
(26,070,152)
29,589,222
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 under YOW
Employee Incentive Plan
Share issue transaction costs
Share-based payments
Expired options and rights
-
-
-
-
-
-
-
(5,099,511)
(5,099,511)
(415,932)
-
(415,932)
(415,932)
(5,099,511)
(5,515,443)
14(b)
14(b)
70,273
(2,719)
-
-
(70,273)
-
(21,576)
(270,089)
-
-
-
-
-
-
-
270,089
-
(2,719)
(21,576)
-
Balance as at 30 June 2019
55,703,545
2,193,024
(2,947,511)
(30,899,574)
24,049,484
Balance as at 1 July 2019
55,703,545
2,193,024
(2,947,511) (30,899,574)
24,049,484
Loss for the year
Other comprehensive income
Foreign currency translation
Total comprehensive loss for
the year
Transactions with owners
recorded directly in equity
Return of capital
Shares issued under YOW
Employee Incentive Plan
Share issue transaction costs
Share-based payments
Expired options and rights
-
-
-
(2,981,926)
-
-
-
-
14(b)
14(b)
27,498
(1,306)
-
-
(27,498)
-
14,514
(145,056)
-
(8,132,605)
(8,132,605)
449,279
-
449,279
449,279
(8,132,605)
(7,683,326)
-
-
-
-
-
-
(2,981,926)
-
-
-
145,056
-
(1,306)
14,514
-
Balance as at 30 June 2020
52,747,811
2,034,984
(2,498,232) (38,887,123)
13,397,440
This consolidated statement of changes in equity should be read in conjunction
with the accompanying notes to the financial statements.
30 | Page
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CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 30 JUNE 2020
D
Cash flow from operating activities
Receipts from customers
Other receipts
Payments to suppliers and employees
Interest received
Income taxes paid
Net cash outflows used in operating activities
Cash flow from investing activities
Payments for plant and equipment
Payments for intangible assets
Net cash outflows used in investing activities
Cash flow from financing activities
Return of capital
Payment of share issue transaction costs
Net cash outflows used in 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
2020
US$
2019
US$
10,700,818
176,568
(12,251,194)
133,394
(83,860)
(1,324,274)
15,259,346
6,053
(17,126,924)
262,800
5,107
(1,593,618)
16(b)
(617,342)
(172,373)
(789,715)
(928,073)
(431,836)
(1,359,909)
(2,981,926)
(1,437)
(2,983,363)
(5,097,352)
16,360,661
533,600
11,796,909
-
(2,954)
(2,954)
(2,956,481)
19,466,956
(149,814)
16,360,661
This consolidated statement of cash flows should be read in conjunction
with the accompanying notes to the financial statements.
31 | Page
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D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 30 September 2020 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 8.
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”).
Going concern
The financial report has been prepared on the going concern basis, which assumes
continuity of normal business activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Group incurred a loss after tax of US$8,132,605 (2019: US$5,099,511) and experienced
net operating and investing cash outflows of US$2,113,989 (2019: US$2,953,527) for the
year ended 30 June 2020.
The Directors have concluded that these accounts should be prepared on a going concern
basis. In making this determination the Directors have considered the following:
• The directors and management have prepared a cash flow forecast for the period ending
30 September 2021 which indicates that the Group will have sufficient funding to meet
its expected cash outflows without additional funding;
• The Group has access to unrestricted cash of US$11,796,909 as at 30 June 2020, and
US$5,664,533 following completion of the return of capital of US$6,132,376 on 14 July
2020; and
• The Group continues to be in direct discussions with several potential strategic partners
to assess opportunities to better position Yowie to compete in this highly competitive
sector, and explore a range of alternatives to realise value from its operations and
related assets, and the Directors consider that the Group is in a strong financial position
to take advantage of such opportunities.
32 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3.
SEGMENT REPORTING
D
The Group has only one reportable segment, which relates to the operations of its
confectionery business, with production carried out under a contract manufacturing
arrangement. The net result is presented on a consolidated basis. All non-current assets are
located in one geographical location, the United States of America.
Major customer information
The revenue from major customers set out below arises from the sale of Yowie chocolate
confectionery product.
Major customer 1
% of Total Net Sales
Major customer 2
% of Total Net Sales
4.
OTHER INCOME
Interest income
Government grant 1
Other income
Consolidated
2020
US$
3,859,367
36%
978,110
9%
Consolidated
2020
US$
126,235
142,767
3,693
272,695
2019
US$
7,549,114
52%
1,158,033
8%
2019
US$
270,164
-
6,437
276,601
1 During the year ended 30 June 2020, the Group received a total of US$142,767 government grant from both
Australia and the US Government as part of their COVID-19 economic response program.
A large portion of the amount relates to Paycheck Protection Program (PPP) Loan from the US Government
of US$151,653, of which US$120,419 was recognised as government grant (other income) as the Group has
reasonable assurance that it will meet the terms for the forgiveness of the loan, while the remaining
US$31,234 is classified as unearned income in the consolidated statement of financial position in pursuant
to AASB 120.
5.
ADMINISTRATION
Administration expenses include:
Employee benefits
Business development and travel
Legal, tax, listing, compliance and insurance
Share-based payments (refer to Note 15)
Depreciation and amortisation
Other administrative expenses
Consolidated
2020
US$
2019
US$
1,263,240
290,810
985,492
14,514
354,465
372,263
3,280,784
1,343,552
360,941
1,067,254
(21,576)
332,118
513,421
3,595,710
33 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
6.
TAXATION
(a)
The major components of income tax expense are:
Current income tax expense/(benefit)
Adjustments for current tax of prior periods
Total current tax expense/(benefit)
Deferred income tax
Decrease in deferred tax assets
Income tax (benefit)/expense reported in the
statement of profit and loss and other comprehensive
income
D
Consolidated
2020
US$
(197,406)
12,645
(184,761)
-
-
2019
US$
-
(28,558)
(28,558)
680,604
680,604
(184,761)
652,046
(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 27.5% (2019:
30%)
Effect of different tax rates on overseas losses
US net operating loss carry-back recoupment
Income tax benefit not recognised
Income tax benefit/(expense)
Consolidated
2020
US$
(8,317,366)
2,287,276
(904,829)
197,406
(1,395,092)
184,761
2019
US$
(4,447,465)
1,334,240
(318,568)
-
(1,667,718)
(652,046)
(c)
Current tax assets at 30 June relates to the following:
US 1
Hong Kong 2
Current tax assets
Consolidated
2020
US$
197,406
52,167
249,573
2019
US$
-
-
-
1
2
This relates to refund from the US Internal Revenue Service in relation to the Yowie US entities’ eligibility to
carryback tax losses generated in previous years and recoup US federal taxes paid in these carryback years.
This relates to prepaid tax which is expected to be refunded back by Hong Kong Inland Revenue
Department.
34 | Page
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
6.
TAXATION (continued)
(d) Deferred income tax at 30 June relates to the following:
D
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
2020
US$
2019
US$
1,477,723
-
377,440
935,062
457,236
7,837,491
(1,696,402)
(9,388,550)
-
1,050,401
6,741
639,260
(1,696,402)
-
754,888
-
257,351
611,392
332,921
7,274,617
(1,225,065)
(8,006,104)
-
759,088
26,157
439,819
(1,225,064)
-
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$2,624,535 and Hong Kong of
US$3,564,767 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$1,648,189 can be used for up to 20 years.
35 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
7.
LOSS PER SHARE
Classification of securities as ordinary shares
D
The Company has only one category of ordinary shares included in basic earnings per share.
Classification of securities as potential ordinary shares
There are currently no securities to be classified as dilutive potential ordinary shares on
issue, as the options on issue are anti-dilutive.
Weighted average number of ordinary shares used
in the calculation of basic and diluted earnings per
share
Basic loss attributable to ordinary equity holders of
the parent
Consolidated
2020
Number
2019
Number
218,144,752
217,588,308
US$
US$
(8,132,605)
(5,099,511)
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
GST receivable
Accrued interest
Consolidated
2020
US$
805,279
1,733
6,560
-
813,572
2019
US$
1,197,537
7,618
6,610
7,660
1,219,425
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.
36 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
9.
PREPAYMENTS
Current
Prepayments – raw materials
Prepayments – other
10.
INVENTORIES
Current
Raw materials
Work in progress
Finished goods
Allowance for disposal
D
Consolidated
2020
US$
183,254
153,881
337,135
2019
US$
1,004,507
380,487
1,384,994
Consolidated
2020
US$
2,212,771
39,054
2,034,991
(1,470,212)
2,816,604
2019
US$
1,796,401
68,253
2,847,500
(518,738)
4,193,416
(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 2020
amounted to US$5,579,766 (2019: US$7,437,662).
(iii) Write-downs of inventories to net realisable value during the year ended 30 June 2020
amounted to US$1,282,742 (2019: US$633,463). The write-downs were mostly due to disposal
(and allowance for disposal) of raw materials relating to outdated Yowie Series and other
inventories that are deemed to have zero realisable value. Refer to Note 23(v) for key
accounting estimate on allowance for disposal of inventories.
Movement in the allowance for disposal of inventories is set out below.
Balance at the beginning of the year
Disposal
Additional allowance
Balance at the end of the year
(518,738)
114,585
(1,066,059)
(1,470,212)
(378,146)
1,616
(142,208)
(518,738)
37 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11. PLANT AND EQUIPMENT
Manufacturing plant and equipment
Cost
Accumulated depreciation
Accumulated impairment losses
Manufacturing plant and equipment under
construction
Cost
Accumulated impairment losses
Office equipment
Cost
Accumulated depreciation
D
Consolidated
2020
US$
4,140,186
(491,436)
(3,558,888)
89,862
765,870
(765,870)
-
12,443
(8,593)
3,850
2019
US$
4,064,940
(404,181)
(405,533)
3,255,226
235,740
-
235,740
10,053
(6,184)
3,869
Total plant and equipment
93,712
3,494,835
Movements in the carrying amount of each class are set out below.
Manufacturing plant and equipment
Balance at the beginning of the year
Additions
Transfers from / (to) manufacturing plant and
equipment under construction
Depreciation
Impairment 1
Amounts written off
Carrying amount at the end of the year
Manufacturing plant and equipment under
construction
Balance at the beginning of the year
Additions
Transfers from / (to) manufacturing plant and
equipment
Impairment 1
Provision for impairment 2
Carrying amount at the end of the year
3,255,226
20,676
54,569
(87,255)
(3,153,354)
-
89,862
235,740
584,699
(54,569)
(765,870)
-
-
3,936,179
198,650
(203,630)
(185,478)
(405,533)
(84,962)
3,255,226
506,462
733,523
203,630
-
(1,207,875)
235,740
38 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11. PLANT AND EQUIPMENT (continued)
Office equipment
Balance at the beginning of the year
Additions
Depreciation
Disposals
Foreign exchange adjustment
Carrying amount at the end of the year
Total impairment and amounts written off
Impairment
Amounts written off
D
Consolidated
2020
US$
3,869
3,570
(3,186)
(393)
(10)
3,850
2019
US$
5,313
2,755
(4,194)
-
(5)
3,869
(3,919,224)
-
(3,919,224)
(1,613,408)
(84,962)
(1,698,370)
1 This relates to impairment losses recognised as a result of impairment testing performed following the
identification of impairment indicators, namely the Group’s market capitalization is less than the Group’s
net assets, and the Group’s financial performance for the year was below budget. Refer to Note 12 for
details on the impairment testing.
2 During the year ended 30 June 2019, provision for impairment was recorded to adjust the net book value of
idle production equipment. The production equipment became idle during the year ended 30 June 2019 as
the Group commissioned new equipment with the aim of improving efficiency of the production plant and
reducing production cost.
12.
INTANGIBLE ASSETS
Rights and licenses 1
Cost
Accumulated impairment losses
Software
Cost
Accumulated amortisation
Accumulated impairment losses
Product development 2
Cost
Accumulated amortisation
Accumulated impairment losses
Consolidated
2020
US$
225,398
(225,398)
-
370,887
(302,773)
(68,114)
-
987,800
(774,917)
(195,545)
17,338
2019
US$
225,398
(24,969)
200,429
349,051
(123,921)
(24,940)
200,190
845,065
(449,801)
(43,786)
351,478
Total intangible assets
17,338
752,097
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.
39 | Page
For personal use only
D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12.
INTANGIBLE ASSETS (continued)
Movements in the carrying amount of each class are set out below.
Consolidated
Rights and licenses
Balance at the beginning of the year
Impairment 1
Carrying amount at the end of the year
Software
Balance at the beginning of the year
Additions
Amortisation
Impairment 1
Amounts written off
Foreign exchange adjustment
Carrying amount at the end of the year
Product development
Balance at the beginning of the year
Additions
Amortisation
Impairment 1
Amounts written off 2
Carrying amount at the end of the year
Total impairment and amounts written off
Impairment
Amounts written off
2020
US$
200,429
(200,429)
-
200,190
22,114
(162,385)
(43,174)
(16,482)
(263)
-
351,478
142,736
(188,894)
(151,759)
(136,223)
17,338
(395,362)
(152,705)
(548,067)
2019
US$
225,398
(24,969)
200,429
227,343
100,655
(102,112)
(24,940)
-
(756)
200,190
408,190
212,886
(225,812)
(43,786)
-
351,478
(93,695)
-
(93,695)
1 This relates to impairment losses recognised as a result of impairment testing performed following the
identification of impairment indicators, namely the Group’s market capitalization is less than the Group’s
net assets, and the Group’s financial performance for the year was below budget. Total impairment losses
recognised under intangible assets were US$395,362 (2019: US$93,695).
2 This relates to the write-off of intangible assets associated with outdated Yowie series.
40 | Page
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12.
INTANGIBLE ASSETS (continued)
Impairment testing
D
As at 30 June 2020, impairment indicators have been identified, including the fact that the
Group’s market capitalisation is less than its net assets, the Group’s financial performance
for the year ended 30 June 2020 was below budget, and general uncertainties created by
COVID-19.
Additionally, as disclosed in the Group’s Interim Financial Statements for the half year
ended 31 December 2019, impairment testing was also completed at that date, due to
impairment triggers also being identified, relating to the fact that Group’s market
capitalisation was less than its net assets, and also its financial performance for the half
year ended 31 December 2019 was below budget.
An impairment loss is recognised for the amount by which the Group’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s Value
in Use (ViU) and Fair Value Less Costs of Disposal (FVLCD).
The group has recognised the impairment losses based on a FVLCD approach, in accordance
with the accounting policy described in Note 23(r).
The Group has only one operating segment and CGU which relates to the operations of its
confectionery business. The Group’s assessment as at 31 December 2019 indicated an
impairment loss of US$1,534,000. The Group’s subsequent impairment assessment as at 30
June 2020 indicated an additional impairment loss of US$2,780,586, with a total
impairment loss for the year ended 30 June 2020 being US$4,314,586, of which further
information is provided below.
Given the impairment triggers identified as at 30 June 2020, which were in addition to
those identified as at 31 December 209, the Group has updated the FVLCD model as at 30
June 2020, taking into account year to date actual performance.
The impairment loss recognised as at 30 June 2020 arose because financial performance in
the second half of the year ended 30 June 2020 was below budget, including those
expected when the 31 December 2019 impairment testing was completed. Performance in
the second half of the year ended 30 June 2020 was impacted by a range of factors
including continued high levels of competition, and the impact of COVID-19.
41 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12.
INTANGIBLE ASSETS (continued)
Impairment testing (continued)
D
The impairment loss of US$4,314,586 reduced the carrying value of the Group’s plant and
equipment and intangible assets to US$111,050. The impairment has been proportionately
applied across the following classes of assets:
Plant and equipment:
Manufacturing plant and equipment
Manufacturing plant and equipment under construction
Intangible assets:
Rights and licences
Software
Product development
Total impairment loss
Note
11
11
12
12
12
Consolidated
2020
US$
3,153,354
765,870
200,429
43,174
151,759
4,314,586
The carrying amount of intangible assets with indefinite useful lives allocated to the CGU is
nil.
Assumptions – FVLCD
The key assumptions made were as follows:
• FY2021 budget, which assumes flat growth from FY2020, was adjusted to reflect sales
underperformance from July to the middle of September 2020, compared to the same
corresponding period in FY2020;
• Revenue growth rate estimates ranging between 4% - 12.1% per annum for FY2021 to
FY2028 driven by:
i) Increased market penetration within the US based on external performance data,
such as ACV*, a statistic representative of the Group’s market penetration across
different distribution channels in the US; and
ii) Assumed sales volumes per store across the expanded distribution network is based
on historic actual volumes for comparable stores.
• EBITDA margin assumes a straight-line improvement from -7% in FY2020 to 10.0% in
FY2025, where EBITDA margins remain constant thereafter. This assumption is based on
benchmarking against various industry participants;
• Terminal year growth rate of 2.1% based on long term CPI;
• Discount rate of 13.0% post-tax;
• Costs of disposal of 5.0% of the estimated recoverable amount; and
• Projected cash flows covering FY2021 to FY2028.
Fair value was measured using Level 3 inputs under AASB 13.
* Percentage relates to the Nielsen measurement of the numbers of stores that carry the Yowie brand,
indicating product availability to the consumer based on ACV (All Commodity Volume).
42 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12.
INTANGIBLE ASSETS (continued)
Impairment testing (continued)
D
The key assumptions used are based on the judgement and experience of the Group, taking
into account current market and economic conditions, risks, uncertainties and
opportunities for improvement.
No reasonably possible change in assumptions could cause a further material impairment.
For the impairment for the year ended 30 June 2020 to be materially less than the
US$4,314,586 recognised by the Group, the Group’s sales volumes would need to be 22%
above the currently observed performance for FY2021 to date. Other than the sensitivity in
relation to the Group’s future sales performance, there are no further reasonably possible
changes in assumptions that would have a material impact on the carrying value of non-
current assets, as the favourable uplifts required to reduce the impairment are outside of
the ranges considered reasonable possible.
Notwithstanding the result of impairment testing above, the Group continues to be in
direct discussions with several potential strategic partners to assess opportunities to better
position Yowie to compete in this highly competitive sector, and explore a range of
alternatives to realise value for its assets.
43 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
13.
TRADE AND OTHER PAYABLES
Current
Trade payables and accruals
Rebate allowances 1
Other
D
Consolidated
2020
US$
565,512
2,106,899
1,751
2,674,162
2019
US$
1,258,981
2,055,914
1,787
3,316,682
1 Rebate allowances include estimated accrual for promotional discounts, prompt payment discounts and
spoilage of goods. Refer to Note 23(v) for key accounting estimate on rebate allowances.
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 2018
Conversion of rights
Share issue costs
As at 30 June 2019
Return of capital 1
Conversion of rights
Share issue costs
As at 30 June 2020
Consolidated
2020
US$
2019
US$
52,747,811
55,703,545
US$
55,635,991
70,273
(2,719)
55,703,545
(2,981,926)
27,498
(1,306)
52,747,811
Number
216,744,323
1,004,664
-
217,748,987
-
547,175
-
218,296,162
1 Return of capital of A$0.02 per share with a total of A$4.36 million (equivalent to US$2.98 million) was
completed in November 2019.
(c)
Terms and conditions of issued capital
Holders of ordinary shares are entitled to receive dividends as declared from time to time
and are entitled to one vote per share at shareholders’ meetings.
In the event of winding up of the Company, ordinary shareholders rank after all other
shareholders and creditors and are fully entitled to any proceeds of liquidation.
44 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
14.
ISSUED CAPITAL AND RESERVES (continued)
(d) Nature and purpose of reserves
D
Share-based payment reserve
The share-based premium reserve is used to recognise the value of options, service rights
and performance rights issued as share-based payments.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from
the translation balances of entities which have functional currency other than USD.
Share-based payment reserve
Foreign currency translation reserve
(e)
Capital management
Consolidated
2020
US$
2,034,983
(2,498,231)
(463,248)
2019
US$
2,193,024
(2,947,511)
(754,487)
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.
2020
Number
2020
WAEP (A$)
2019
Number
Outstanding at 1 July
Granted during the year
Exercised during the year
Lapsed/forfeited during the year
Outstanding as at 30 June
Vested and exercisable at 30 June
-
-
-
-
-
-
-
-
-
-
-
-
2019
WAEP (A$)
1.552
-
-
1.552
-
500,000
-
-
(500,000)
-
-
-
45 | Page
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15.
SHARE-BASED PAYMENTS (continued)
(b)
Remaining contractual life
D
There were no share-based payment options outstanding as at 30 June 2020 (2019: nil).
The weighted average remaining contractual life for the share-based payment rights
outstanding as at 30 June 2020 was 5.22 years (2019: 4.03 years).
(c) Outstanding share options and rights under share-based payments
There were no share-based payment options outstanding as at 30 June 2020 (2019: nil).
Service rights outstanding at the end of the year have the following expiry date:
Type
Grant Date
Vesting Date
Expiry Date
Service Rights
Service rights
Service rights
Service rights
13 Jun 2016
12 Jun 2017
16 Nov 2017
16 Nov 2017
12 Jun 2019
12 Dec 2018
18 Sep 2019
18 Sep 2020
12 Jun 2020
12 Dec 2019
18 Sep 2024
18 Sep 2025
Rights
30 June 2020
-
-
-
271,739
271,739
Rights
30 June 2019
132,925
142,511
271,739
271,739
818,914
(d)
Expenses arising from share-based payment transactions
The share-based payments expense for the year is US$14,514 (2019: a credit of US$21,576).
The Group recognises the share-based payments expense over the vesting period for any
options and rights granted.
Options and rights issued to KMPs
Options and rights issued to other employees
Options and rights issued to consultants
Consolidated
2020
US$
14,514
-
-
14,514
2019
US$
(31,810)
10,234
-
(21,576)
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
No new rights or options were issued during the year ended 30 June 2020 or 30 June 2019.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
2020
US$
2019
US$
4,232,209
7,564,700
3,648,961
12,711,700
11,796,909
16,360,661
(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
Foreign exchange (gain)/loss
Loss on disposal of asset
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 current tax assets
(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
2020
US$
(8,132,605)
2019
US$
(5,099,511)
354,465
332,118
87,255
14,514
(75,749)
393
4,467,291
406,572
1,047,859
1,376,812
(249,573)
-
(635,487)
(23,239)
5,984
31,234
(1,324,274)
185,478
(21,576)
(294,342)
-
1,792,065
1,652,745
236,429
(885,634)
-
680,604
(110,726)
(28,059)
12,475
(45,684)
(1,593,618)
(c) Non-cash investing and financing activities
During the year there were no reportable non-cash financing and investing activities.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
17. RELATED PARTY DISCLOSURES
(a)
Compensation of key management personnel
Short-term benefits
Post-employment benefits
Share-based payments expensed
Termination payments
D
Consolidated
2020
US$
1,056,294
10,426
14,514
-
1,081,234
2019
US$
1,059,931
13,640
(31,809)
4,419
1,046,181
(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 recognized was reversed
during the half-year ended 31 December 2017.
In this same case (which has, since the last report, been consolidated with the other
pending Florida state court action), ACC, Whetstone Industries (“WI”), and Henry M.
Whetstone, Jr. (“Whetstone”) have filed counterclaims against YNA alleging that YNA
breached the Manufacturing Agreement, the Patent Agreement, violated the Florida
Uniform Trade Secrets Act (“FUTSA”), breached fiduciary duties owed to WI and ACC, and
fraudulently induced ACC, WI, and Whetstone to enter into amendments to the
Manufacturing and Patent Agreements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18. COMMITMENTS AND CONTINGENCIES (continued)
(b)
Contingencies (continued)
D
For its claim of the breach of the Manufacturing Agreement, ACC and WI (as the purported
successor-in-interest to the Manufacturing Agreement) allege that the Manufacturing
Agreement was a requirements contract that required YNA to manufacture with ACC and
WI until the agreement expired in 2027; however, YNA believes this is inconsistent with the
plain language in the Manufacturing Agreement which only requires YNA to manufacture
with ACC and WI when YNA is using Whetstone’s patents to produce its chocolate and toy
combination products. For its claim for breach of the Patent Agreement, Whetstone alleges
that YNA owes him royalty fees from that time 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 (now expired) patent in its manufacturing
process (and hasn’t for several years), it believes that there is no legal basis under YNA’s
contract with Mr. Whetstone to pay him any royalty. For its FUTSA claim, WI and ACC
claim that YNA impermissible appropriated the technology from its manufacturing line to
start its line with Madelaine. YNA rejects this as false and notes that the manufacturing line
used at Madelaine is much newer and modern than WI’s and ACC’s manufacturing lines.
For its breach of fiduciary duty claim, WI and ACC claim that YNA owed fiduciary duties to
them, but this is inconsistent with Florida law which does not apply fiduciary duties in
situation like these. Finally, for its fraudulent inducement claim, there is no support for any
claim that YNA (or any of its agents) acted to coerce WI and ACC to enter into any
amendment agreements.
Both parties filed and argued cross-motions for summary judgment on issues related to the
Patent Agreement in October 2017. On 13 September 2018, the Court entered an order
denying both parties motions for summary judgment. No trial date is currently set for this
matter so YNA cannot make a determination as to when this matter will be resolved.
Further, for all the above causes of action, YNA has disclaimed liability and is defending the
action. YNA considers no provision is warranted in relation to this counterclaim.
On 16 November 2017, in a related action, Whetstone Industries and Mr. Whetstone filed
tortious interference claims against the Group and former Directors, 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. On 17 August 2018, all defendants filed a motion to
dismiss the Complaint in its entirety for failure to state a claim upon which relief can be
granted. The Court denied this motion to dismiss in August 2019. A scheduling order has
been entered in this matter and trial is currently set for August 2021.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
2020
US$
2019
US$
93,753
46,936
140,689
57,645
-
57,645
(506)
7,233
6,727
50,343
79,652
129,995
64,914
-
64,914
26,439
60,642
87,081
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
Total equity
2020
US$
8,364,089
5,173,433
13,537,522
140,082
-
140,082
2019
US$
8,745,540
15,543,663
24,289,203
239,719
-
239,719
13,397,440
24,049,484
54,318,121
(4,941,907)
(35,978,774)
13,397,440
57,273,855
(3,745,792)
(29,478,579)
24,049,484
Loss of the parent entity
Total comprehensive loss of the parent entity
(6,645,251)
(7,683,325)
(3,244,116)
(5,515,443)
(b)
Commitment and Contingencies of the Parent Entity
The parent entity had no significant commitments or contingent liabilities as at 30 June
2020 or 30 June 2019. Refer to Note 18 for a discussion of contingencies of the Group.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20. PARENT ENTITY AND SUBSIDIARY INFORMATION (continued)
(c)
Subsidiaries
Name
Country of Incorporation
Yowie Enterprises Pty Ltd
Yowie North America, Inc.
Yowie Natural World, Inc.
Yowie Hong Kong Holdings Limited
Yowie Hong Kong Enterprises Limited
YOW Brands Limited
Australia
USA
USA
Hong Kong (China)
Hong Kong (China)
Hong Kong (China)
21.
SUBSEQUENT EVENTS
D
Percentage Interest
2019
%
100
100
100
100
100
100
2020
%
100
100
100
100
100
100
The Group announced on 25 May 2020 its intention to undertake another round of return
of capital at 4c per share (AUD). This resolution was approved by the shareholders on 24
June 2020 and the payment totalling US$6,132,376 (equivalent to A$8,731,846) was
distributed to shareholders on 14 July 2020.
While the Group continues to closely monitor the impact of COVID-19, it is not practicable
to estimate the potential impact given the uncertain nature of the situation.
Other than matters noted above, 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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
22.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
D
The Board reviews and agrees policies for managing each of these risks as summarised
below.
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
2020
US$
8,095,512
2019
US$
13,042,471
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% (2019: +0.5%)
-0.5% (2019: -0.5%)
Post tax loss
Higher / (lower)
2020
US$
40,478
(40,478)
2019
US$
65,212
(65,212)
Equity
Higher / (lower)
2020
US$
40,478
(40,478)
2019
US$
65,212
(65,212)
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
2020
US$
2019
US$
8,354,681
8,294
31,238
913
8,395,126
118,075
22,007
140,082
2,729,783
14,530
27,637
13,702
2,785,652
223,694
16,024
239,718
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% (2019: +10%)
Exchange Rate - 10% (2019: -10%)
Profit or loss
Higher / (lower)
Equity
Higher / (lower)
2020
US$
2019
US$
24,247
(24,247)
2020
US$
(750,459)
750,459
2019
US$
(182,957)
182,957
-
-
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D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
2020
US$
-
8,358,226
3,438,683
11,796,909
2019
US$
4,605,700
8,748,558
3,006,403
16,360,661
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
2020
US$
2,674,162
-
2,674,162
2019
US$
3,316,682
-
3,316,682
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 2020
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 effect on the
measurement or disclosure of the amounts reported for the current or prior periods.
AASB 16 Leases
The Group has adopted AASB 16 Leases from 1 July 2019.
AASB 16 introduced a single, on balance sheet accounting model for lessees. As a result,
the Group as a lessee, will recognise right-of-use assets representing its rights to use the
underlying assets and lease liabilities representing its obligation to make lease payments.
Additional disclosure of the consolidated entities lease accounting policies and its impact as
required by the standard are included in Note 23(t).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
D
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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 2020.
(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 2020.
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.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
Foreign currency translation
D
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.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f)
Trade and other receivables
D
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. Refer to Note 23(q) for details on
assessment of uncollectible amounts.
(g)
Inventories
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
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Intangible assets
D
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.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Intangible assets (continued)
D
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.
(k)
Provisions
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
The Group recognises revenue predominately from the sale of goods.
Sale of goods
Revenue is recognised when control of the product is transferred, being either when the
product is delivered to the customer or, in some instance, when the customer picks up the
product, and there is no unfulfilled obligation that could affect the customer’s acceptance
of the products.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Revenue recognition (continued)
D
Revenue from sales is recognised based on the arrangement between the customer and the
Group. The arrangements in place do not commit customers to purchasing a specified
quantity nor commit Yowie to deliver the same, but set out the terms and conditions that
apply between the parties at the time an order is placed by a customer and accepted by the
Group. The terms and conditions cover, as appropriate to the customer, pricing, settlement
of liabilities, rebate allowances and any other negotiated performance obligations.
The rebate allowances relate to the customers right to claim promotional discounts and
spoilage of goods. At the point of sale, promotional discounts, spoilage allowance and
corresponding adjustment to revenue is recognised for those allowances expected to be
claimed by customers. The Group uses its accumulated historical experience and, whenever
available, mutually agreed terms to estimate the rebate allowances on a per customer
basis.
No element of financing is present in the pricing arrangement. Settlement terms are
generally credit terms of 30 to 60 days. Terms reflect negotiations with customers, policies,
procedures and controls held by each business unit as it relates to customer credit risk. For
customers who purchase on credit, a receivable is recognised when the products are
delivered or picked up as this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is due.
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.
(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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020
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 assets
AASB 9 has three classification categories for financial assets; amortised cost, fair value
through other comprehensive income (FVOCI) and fair value through profit or loss.
The classification is based on the business model under which the financial asset is
managed and its contractual cash flows. Compared to AASB 139, the FVOCI and amortised
cost categories have been added and the held-to-maturity, loans and receivables and
available for sale classification categories have been removed. The Group only have
financial assets measured at amortised cost.
Amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
(i)
the financial asset is held within a business model whose objective is to hold
financial assets in order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows
that meet the sole payment of principal and interest (SPPI) requirements.
(ii)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Financial instruments (continued)
D
Impairment of financial assets
The Group assesses on a forward looking basis the expected credit losses associated with its
debt instruments carried at amortised cost. The impairment methodology applied depends
on whether there has been a significant increase in credit risk. For trade receivables,
contract debtors and lease receivables, the Group applies the simplified approach
permitted by AASB 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables.
Financial liabilities
AASB 9 largely retains the existing requirements of AASB 139 for the classification and
measurement of financial liabilities. Financial liabilities are measured at amortised cost,
except for those financial liabilities that are designated to be measured at fair value
through profit or loss.
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade
payables are settled on terms aligned with the normal commercial terms in operations.
(r)
Impairment of assets
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)
Leases
D
The Group, as a lessee will assess whether a contract is, or contains, a lease under AASB 16.
A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
If the contract is assessed to be, or contains, a lease, the Group will recognise a right-of-use
asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated depreciation and
impairment losses and adjusted for certain remeasurements of the lease liability.
Depreciation is based on the straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are
not paid at the commencement date, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability, offset
by lease payments made. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, a change in the estimate of the amount expected
to be payable under a residual value guarantee, or as appropriate, changes in the
assessment of whether a purchase or extension option is reasonably certain to be exercised
or a termination option is reasonably certain not to be exercised.
Recognition exemption - Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-
term leases with a lease term of 12 months or less and leases for low-value assets. The
Group will recognise the payments associated with these leases as an expense on a
straight-line basis over the lease term.
Impact on transition
There was no impact on the financial statements from the application of this new standard
as at 1 July 2019 as the Group’s leasing arrangements at that time were either:
•
•
low value assets, or
short-term contracts.
(u) Government grants
Government grants are not recognised until there is reasonable assurance that the Group
will comply with the conditions attaching to them and that the grants will be received.
A forgivable loan from government is treated as a government grant when there is
reasonable assurance that the entity will meet the terms for forgiveness of the loan.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u) Government grants (continued)
D
Government grants are recognised in profit or loss on a systematic basis over the periods in
which the Group recognises as expenses the related costs for which the grants are intended
to compensate.
(v)
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.
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.
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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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
D
(v)
Significant accounting judgements, estimates and assumptions (continued)
Impairment of non-financial assets
The Group tests annually, or whenever an impairment trigger is identified, 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 dispose and its value in use. The fair value less costs to dispose calculation is based
on the Group’s budget and data from various market participants 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.
Allowance for disposal of inventories
The allowance for disposal of inventories assessment requires a degree of estimation and
judgement. The level of the allowance is assessed by taking into account the recent sales
experience, the ageing of inventories, future production plans and their alignment with the
remaining term of any applicable contract manufacturing agreements, as well as any and
other factors that affect inventory obsolescence. To the extent that these judgements and
estimates prove incorrect, the Group may be exposed to potential additional inventory
write-downs or reversals in future periods.
Rebate allowances
The rebate allowances relate to the customers right to claim promotional discounts and
spoilage of goods. At the point of sale, promotional discounts, spoilage allowance and
corresponding adjustment to revenue is recognised for those allowances expected to be
claimed by customers. The Group uses its accumulated historical experience and, whenever
available, mutually agreed terms to estimate the rebate allowances on a per customer
basis.
COVID-19
The outbreak of the 2019 novel strain of coronavirus causing a contagious respiratory
disease known as COVID-19, and the subsequent quarantine measures imposed by the
United States, Australian and other governments, and related travel and trade restrictions
have caused disruption to businesses and resulted in significant global economic impacts.
These factors have had a significant impact on the Group’s financial results and operations
for the year ended 30 June 2020 as noted elsewhere within the Directors report. However,
as the impact of COVID-19 continues to evolve, including changes in government policy and
business reactions thereto, further disruption to our business may occur. Due to the
continually evolving nature of COVID-19 the Directors cannot reasonably estimate the
effects that the COVID-19 pandemic could have on future periods. However, there is
uncertainty about the length and potential impact of any resultant disturbance. As a result,
we are unable to estimate the potential impact on the Group’s future operations as at the
date of these Financial Statements.
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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 2020 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 2020.
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
30 September 2020
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Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Deloitte Touche Tohmatsu
Tower 2, Brookfield Place,
123 St Georges Tce,
Perth WA 6000, Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 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 2020, 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 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (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 Asia Pacific Limited and the Deloitte Network.
For personal use only
Key audit matter
How the scope of our audit responded to the
Key Audit Matter
Carrying value of non-current assets
As at 30 June 2020, the Group’s non-current
assets were assessed for impairment,
resulting in an impairment of $2,780,586
being recognised. This expense was in
addition to the impairment of $1,534,000
recognised as at 31 December 2019, taking
the cumulative impairment for the full year
ended 30 June 2020 to $4,314,586 as
disclosed in Note 12.
The recoverable amount of the Group’s non-
current assets has been estimated using a
fair value less costs to dispose impairment
model.
Determination of the recoverable amount
requires significant judgements and
estimates, specifically concerning factors
such as:
•
forecast sales volumes, and related
growth rates;
forecast pricing;
forecast production, sales and
distribution, marketing and general
and administrative costs; and
discount rates.
•
•
•
Revenue recognition
For the year ended 30 June 2020 the Group’s
revenue from the sale of goods recognised
totalled $10,753,996.
Significant judgement is required in
determining the timing of revenue
recognition, given the shipping terms, and
the related timing of when control passes to
the end customer, and also in calculating the
allowance for spoilage, which arises due to
customers ability to return damaged or
spoiled product.
In conjunction with our valuation specialists, our
procedures included, but were not limited to:
•
•
•
•
•
•
process
understanding management’s
for
assessing the recoverability of non-current
assets;
evaluating management’s assessment as to
whether an impairment indicator existed;
assessing the integrity of the model used by
management to calculate the recoverable value
of non-current assets with reference to relevant
accounting standards;
assessing the reasonableness of forecast cash
flows including the impact of COVID-19 used in
the impairment models compared to the latest
Board approved budget;
assessing the historical budgeting accuracy of
the Group and, where appropriate, challenging
forecast cash flows with reference to historical
and recently observed actual performance;
assessing and challenging the assumptions and
methodologies adopted by management to
estimate recoverable amount of the non-current
assets, including:
o
o
key assumptions, including forecast
sales volumes by comparing them to
historical results and recently observed
actual performance; and
the reasonableness of the discount rate
applied.
We also assessed the appropriateness of the
disclosures included in Note 12 to the financial
statements.
Our procedures included, but were not limited to:
•
•
•
•
•
understanding the process and key controls
management has in place to address the risks
of material misstatement in relation to the
timing and completeness of the revenue
recorded;
assessing the key contracts with significant
customers to understand the terms of those
contracts for the appropriate revenue
recognition;
testing revenue transactions on a sample basis
of invoices to delivery dockets to address the
risks of occurrence and accuracy of the revenue
recorded;
testing revenue transactions around the year
end to ensure that revenue transactions are
recorded in the correct period; and
assessing the appropriateness of the allowance
for spoilage, compared to actual claim rates.
We also assessed the appropriateness of the
disclosures included in Note 23(m) to the financial
statements.
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Other Information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2020, 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 fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
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•
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, actions taken to eliminate
threats or safeguards applied.
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 13 to 25 of the Directors’ Report for the year
ended 30 June 2020.
In our opinion, the Remuneration Report of Yowie Group Limited, for the year ended 30 June 2020,
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
David Newman
Partner
Chartered Accountants
Perth, 30 September 2020
For personal use only
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 25
September 2020.
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
1,086
629
327
691
175
No. of
Ordinary Shares
289,239
1,795,432
2,631,719
23,985,299
189,866,212
2,908
218,567,901
There were 2,130 shareholders holding less than a marketable parcel of ordinary shares.
Quoted and Unquoted Equity Securities
Equity Security
Ordinary Shares
Employee Service Rights
Exercise Price: Nil
Expiry Date: 18 Sep 2025
Quoted
218,567,901
-
Unquoted
-
271,739
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D
ASX ADDITIONAL INFORMATION
Unlisted Employee/Consultant Options/Rights
Exercise Price
Nil
Expiry Date
18 Sep 2025
No.
271,739
No. of Holders
1
Twenty Largest Holders of Ordinary Shares
Name
Shares Held
Percentage
%
BNP Paribas Nominees Pty Ltd
Keybridge Capital Limited
Recruitment Investments Pty Ltd
Scarborough Equities Pty Ltd
Reash Pty Ltd
Bentley Capital Limited
Keybridge Capital Limited
Abdullah Hani Abdallah
Citicorp Nominees Pty Limited
1
2
3
4
5
6
7
8
9
10 Mr Keith Phillip Hudson & Mrs Ann Hudson
11 Mr Ian Morton & Mrs Deborah Morton
12 Wilson Asset Management (International) Pty Limited
13
14
15
16 Mr Asok Kumar & Mrs Renu Kumar
Keybridge Capital Limited
17
HSBC Custody Nominees (Australia) Limited
18
19
Dr Gregory Bryan Makin
20 Mr Louis Thomas Carroll
Huntsman Holdings Pty Ltd
Bart Superannuation Pty Limited
Patricia Mary Fields
TOTAL
Substantial Shareholders
31,627,746
17,127,903
11,243,150
11,243,150
10,000,000
9,956,110
6,423,799
5,666,667
5,578,340
5,026,373
3,369,949
3,267,231
3,000,000
2,709,604
2,000,000
2,000,000
1,889,000
1,803,413
1,757,027
1,565,217
137,254,679
14.47
7.84
5.14
5.14
4.58
4.56
2.94
2.59
2.55
2.30
1.54
1.49
1.37
1.24
0.92
0.92
0.86
0.83
0.80
0.72
62.79
Substantial shareholders who have notified the Company in accordance with section 671B of
the Corporations Act 2001 are as follows:
Shareholder
Aurora Funds Management Limited in its capacity as
responsible entity of HHY Fund
Australian Style Group Pty Ltd
Bentley Capital limited
Keybridge Capital Limited
Orion Equities Limited
Queste Communications Ltd
Recruitment Investments Pty Ltd
Scarborough Equities Pty Ltd
Wilson Asset Management Group
No. of Shares
26,526,643
17,002,903
21,199,260
52,845,101
21,199,260
21,199,260
11,243,150
21,199,260
56,112,332
%
12.24
7.81
9.71
24.21
9.71
9.71
5.15
9.71
25.71
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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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