ASX Announcement 31 August 2018
HotCopper Holdings Limited | www.hotcopper.com.au | ASX: HOT | Level 11, BGC Centre, 28 The Esplanade Perth WA
2018 Appendix 4E and Annual Report
The Directors of HotCopper Holdings Limited (ASX:HOT) (HotCopper or the Company) are pleased to provide the Appendix 4E and audited Annual Report for the year ended 30 June 2018.
Appendix 4E: Preliminary Financial Report for the year ended 30 June 2108 as required by ASX listing rule 4.3A
Results for announcement to the market
(all comparisons to the year ended 30 June 2017) Movement 30 June 2018
Restated 30 June 2017
Audited Earnings
Revenue from ordinary activities Up 28% 4,917,647 3,852,364
Profit before income tax Up 69% 1,553,924 920,311
Profit for the year attributable to ordinary equity holders Up 164% 1,177,938 445,356 Appendix 4E Net tangible asset per share
Net tangible assets Up 29% 3,354,538 2,601,376
Fully paid ordinary shares on issue at Balance Date - 106,985,001 106,985,001
Net tangible asset backing per issued ordinary share (cents) Up 29% 3.14 2.43
Audited Earnings per share (EPS)
Basic earnings per share (cents) Up 139% 1.10 0.46
Dividend
As a result of the strong financial performance of the Company, the board declares a fully franked dividend of 0.5 cents per share reflecting the expectation for continued strength and growth of HotCopper as well as the commitment to shareholders to distribute profits where they are in excess of the company’s funding requirements. Dividend Information Amount per share (cents) Franked amount per share (cents)
Tax Rate for franking
credit
Interim 2018 dividend per share (paid 23rd March 2018) 0.5 0.5 27.5%
Final 2018 dividend per share determined 0.5 0.5 27.5%
Key details of the dividend are a:
Date Dividend Declared Fri 31st August 2018
Ex-Dividend Date Wed 5th September 2018
Record Date Thurs 6th September 2018
Date Payable Fri 28th September 2018
ASX Announcement 31 August 2018
HotCopper Holdings Limited | www.hotcopper.com.au | ASX: HOT | Level 11, BGC Centre, 28 The Esplanade Perth WA Additional information supporting the Appendix 4E disclosure can be found in the Annual Report which contains the Directors’ Report and the 30 June 2018 Financial Statements and accompanying notes.
This report is based on the consolidated financial statements for the year ended 30 June 2018 which have been audited by Ernst & Young.
Review of the 2018 financial results
The board is pleased to present the 30 June 2018 Annual Report, reflecting excellent balanced revenue growth for the year with low cost growth to expand the Company profit margin. Revenue increased by $1,065,283 at an annualised growth rate of 28% to a total of $4,917,647 for the 2018 financial year and cost growth has been limited to 5%.
By ensuring revenue growth exceeded cost growth, profit before tax margin increased from 22% to 32% delivering $1,177,938 profit after tax, supporting a full year, fully franked dividend of 0.5 cents per share in addition to the half year, fully franked dividend also paid at 0.5 cents per share.
The 2017 financials presented in this Annual Report have been restated to include additional revenue of $163,224. This revenue adjustment relates to a single supplier engaged for the sale of HotCopper advertising inventory under a Publisher Agreement, and reconciliation of the supplier account identified these advertising sale receipts earnt in 2017 that had not been reported. Further details of this restatement can be found in Note 3 of the accounts.
The financial results reflect the Company’s successful ability to manage, at a low operating cost, the HotCopper investment forum, providing a commercial return to shareholders by providing access to that forum to advertisers and ASX listed companies.
HotCopper is internally funded from cashflow generated on the sale of advertising to consumer advertisers and corporate investor relations services. At 30 June 2018 the company has cash and cash equivalents in hand of $3,011,352, an increase of $418,430, 16% for the year.
During the year the Company completed the launch of both iOS and Android mobile phone applications and invested internally in the launch of a website redesign to improve the experience of HotCopper users through improved functionality, operational efficiency and speed as well as improved responsive designed for mobile and tablet users.
The site redesign enhances both the look and function of the site as well as migrating from legacy development infrastructure to a fully integrated and efficient development platform. HotCopper commenced soft launch of the updated site to a select population of HotCopper members in August 2018 to enable user feedback and bug-fixes to be incorporated into the final design expected to be launched shortly after.
The Corporate Spotlight service, a cornerstone HotCopper investor relations service for listed corporations reached over 100 individual sales by the end of June 2018 and remains a key offering growth driver for the Company.
Commenting on the Annual Report, General Manager and Company Secretary, Adam Webb Ware, said, “The board and management are pleased by the financial results reported today, reflecting balanced revenue growth while keeping costs down to improve profit margins and enable a final shareholder dividend following the half year maiden dividend. This has been achieved in the backdrop of significant operational and website efforts to launch both the iOS and Android mobile apps and reaching the development goalposts required to commence launch of the HotCopper site redesign, transitioning the website away from legacy development infrastructure. The Company is well capitalised and placed to continue this momentum for the 2019 financial year.”
ASX Announcement 31 August 2018
HotCopper Holdings Limited | www.hotcopper.com.au | ASX: HOT | Level 11, BGC Centre, 28 The Esplanade Perth WA For further information, please contact:
Adam Webb Ware HotCopper Holdings Ltd [email protected] +61 8 6169 3112
About HotCopper Holdings Ltd
HotCopper Holdings Limited operates www.hotcopper.com.au – Australia’s #1 internet discussion forum for ASX-listed companies and stock market analysis.
HotCopper has over 300,000 registered members and over 600,000 unique site visitors per month, a number that has been growing strongly since 2004.
HotCopper derives revenue from commercial and corporate advertising, as well as investor relations services to listed entities. HotCopper is developing a range of new website enhancements and investor services to enhance the HotCopper user experience and create value for shareholders through new revenue streams
and its controlled entities
ACN 611 717 036
Financial report for the year ended 30 June 2018
ABN 39 092 598 859
Corporate Directory
Directors
Alec Christopher Pismiris Gavin John Argyle Colin Edward Chenu
Company Secretary Adam Webb Ware
Registered and Principal Office Level 11, BGC Centre
28 The Esplanade, Perth
WA 6000
Bankers
Westpac Banking Corporation 109 St Georges Terrace, Perth
WA 6000
Solicitors
Bennett + Co. Ground Floor, BGC Centre 28 The Esplanade,
Perth WA 6000
Auditor Ernst & Young 11 Mounts Bay Road, Perth
WA 6000
HOTCOPPER HOLDINGS LIMITED
ABN 39 092 598 859
CONTENTS Page
Directors’ Report 1
Consolidated Statement of Profit or Loss and Other Comprehensive Income 17
Consolidated Statement of Financial Position 18
Consolidated Statement of Changes in Equity 19
Consolidated Statement of Cash Flows 20
Notes to the Consolidated Financial Statements 21
Directors’ Declaration 57
Independent Auditor’s Report 58
Auditor’s Independence Declaration 62
ASX Additional Information 63
DIRECTORS’ REPORT
1 The directors submit their report for HotCopper Holdings Limited (“the Company”) and its controlled entities (“the Group”) for the financial year ended 30 June 2018.
Directors
The names of the directors in office at any time during, or since the end of, the year are set out below. Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Names, qualification, experience and special responsibilities
Mr Alec Christopher Pismiris (Chairman)
Mr Pismiris is currently a director and company secretary for several ASX listed companies as well as a number of unlisted public and private companies. Mr Pismiris was recently appointed a director of Pacton Gold Inc., a company listed on the TSX Venture Exchange, where he is engaged as Interim President and Chief Executive Officer. Mr Pismiris completed a Bachelor of Commerce degree at the University of Western Australia, is a member of the Australian Institute of Company Directors and a Fellow of The Governance Institute of Australia. Mr Pismiris has over 30 years’ experience in the securities, finance and mining industries and has participated numerous times in the processes by which boards have assessed the acquisition and financing of a diverse range of assets and has participated in and become familiar with the range of evaluation criteria used and the due diligence processes commonly adopted in the commercial assessment of corporate opportunities.
Other current directorships: Agrimin Limited, Aguia Resources Limited, Pacton Gold Inc. and Pelican Resources Limited
Former directorships (last 3 years): Cardinal Resources Limited and Impression Healthcare Limited.
Mr Gavin John Argyle
Mr Argyle is an experienced senior executive who has worked in Australian capital markets for more than 25 years. In 2006, Mr Argyle co-founded Capital Investment Partners (CIP), a successful Perth-based investment bank providing capital raising and corporate advisory services to small and mid-capitalised ASX-listed companies. He has been managing director of CIP since 2008.
Mr Argyle holds a Bachelor of Commerce from the University of Western Australia and an MBA from the Wharton School at the University of Pennsylvania.
Other current directorships: none Former directorships (last 3 years): none
Mr Colin Edward Chenu
Mr Chenu is a graduate of the University of Western Australia, with a Bachelor of Law, and is admitted to practice in the Supreme Court of Western Australia and the High Court of Australia. He has practised law in Western Australia for more than 30 years as a barrister and solicitor, in a wide range of commercial litigious and non litigious work. Mr Chenu has gained extensive experience in the law of corporations, trade practices, contracts, equity and trusts, and defamation.
Other current directorships: Pelican Resources Limited Former directorships (last 3 years): none
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT
2 Company Secretary
Ms Susan Hunter (Resigned 30 April 2018)
Ms Hunter has over 20 years’ experience in the corporate finance industry. She is founder and managing director of consulting firm Hunter Corporate Pty Ltd, which specialises in the provision of corporate governance and company secretarial advice to ASX listed companies.
She previously held roles at Ernst & Young, PricewaterhouseCoopers and Bankwest both in Perth and Sydney. Ms Hunter holds a Bachelor of Commerce, is a Member of the Australian Institute of Chartered Accountants, a Fellow of the Financial Services Institute of Australasia, a Graduate Member of the Australian Institute of Company Directors and an Associate of the Governance Institute of Australia Ltd.
General Manager and Company Secretary
Mr Adam Webb Ware (Appointed General Manager 8 March 2018, appointed Company Secretary 30 April 2018)
Mr Webb Ware has over 20 years’ industry experience in corporate finance and financial services across Australia, USA and UK markets. Prior to working in the investment and commercial banking sector, Mr Webb Ware spent several years with the information and technology company, IMS Health (now IQVIA) holding responsibilities for investments and product development as well as finance and internal controls.
Mr Webb Ware is a Chartered Accountant and holds a Bachelor of Commerce from the University of Western Australia.
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of the Company were: Number of ordinary shares Number of options A. Pismiris 350,000 700,000 G. Argyle 5,600,000 - C. Chenu 150,000 -
Principal activities
HotCopper Holdings Limited operates HotCopper, Australia’s number one stock market internet discussion forum. HotCopper is the largest internet discussion forum in relation to the Australian stock market and has become a popular source of research and discussion for a wide range of investors. In addition, HotCopper is an investor relations tool for ASX-listed companies seeking access to HotCopper’s substantial user base of retail and sophisticated investors and self-managed superannuation funds.
HotCopper currently generates revenue from commercial and corporate advertising.
No significant change in the nature of these activities occurred during the year.
DIRECTORS’ REPORT
3
Operating and financial review
The 2018 financial year is the first full financial year for HotCopper operating as a publicly traded company since gaining admittance to the Official List of the Australian Stock Exchange on the 13th of
September 2016. It also represents the first full year the company is able to demonstrate progress against the strategic objectives set out in the IPO Prospectus under its reconstituted board following director changes effected in the first half of 2017.
The board is pleased to present the HotCopper financial results reporting excellent balanced revenue growth for the year with low cost growth to expand the Company profit margin. Revenue increased by $1,065,283 at an annualised growth rate of 28% to a total of $4,917,647 for the 2018 financial year.
For the same period, growth in operating expenses was limited to 6% (2018: $3,395,988, 2017: $3,210,888). By ensuring revenue growth exceeded cost growth, HotCopper’s profit before tax margin has increased from 22% to 32% delivering a consolidated profit after tax of the Group of $1,177,938 for the financial year (2017: $445,356).
The 2017 financials presented in this Annual Report have been restated to include additional revenue of $163,224. This revenue adjustment relates to a single supplier engaged for the sale of HotCopper advertising inventory under a Publisher Agreement, and reconciliation of the supplier account identified these advertising sale receipts earnt in 2017 that had not been reported. Further details of this restatement can be found in Note 3 of the accounts.
The financial results presented by the Company are reflective in its successful ability to manage, at a low operating cost, the HotCopper investment forum, providing a commercial return to shareholders by providing access to that forum to advertisers and ASX listed companies.
The mission of HotCopper is to improve Australian investment decisions through the exchange of analysis. The Company operates a free website providing a source of information for a range of retail, sophisticated and self-managed superannuation fund investors and market participants without any subscription requirement. That audience is significant in size and engagement. They visit HotCopper daily to make investment decisions through the review and exchange of information and market sentiment commentary freely available.
HotCopper monitors a range of website performance measures, including engagement metrics such as the number of visitor page views. Page views report the total volume of individual news and information pages visitors look at while using HotCopper. Applying a general principle that the higher the pageviews, the more information visitors are accessing and engaging with, the metric provides a comparable measure to peer sites in Australia.
HotCopper monthly visitor page view volumes have increased from 34 million in January 2017, to 37 million by June 2017, to 47 million in June 2018, representing growth of 34% since the start of 2017, and 21% compared to June 2017.
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT 4 Since January 2017 HotCopper pageviews have increased 34% to 47 million per month by June 2018. Source: Google AnalyticsPageviews are a media performance metric reported by the global measurement and data analytics company, Nielsen Holdings PLC Thomson Reuters. HotCopper achieves significantly higher page view levels compared to “Financial News and Information” category peer’s, reporting the highest volume of pageviews in the category for June 2018.
HotCopper achieves the highest volume of pageviews in the category of “Financial News and Information”. Source: Nielsen Content Ratings, June 2018
HotCopper also monitors visitor engagement by examining is the average number of minutes a visitor will spend on HotCopper per session. The longer the period of time a visitor remains on the site, the better the indicator that visitors are engaging with HotCopper content and discussion and finding value from their visit as they make investment decisions.
0 5 10 15 20 25 30 35 40 P a ge V ie w s (m il li o n s)
Australian Financial News - Nielsen (June 2018)
0 10 20 30 40 50 60 70 Jan-17 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Monthly Average Page Views (millions)
DIRECTORS’ REPORT
5 HotCopper visitors consistently spend on average eleven and a half minutes per session on HotCopper 2018.
Source: Google Analytics
HotCopper has a highly engaged audience, accessing millions of pages of news and information every month and spending consistently over eleven and a half minutes per session. This places HotCopper as a valuable contributor to an efficient Australian stock market, used by investors in their decision-making process.
Maintaining and growing that audience engagement is a key strategic goal and revenue driver for the Company and main focus for internal investment.
Approximately 40% of the HotCopper audience access the website through a mobile phone device and in July 2017 HotCopper took a major step towards improving services to this audience, launching its first mobile app, the HotCopper iOS mobile application.
Since launch users of the HotCopper iOS app have continued to grow as new members downloaded the app and used it for their daily HotCopper access. A year on, in July 2018, HotCopper launched its Android app, offering Android mobile users a free app to match the iOS offering, completing coverage to the mobile user market.
Monthly HotCopper visitors using the iOS mobile app has grown to exceed 13,000 by June 2018, completing over 370,000 HotCopper in-app sessions for the month. Source: Google Analytics 0 2 4 6 8 10 12 14 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Average Session Duration (minutes)
0 3 6 9 12 15 0 100 200 300 400 500 U se rs (' 0 0 0 ) Se ss io n s (' 0 0 0 )
HotCopper Mobile Device Audience
Sessions Users
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT
6 In addition to investment in the existing HotCopper website and mobile offerings, the Company has been working to update the HotCopper site design as well as migrate from legacy infrastructure to enable faster introduction of new user features and initiatives. The new site will enable improved functionality, navigation, operational efficiency and speed, including a responsive design for mobile and tablets.
The new site design has been launched in August 2018, commencing with a gradual roll out to selected members to enable user feedback and socialisation prior to full launch.
The site redesign provides an improved development platform, enabling ongoing functionality improvements, user features and services to increase user engagement and value, as well as provide an improved platform for additional revenue streams for corporate and consumer advertising that enhance, rather than disrupt the user experience.
HotCopper provides Australian listed companies access to an engaged audience of investors for investor relations services. The Company has made further progress in its commercial offerings to develop complementary revenue streams for minimal capital investment. In November 2016, HotCopper announced the launch of its new investor relations platform, Corporate Spotlight. Designed to address the difficulties that ASX-listed companies have in reaching large numbers of self-directed Australian investors, Corporate Spotlight offers a dedicated space above a company’s HotCopper sub-forum to display company information, videos and publications.
By 30 June 2018 over 100 contract sales of the Corporate Spotlight offering have been made, validating Company belief in the customer proposition and commercial potential of the offering.
The term contract nature of these sales means revenue is recognised over the life of the contract, typically 12-months. In relation to contracts sold and collected during the 2018 financial year, and relating to contracted periods extending past 30 June 2018, the Company has deferred revenue of $716,363 on the Balance Sheet. Further details are found at Note 17.
As a result of the strong financial performance of the Company, a maiden, fully franked dividend was declared of 0.5 cents per share in relation to the half year ended 31 December 2017. The board will declare a full year, fully franked dividend of 0.5 cents per share reflecting the expectation for continued strength and growth of HotCopper. This is funded internally from operating profits and represents the commitment to shareholders to distribute those profits where they are in excess of the company’s own growth funding requirements.
As the company remains in a growth period the board has elected not to set a formal dividend policy statement for future dividends however it does intend to continue to pay dividends as and when possible and at a level consistent with dividend levels declared for the 2018 financial year.
The board is working to appoint a Managing Director with suitable individual and specific industry knowledge in the fintech and media sector. The board is hopeful to make this appointment before the end of the financial year and until an appointment is made, HotCopper General Manager, Adam Webb Ware will continue working as acting CEO.
Significant changes in the state of affairs
There have been no other significant changes in the Group’s state of affairs during the course of the year ended 30 June 2018.
DIRECTORS’ REPORT
7
Review of financial condition
The company is well capitalised, with cash and cash equivalents of $3,011,352 at 30 June 2018, an increase of $418,430 (16%) from the same time 2017. Cash receipts from customers increased 28% for the financial year to reach $5,321,768 (2017: $4,164,100). As 30 June 2018 current assets exceed current liabilities by $2,560,955 and HotCopper does not maintain drawn loan or debt facilities as operations and investments continue to be funded from operational cashflow.
Significant events after the balance date
Other than the declaration of a full year, fully franked dividend of 0.5 cents per share, no matters or circumstances have arisen since 30 June 2018 that have significantly affected or may significantly affect:
the Company’s operations in future financial years; or the results of those operations in future financial years; or the Company’s state of affairs in future financial years.
Likely developments and expected results of operations
Likely developments in the operations of the consolidated group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the consolidated group.
Environmental regulation
The Group is not subject to any particular or specific environmental regulation in any of the jurisdictions in which it operates and therefore is not required to present further details in relation to environmental regulation.
Dividends
In the current year the Company paid a fully franked dividend of 0.5 cents per share in relation to the half year ended 31 December 2017.
Subsequent to the year end, the board will declare a full year, fully franked dividend of 0.5 cents per share.
Options
As at the date of this report, there were 5,350,000 unissued ordinary shares under options (5,350,000 at the reporting date). Refer to the Remuneration Report for further details of the options outstanding for Key Management Personnel (KMP).
No shares were issued during or since the end of the year as a result of the exercise of an option over unissued shares or interests.
Indemnification and insurance of directors
During or since the financial year, the Company has paid premiums in respect of a contract insuring all the directors of HotCopper Holdings Limited against legal costs incurred in defending conduct other than:
a) a wilful breach of duty, and
b) a contravention of section 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums paid for Directors D&O Insurance for the 2018 financial year was $18,700.
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT
8
Indemnification of auditors
To the extent permitted by lay, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
Directors’ meetings
The number of meetings of directors held during the year and the number of meetings attended by each director were as follows:
Held Attended
A. Pismiris 6 6
G. Argyle 6 6
C. Chenu 6 6
Non-audit services
The following non-audit services were provided by the entity’s auditor, Ernst & Young Australia. 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 nature and scope of each type of non-audit service provided means that auditor independence was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services for the 2018 financial year:
$
Tax Advisory 21,738
21,738
Auditor independence declaration
A copy of the Auditor’s Independence Declaration as required under Section 307C of the
Corporations Act 2001 is set out in this Annual Report, located immediately following the Independent Audit Report.
DIRECTORS’ REPORT
9
REMUNERATION REPORT (AUDITED)
The Group’s remuneration policy is structured for the purpose of motivating executive directors and senior management to pursue the long-term growth and success of the Group and demonstrating a clear relationship between executive directors’ and senior management’s performance and remuneration.
The Board’s sets the level and structure of remuneration for executive directors and senior management, for the purpose of balancing the Group’s competing interests of attracting and retaining executive directors and senior management and not paying excessive remuneration.
Executive directors’ remuneration is structured to reflect short and long-term performance objectives appropriate to the Group’s circumstances and goals. Executive directors’ and senior management’s remuneration packages involve a balance between fixed and incentive pay, reflecting short and long-term performance objectives appropriate to the Group’s circumstances and goals.
The remuneration structures take into account the capability and experience of the key management personnel and the Group’s performance including:
- the successful implementation of new revenue streams for development into operations; - the Group’s earnings;
- the growth in share price and delivering enhancement of shareholder value; and - the amount of incentives within each key management person's remuneration.
2017 AGM first strike
The Company received a first strike at the 2017 AGM. The board noted that the 2017 period included several board and key management personnel appointments that had exited the Company by the end of the 2017 financial year, as well as related termination costs and share-based payments in relation to the initial public offering.
For the 2018 financial year, Directors remuneration has reduced by 75% to $132,000 for the year (2017: $520,526) and total remuneration to Directors and key management personnel has reduced by 30% to $524,977 (2017: $748,768). For the same period reported revenue has increased 28% and profit attributable to the members of the Company has increased by 164%.
As a percentage of revenue, total remuneration to Directors and key management personnel has reduced to 11%, down from 18% in 2017.
The Board considers the Group remuneration policy and practice to be consistent and aligned with the Company’s current performance and long-term performance objectives. The Company’s remuneration philosophy will be further demonstrated at the conclusion of its search for the appointment of a Managing Director, as well as the possibility of an additional independent director with specific sector experience, as it relates the Company’s commitment for enhanced transparency of remuneration packages and disclosure.
Principles of remuneration
Remuneration packages include a mix of fixed and variable remuneration and short and long-term performance-based incentives.
Fixed remuneration
Fixed remuneration consists of base remuneration as well as employer contributions to superannuation funds, as required by law. Remuneration levels are reviewed annually by the board through a process that considers individual performance and overall performance of the Group.
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT
10 Performance linked remuneration
Performance linked remuneration includes short-term and long-term incentives and is designed both to reward key management personnel for meeting or exceeding their financial and personal objectives and to keep the Group competitive in the marketplace.
The long-term incentive (‘LTI’) has been provided as options over ordinary shares of the Company that were issued when the Company completed its listing on the Australian Securities Exchange (‘ASX’) in September 2016.
Short-term incentive bonus
Short-term incentives are paid to key management personnel at the discretion of the board based on individual performance for the year. The full board reviews and confirms the cash incentive to be paid to each individual. Discretionary payments thus provide the board with flexibility to reward individual performance.
During the 2018 financial year, a total cash incentive payment of $34,904 was paid, or is payable, to key management personnel. These payments were received by the former Chief Executive Office, Mr Ben Newport related to the achievement of a cashflow performance milestone, calculated as an uncapped 3.5% of receipts from customers above the quarterly milestone set by the board.
There are no contracts in place including a STI component following departure of Mr Newport in June 2018.
Long-term incentive
Options are issued at the discretion of the board and provides for key management personnel to receive varying numbers of options for no consideration. The actual number of options issued depends on the seniority and responsibility of the executive concerned.
For executive options, the performance conditions and vesting periods of the options are set so as to provide a realistic incentive to each executive and to reflect the executive’s contribution to the Group and enhancement of value for all shareholders. The Company did not issue any options during the 2018 financial year.
Consequences of performance on shareholder wealth
The board considers that the most effective way to increase shareholder wealth is to increase revenue and profits through existing channels and the development of new revenue streams through website enhancements, product development and possible strategic partnerships.
The board considers that the Group’s LTI schemes incentivise key management personnel to successfully develop new revenue streams by providing rewards that are directly correlated to delivering value to shareholders through share price appreciation.
The factors that are considered relevant to affect total shareholder returns as required to be disclosed by the Corporations Act are summarised in the following table.
2018
2017
Restated* 2016 2015 2014
Revenue ($000’s) 4,917 3,852 2,747 2,148 1,283
Net profit after tax ($000's) 1,177 445 498 594 239
Share price at year end ($'s) 0.22 0.15 N/A** N/A** N/A**
* Certain amounts shown here do not correspond to the 2017 financial statements and reflect adjustments made, refer to Note 3. **Company was unlisted prior to September 2016
DIRECTORS’ REPORT
11 During the year, a fully franked dividend of $0.005 per share was declared on 27 February 2018 for payment on 23 March 2018 by the Company. The dividend cash payment totalled $534,925.
In the 2017 financial year a distribution of $10,184,223 was made to the original shareholders of Report Card on the Group reorganisation and a fully franked dividend of $570,500 was declared on 29 October 2015 for payment on 29 October 2015 by the Company’s subsidiary, Report Card.
Service contracts
The Group has entered into an employment agreement with General Manager, Mr Adam Webb Ware. The terms of the agreement are set out as follows:
- Commencement date: 8 March 2018 - Term: 12 months
- Fixed remuneration: $175,000 per annum - Termination for cause: no notice period
- Termination without cause: one month notice period - Termination by employee: one month notice period
On 30 April 2018 Mr Webb Ware was also appointed as Company Secretary in addition to his existing role as General Manager, without change to Mr Webb Ware’s employment contract or remuneration. From 1 June 2018 Mr Webb Ware has worked as acting CEO in addition to his existing responsibilities. A fixed remuneration supplement equivalent to $25,000 per year has been awarded while Mr Webb Ware works in this capacity.
There are no other service contracts with any director and there are no other executives in the Company currently.
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT
12 Directors’ and executive officers’ remuneration
Details of the nature and amount of each major element of remuneration of each director and key management person of the Group for the year ended 30 June 2018 are as follows. Short-term Post-employment Termination benefits Share-based payments Total Proportion of remuneration performance related Value of options as proportion of remuneration Salary & fees $ Consulting Fees $ Bonus $ Total $ Superannuation benefits $ $ $ $ % % Directors A Pismiris 60,000 - - 60,000 - - - 60,000 - - G Argyle 36,000 - - 36,000 - - - 36,000 - - C Chenu 36,000 - - 36,000 - - - 36,000 - - Total 132,000 - - 132,000 - - - 132,000
Other key management personnel
B Newport(1) – Chief Executive
Officer 200,000 - 34,904 234,904 22,316 - - 257,220 14 -
M Fennell(2) – General Manager 67,381 - - 67,381 5,849 - - 73,230 - -
A Webb Ware(3) – General
Manager 57,102 - - 57,102 5,425 - - 62,527 - -
Total 324,483 - 34,904 359,387 33,590 - - 392,977
(1) Resigned 30 June 2018 (2) Resigned 21 December 2017 (3) Appointed 8 March 2018
DIRECTORS’ REPORT
13 Directors’ and executive officers’ remuneration (continued)
Details of the nature and amount of each major element of remuneration of each director and key management person of the Group for the year ended 30 June 2017 are as follows. Short-term Post-employment Termination benefits Share-based payments Total Proportion of remuneration performance related Value of options as proportion of remuneration Salary & fees $ Consulting Fees $ Bonus $ Total $ Superannuation benefits $ $ $ $ % % Directors A Pismiris* 35,400 - - 35,400 - - 41,332 76,732 - 54 G Argyle(1) 23,300 - - 23,300 - - - 23,300 - - C Chenu(2) 24,000 - - 24,000 - - - 24,000 - - S James(3)* 42,000 60,000 - 102,000 - - 118,092 220,092 - 54 G Reilly(4)* 56,000 - 12,500 68,500 - 40,000(8) 67,902 176,402 7 38 Total 180,700 60,000 12,500 253,200 - 40,000 227,326 520,526
Other key management personnel
B Newport(5) – Chief Executive
Officer 29,187 - 2,100 31,287 2,973 - - 34,260 6 -
M Fennell(6) – General Manager 96,400 - 7,500 103,900 9,158 - - 113,058 7 - G D’arcy(7) – Managing Director
(Report Card) 59,070 - - 59,070 1,188 - 20,666 80,924 - 26
Total 184,657 - 9,600 194,257 13,319 - 20,666 228,242
(1) Appointed 8 November 2016 (2) Appointed 8 November 2016 (3) Resigned 22 June 2017 (4) Resigned 3 February 2017 (5) Appointed 11 April 2017, Resigned 30 June 2018 (6) Appointed 3 October 2016, Resigned 21 December 2017 (7) Resigned 31 July 2016 (8) This relates to payment of remainder of fees due under the Executive Services Agreement. *Includes remuneration earned as a Director of Report Card Pty Ltd
HOTCOPPER HOLDINGS LIMITED
DIRECTORS’ REPORT
14 Non-executive directors
Total remuneration for all non-executive directors was set at $400,000 per annum (approved 22 April 2016). The levels of fees set were based on a review involving reference to fees paid to other non-executive directors of comparable companies at the time. Directors’ fees are paid monthly in arrears. Members of the board of directors are entitled to performance related remuneration. Directors’ fees cover all main board activities. Additional services provided outside of board duties attract a separate daily rate agreed by the full board. There is no board retirement scheme and there is currently no intention to establish such a scheme.
Annual directors’ fees currently agreed to be paid by the Company are $60,000 to the Chairman and $36,000 to the other non-executive directors. Superannuation payments (if applicable) are not included in these amounts.
Analysis of bonuses included in remuneration
Short-term incentive cash bonuses were awarded and paid as remuneration in the year ended 30 June 2018 and 30 June 2017 as follows:
Key management personnel
Bonus awarded Rationale
2018
B Newport $34,904 In accordance with the terms of his employment
contract. 2017
G Reilly $12,500 At discretion of Chairman, based on performance
of the business and length of service.
B Newport $2,100 In accordance with the terms of his service
employment contract (described above).
M Fennell $7,500 At discretion of Chairman, based on performance
of the business and length of service.
Equity instruments
All options refer to options over ordinary shares of HotCopper Holdings Limited, which are exercisable on a one-for-one basis.
Options granted as remuneration
The Company did not issue any LTI options during the 2018 financial year.
It is the intention of the Company to implement an Employee Option Plan (Plan) and will seek shareholder approval for the adoption of the Plan at the Company’s 2018 Annual General Meeting. The Board considers the Plan a crucial mechanism to encourage and retain high level executive, employee and contractor performance. The Board intends to implement the Plan, and set the performance conditions, in a manner designed to incentivise and reward high level executive, management and employee performance.
Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions have been altered or modified by the issuing entity during the reporting period.
DIRECTORS’ REPORT
15 Exercise of options granted as remuneration
No shares were issued on the exercise of options granted as remuneration during the reporting period, or since the end of the reporting period.
Analysis of rights over equity instruments granted as remuneration
The table below discloses the number of share options granted, vested or lapsed during the prior year. No options were granted during the current year, only the below cancellations were noted:
Directors Financial Year Options granted during the year
Grant date Fair value of
option at award
date
Vesting date Exercise price No. vested during the year No. cancelled during the year Value of options granted during the year A Pismiris 2017 - 13 September 2016 $0.059 13 September 2016 $0.25 - - - S James(1) 2017 - 13 September 2016 $0.059 13 September 2016 $0.25 - 2,000,000 - G Reilly(2) 2017 - 13 September 2016 $0.059 13 September 2016 $0.25 - 1,150,000 - Key management personnel G D’Arcy(3) 2017 - 13 September 2016 $0.059 13 September 2016 $0.25 - -
(1) Resigned 22 June 2017 (2) Resigned 3 February 2017 (3) Resigned 31 July 2016
The options granted during the prior year had an expiry date of 13 September 2020. There were no options that were forfeited during the year.
Option holdings of Key Management Personnel
2018 Held at 1 July 2017 Granted as remuneration during 2018 Net change other Held at 30 June 2018 Vested and exercisable Directors A Pismiris 700,000 - - 700,000 700,000 G Argyle - - - - - C Chenu - - - - - S James (1) 2,000,000 - (2,000,000) - - G Reilly (2) 1,150,000 - (1,150,000) - -
Key management personnel
B Newport (3) 250,000 - - 250,000 250,000 M Fennell (4) - - - - - G D’Arcy (5) 350,000 60,000 - - 350,000 60,000 350,000 60,000 A Webb Ware (6) - - - - - 4,450,000 - (3,150,000) 1,300,000 1,300,000
(1) Resigned 22 June 2017 (2) Resigned 3 February 2017 (3) Resigned 30 June 2018 (4) Resigned 21 December 2017 (5) Resigned 31 July 2016 (6) Appointed 8 March 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018
17 Note 2018 2017 Restated* $ $ Revenue 5 4,917,647 3,852,364 Other income 6 32,265 278,835 Expenses
Employee benefits expense 7(a) (1,337,123) (901,114)
Options expense - (436,487)
Commission paid (160,744) (263,731)
Depreciation and amortisation (161,552) (67,069)
Other expenses 7(b) (1,736,569) (1,542,487)
Profit before income tax 1,553,924 920,311
Income tax expense 8(b) (375,986) (474,955)
Profit for the year attributable to the members of
the Company 1,177,938 445,356
Other comprehensive income
Amounts that may be subsequently reclassified to profit or loss (net of tax):
Fair value loss on available-for-sale financial assets (44,481) -
Oher comprehensive loss , (44,481) -
Total comprehensive income for the year
attributable to the members of the parent entity 1,133,457 445,356
Earnings per share attributable to members
Basic earnings per share (cent) 19 1.10 0.46
Diluted earnings per share (cents) 19 1.05 0.43
* Certain amounts shown here do not correspond to the 2017 financial statements and reflect adjustments made, refer to Note 3.
.
HOTCOPPER HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 18 Note 2018 2017 Restated* $ $ ASSETS CURRENT ASSETS
Cash and cash equivalents 9 3,011,352 2,592,922
Trade and other receivables 10 1,228,859 645,255
Other current assets 12 24,968 15,665
TOTAL CURRENT ASSETS 4,265,179 3,253,842
NON-CURRENT ASSETS
Plant and equipment 13 51,940 31,228
Intangibles 14 471,234 625,864
Available for sale financial assets 11 258,620 -
Deferred tax asset 8 433,726 99,033
Other receivables 12 49,297 57,286
TOTAL NON-CURRENT ASSETS 1,264,817 813,411
TOTAL ASSETS 5,529,996 4,067,253
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 15 304,740 427,027
Provisions 16 32,240 42,312
Unearned revenue 17 716,363 199,000
Current tax liabilities 650,881 171,674
TOTAL CURRENT LIABILITIES 1,704,224 840,013
TOTAL LIABILITIES 1,704,224 840,013 NET ASSETS 3,825,772 3,227,240 EQUITY Issued capital 18 11,641,211 11,641,211 Reserves (9,726,814) (9,682,333) Retained earnings 1,911,375 1,268,362 TOTAL EQUITY 3,825,772 3,227,240
* Certain amounts shown here do not correspond to the 2017 financial statements and reflect adjustments made, refer to Note 3.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
19 Note Share Capital
Distribution reserve Share based payments reserve Available for sale reserve Retained earnings Total Restated* $ $ $ $ $ $ Balance at 1 July 2016 370,650 - - - 823,006 1,193,656
Profit for the period as reported in the 2017 financial statements - - - - 327,017 327,017
Adjustment on correction of error (net of tax) 3 - - - - 118,339 118,339
Total comprehensive income for the year (restated*) - - - - 445,356 445,356
Issue of shares issued under the Offer 12,184,233 - - - - 12,184,233
Capital raising costs net of tax (264,554) - - - - (264,554)
Distribution to original shareholders in Report Card on the Group restructure
- (10,184,223) - - - (10,184,223)
Share buyback and cancellation (649,118) - - - - (649,118)
Share based payments - - 501,890 - - 501,890
Balance at 30 June 2017 (restated*) 11,641,211 (10,184,223) 501,890 - 1,268,362 3,227,240
Balance at 1 July 2017 (restated*) 11,641,211 (10,184,223) 501,890 - 1,268,362 3,227,240
Profit for the year - - - - 1,177,938 1,177,938
Other comprehensive income - - - (44,481) - (44,481)
Total comprehensive income/(loss) for the year - - - (44,481) 1,177,938 1,133,457
Dividend paid 20 - - - - (534,925) (534,925)
Balance at 30 June 2018 11,641,211 (10,184,223) 501,890 (44,481) 1,911,375 3,825,772
* Certain amounts shown here do not correspond to the 2017 financial statements and reflect adjustments made, refer to Note 3.
HOTCOPPER HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
20
Note 2018 2017
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 5,321,768 4,164,100
Payments to suppliers and employees (3,728,275) (3,107,347)
Interest received 31,766 4,373
R&D tax credit received - 271,216
Income tax paid (214,602) (407,499)
Net cash provided by operating activities 9 1,410,657 924,843
CASH FLOWS FROM INVESTING ACTIVITIES
Loan to unrelated parties (50,000) -
Purchase of available-for-sale financial assets (419,971) -
Proceeds from available-for-sale financial assets 45,803
Purchase of plant and equipment (33,134) (19,782)
Additions to intangibles - (208,403)
Payment of security deposit - (49,275)
Net cash used in investing activities (457,302) (277,460)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 12,184,233
On-market share buyback of Company shares - (649,118)
Payment on legal acquisition of Report Card - (10,184,223)
Dividends paid 20 (534,925) -
IPO associated costs - (34,369)
Net cash (used in)/provided by financing activities (534,925) 1,316,523
Net increase in cash held 418,430 1,963,906
Cash and cash equivalents at beginning of financial year 2,592,922 629,016
Cash and cash equivalents at end of financial year 9 3,011,352 2,592,922
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
21 1. Corporation information
The consolidated financial report of HotCopper Holdings Limited (the “Company”) and its controlled entities (collectively referred to as the “Group”) for the year ended 30 June 2018 was authorised for issue in accordance with a resolution of the directors on 31 August 2018.
HotCopper Holdings Limited is a for-profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The Group is principally engaged in the provision of a stock market internet discussion forum. The Group’s principal place of business is in Perth, Western Australia, Australia. Further information on the nature of the operations and principal activities of the Group is provided in the directors’ report. Information on the Group’s structure is provided in Note 29. Information on other related party relationships of the Group is provided in Note 26.
2. Significant accounting policies 2.1 Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board.
The financial report has been prepared on an accrual basis and is based on historical costs except for the revaluation of the available held for sale financial asset.
The financial report is presented in Australian dollars (AUD).
The Group applied all new and amended Australian Accounting Standards and Interpretations, which are effective for annual periods beginning on 1 July 2017. Refer Note 30 for further details.
(i) Compliance with International Financial Reporting Standards
The consolidated financial statements of HotCopper Holdings Limited also comply with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB)
2.2 Basis of consolidation
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:
power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption, and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
the contractual arrangement(s) with the other vote holders of the investee; rights arising from other contractual arrangements; and
the Group’s voting rights and potential voting rights.
HOTCOPPER HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
22 2.2 Basis of consolidation (continued)
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
2.3 Summary of significant accounting policies (a) Foreign currency translation
Functional and presentation currency
The functional currency of each entity in the Group is determined with reference to the currency of the primary economic environment in which the Company operates (“the functional currency”). The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss.
(b) Plant and equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Repairs and maintenance are charged to the profit or loss during the reporting period in which they are incurred.
Depreciation is calculated over the estimated useful life of the asset as follows:
Method Useful Lives
Office Equipment Reducing Balance 2-14
Leasehold Improvements
Reducing Balance 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
23 2.3 Summary of significant accounting policies (continued)
(b) Plant and Equipment (continued)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
(c) Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value (less costs of disposal) and value in use. For the purposes of assessing impairment, assets are grouped together at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.
(e) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance account for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised in profit or loss.
HOTCOPPER HOLDINGS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
24 2.3 Summary of significant accounting policies (continued)
(f) Intangible assets - software development
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
(a) the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
(b) its intention to complete and its ability and intention to use or sell the asset; (c) how the asset will generate future economic benefits;
(d) the availability of resources to complete the asset; and
(e) the ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of website development cost is based on a straight-line method over a 3-10 year period and matched to the future economic benefits over the useful life of the project. The amortisation period and
amortisation method of intangible assets are reviewed at least at each balance date.
(g) Provisions
Provisions are recognised when the Company 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.
Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of profit and loss and other comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(h) Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on a straight-line basis over the lease term.
(i) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and the specific criteria have been met for each of the Company’s activities as described below:
Advertising income
Revenue from advertising services is recognised when the services have been performed and the fair value of the consideration for the services provided can be reliably measured.
Revenue from the provision of advertising on websites is recognised on a page impression basis and is calculated on the number of page impressions that occur over a period.
Revenue from corporate advertisement is recognised upon delivery of services over the length of the contract.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
25 2.3 Summary of significant accounting policies (continued)
(i) Revenue recognition (continued) Interest income
Interest income 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 income 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.
(j) 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 acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(k) Trade and other payables
These amounts represent liabilities for goods or services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(l) Income tax Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
The Group records its best estimate of these items based upon the latest information available and management’s interpretation of enacted tax laws. Whilst the Group believes it has adequately provided for the outcome of these matters based on the most probable outcome, future results may include favourable or unfavourable adjustments as assessments are made, or resolved.
Deferred tax
Deferred tax is provided using the full liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised 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.
