8COMMON LIMITED - Annual Report 2019

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And its Controlled Entities 2019 Annual Report

Annual Report for the year ended 30 June 2019 ACN: 168 232 577

2 Chairman’s Message

5 Directors’ Report

15 Auditor’s Independence Declaration

16 Consolidated Statements

20 Notes to Financial Statements for the Year Ended

51 Directors’ Declaration

52 Independent Audit Report

59 ASX Additional Information Cc

8common Annual Report 2019

Chairman’s Message

Dear fellow shareholders,

We are pleased to present to you the 2019 8common Limited (ASX:8CO) Annual Report. 8common has transitioned into a pure-play fintech company offering travel and expense management systems to over 117,000 users and managing close to $600 million in transactions in FY2019. The 2019 financial year saw the Group successfully deliver a strong operational and financial result which was reflected by two consecutive quarters of positive operating cash flow and a strong end of year cash position.

The key financial highlights for the 12 months ended 30 June 2019 include:

Revenue from continuing operations grew 32% to $3,474,175 (FY18: $2,638,401);
Record SaaS revenue up 17% to $1,889,226 (FY18: $1,610,696)
Cash receipts from operations at $4,140,419 (FY18: $4,190,977 includes divested asset Realtors8);
$130,498 net cash outflow for the full year (1H19: -$583,158 v 2H19: $452,660);
EBITDA loss $681,285 (FY18: $515,107)
EBITDA loss significantly reduced to $418,390 when normalised to remove non-cash items of write-offs related to the Realtors8 divestment and share based payments;
Loss after tax of $1,356,222 (FY18: $1,290,488);
Cash at Bank of $1,033,383 (FY18: $533,594); and
Conversion of options (ASX:8COO) raised $599,887.

8CO’s improving financial performance was driven by another strong year of operations. Our team, led by our recently appointed CEO, Andrew Bond, delivered some significant new contract wins during the period. The contract wins position the company for future growth, both in terms of customers and in recurring SaaS revenue. Key operational highlights for the period include:

Contract agreements with Federal Government shared service hubs of the Department of Finance (up to 15 agencies) and Department of Industry, Innovation and Science (up to 41 agencies) will drive new customers to 8CO’s platform, positively impacting implementation revenue and monthly recurring SaaS revenue;
NSW Government footprint continued to grow (60 agencies and 70,000 users) with more than 20 agencies on-boarded.
Average ARPU increased to $20 (Federal Gov: $47, State Gov: $14 and Corporates: $24). The increase in ARPU from FY18 ($16.72) was mainly driven by increasing Travel SaaS revenue from within the Federal Government. The significantly higher Federal Government ARPU has been generated from our travel module revenue and highlights the opportunity to expand travel module into our other markets of State Government and corporate.
The NSW Department of Industry became the first NSW Government agency to adopt travel with more expected to follow suit;
Corporate client interest in travel and expense management (TEMS) linked procurement payments (Payhero) increased;
The Company modestly increased headcount to facilitate scale-up efforts in Sales and Marketing, R&D and Partner expansion has begun;

8common Annual Report 2019

Chairman’s Message (continued)

Strong Expense8 performance in 2H19

The Expense8 platform continues to underpin the company’s growth with over 117,000 users globally across Federal Government, State Governments and large corporations. Our platform’s processed over 2.5m transactions in 2019. The platform has now processed over $2.7bn in transaction value since 2003, reflecting the deep and long lasting service that the Expense8 technology provides to our clients.

Federal Government shared service hub contract wins from the Service Delivery Office (SDO) of the Department of Finance (DoF) and the Department of Industry, Innovation and Science (DIIS) should provide continued implementation and SaaS revenue growth.

New contract wins and extension of existing relationships drove a strong uplift in cash receipts throughout the year. Revenue from continuing operations was up 31% over the financial year, and was the 5th year of continued revenue growth for the company. The last 2 quarters of the FY19 year were cashflow positive for the group.

The Groups SaaS revenue continues to grow, with recurring revenue up 17% over the course of the year. The company is now annualising over $2m of recurring revenue based off our 4Q19 results.

The Company is positioned to scale the core Expense8 business across new market segments, both organically and via partnerships. These new segments include Payhero (Expense Management linked procurement payments) and Benefits8 (employee benefits e-commerce).

Corporate activity

We completed the sale of Realtors8 to Cloudaron Group Berhad (Cloudaron) on 30 June 2018 for approximately $4.6m (based on the latest foreign exchange rates) comprised of $470K in cash and $4.13m in shares comprised of:

Approximately $1.53m in shares not subject to escrow;
Approximately $1.53m placed in voluntary escrow until 30 June 2020;
Approximately $1.07m additional payment which is subject to an EBITDA Guarantee and adjusted in accordance with the terms of the Realtors8 SPA, due to be issued in April 2020.

Staff and management update

Following the end of the year Andrew Bond was appointment as Chief Executive Officer. Andrew has been with the group for 4 years and has been instrumental in building client relationships which have culminated in the strong financial and operational results we have achieved. He is well supported by Ben Brockhoff, a 14 year veteran with the Group who takes on the Chief Operating Officer role. They are joined by Zoran Grujic (Chief Financial Officer) and Rory Koehler (Chief Technology Officer) who form the rest of the management team.

8common Annual Report 2019

Chairman’s Message (continued)

Outlook for FY20

We have identified 3 core objectives for the year ahead:

Expand partnership model to reach new market segments and drive client growth;
Strengthen core client relationships with new products and features which support their ambitions; and
Increase Research & Development efforts to accelerate product roadmap ambitions.

We have had a successful year post transition to deliver a strong 2H FY2019. We are thankful to our shareholders for your continued support for this Company and look forward to delivering further growth on a strong financial footing. I would like to congratulate Andrew Bond on his new role as CEO and look forward to continuing our strong working partnership. To my fellow Board members, management and 8CO family, thank you for your efforts and dedication. We have laid a strong foundation FY2020 and we look forward to sharing our progress!

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Nic Lim - Executive Chairman

For further information, please contact:

Nic Lim

Executive Chairman [email protected]

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8common Annual Report 2019

DIRECTORS’ REPORT

Your directors present their report on the consolidated entity (referred to herein as the Group) consisting 8common Limited and its controlled entities for the financial year ended 30 June 2019. The information in the review of operations forms part of this directors’ report for the financial year ended 30 June 2019 and is to be read in conjunction with the following information:

General Information

Directors

The following persons were directors of 8common Limited during or since the end of the financial year up to the date of this report:

Kah Wui “Nic” Lim – Managing Director and Executive Chairman

Adrian Bunter – Non Executive Director Nyap Liou “Larry” Gan – Non Executive Director John Du Bois – Non Executive Director (appointed 11 October 2018) Zoran Grujic (resigned 18 July 2018) Grant McCarthy (resigned 18 July 2018)

Particulars of each director’s experience and qualifications are set out later in this report.

Principal Activities

The 8common Group’s primary business is in the development and distribution of two established software solutions: Expense8 and Perform8. The solutions help companies, their employees and professionals control costs, boost productivity

Operating Results and Review of Continuing Operations

Over this year, the Group achieved revenue from continuing operations of $3,474,175 (2017: $2,638,401) and a loss after providing for income tax amounting to $1,356,222 (2018: $982,981 loss). The Expense8 results showed strong and steady growth, as new client wins and existing clients continued to transition to the Expense8 enterprise cloud (SaaS) platform from older annual contracts.

Financial Position

The net assets of the Group are $6,043,847 (2018: $6,040,340). The main assets consist of:

Financial assets in Cloudaron of $3,560,779 and
Intangible assets of $2,051,207 (2018: $2,716,650) that are made up of Goodwill $1,225,108 (2018: $1,225,108) & Intellectual Property and Development costs $826,099 (2018: $1,486,742)

The net current assets at balance date is a deficit of $44,361 which included deferred revenue of $371,097 (while 2018 was a surplus of $2,763,512), the Directors believe there are reasonable grounds that the Group will be able to continue as a going concern after consideration of the following factors: the current business development prospects show an increase in activity that should lead to increasing ongoing revenue; no long-term debt in the business which frees up working capital; the shares available for sale in Cloudaron received from the sale of Realtors8 group and the ability of option holders to exercise their options provides another avenue of liquidity, should the business require it; the ability of the Company to raise further funding when required and the Directors remaining committed to the long-term business plan that is contributing to improved results as the business progresses.

8common Annual Report 2019

Significant Changes in State of Affairs

During the financial year the following significant changes in the state of affairs of the consolidated entity occurred:

Increase in contributed equity of $599,887 through the issue of shares via options holders exercising their options to acquire ordinary shares;
contract from Service Delivery Office (SDO) of the Federal Department of Finance to deliver Expense8 as a shared service to its clients; and
contract from the Federal Department of Industry, Innovation and Science to deliver Expense8 as a shared service to its clients.

Events after Reporting Year

On the 12 September 2019, 8Common successfully received a $279,970 refund claim under the Federal Government’s Research and Development (R&D) Tax Incentive Program.

Environmental Issues

The company takes a responsible approach in relation to the management of environmental matters. All significant environmental risks have been reviewed and the consolidated entity has no legal obligation to take corrective action in respect of any environmental matter. The consolidated entity’s operations are not subject to significant environmental regulations.

Dividends Paid or Recommended

No dividend has been paid or declared in relation to the financial year ended 30 June 2019.

Indemnifying and insurance of officers

The company has indemnified all current and previous directors of the consolidated entity, the company secretary and certain members of senior management against all liabilities or loss (other than to the company or a related body corporate) that may arise from their position as officers of the company and its controlled entities, except where the liabilities arise out of conduct involving a lack of good faith or indemnification is otherwise not permitted under the Corporations Act. The indemnity stipulates that the company will meet the full amount of any such liabilities, including costs and expenses, and covers a period of seven years after ceasing to be an officer of the company.

During the financial year, 8common Limited paid a premium of $27,983 to insure the directors and secretaries of the company and its Australian-based controlled entities, and the general managers of each of the divisions of the group. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Indemnifying and insurance of auditor

The company’s insurance contract does not provide cover for the independent auditors of the company or of a related body corporate of the company.

Proceedings on Behalf of Company

No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The company was not a party to any such proceedings during the year.

8common Annual Report 2019

Non-audit Services

The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of nonaudit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

The following fees were paid or payable by 8common Limited for non-audit services provided by an entity related to the audit firm during the year ended 30 June 2019:

Other services Taxation services	$ 7,100 3,889
	10,989

Employee Share Options

At the date of this report, the unissued ordinary shares of 8common Limited under Employee share option plan are as follows:

	Grant Date	Exercise Price	Number of Options
Employee Option Plan	30 June 2019	$0.168	7,650,000

Option holders do not have any rights to participate in any issues of shares or other interests of the company or any other entity.

There have been no options granted over unissued shares or interests of any controlled entity within the Group during or since the end of the reporting period.

For details of options issued to directors and executives as remuneration, refer to the remuneration report.

During the year ended 30 June 2019, there were no ordinary shares issued on the exercise of employee share options granted.

No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate

Auditor’s Independence Declaration

The lead auditor’s independence declaration for the year ended 30 June 2019 has been received and can be found on page 15 of the financial report.

Auditor

Walker Wayland NSW Chartered Accountants continues in office in accordance with section 327 of the Corporations Act 2001.

Options

At the date of this report, there were 27,627,177 options on issue listed on the Australian Stock Exchange under the stock code 8COO. Grant Date – 08/02/2018, Expiry Date – 08/02/2020 and Exercise Price - $0.035

8common Annual Report 2019

Information Relating to Directors

Managing Director and Executive Chairman
Kah Wui “Nic” Lim Managing Director and Executive Chairman Qualifications – Bachelor of Commerce (Western Sydney University) and Bachelor of Law (University of Technology, Sydney)
Experience – Founder of 8common, investor and Board member of various technology companies over the last 20 years. Co-Founded Catcha.com in 1999, Nic left an operational role in 2003 and remained on the Board member of various subsidiaries until 2010. Nic established a career in finance and advisory until 2012 and was most recently attached to the Fixed Income Sales team within the Investment Bank of Morgan Stanley in Singapore. He was also previously with UBS and Credit Suisse in Hong Kong.
Interest in Shares and Options – 24,479,850 ordinary shares in 8common Limited and 2,004,001 Options at $0.035 (expiring on 8 February 2020).
Special Responsibilities – None Directorships held in other listed – None entities during the last three years
Nyap Liou “Larry’ Gan – Non-Independent, Non-Executive Director Qualifications – Fellow of Association of Certified Chartered Accountants and Certified Management Consultant
Experience – During his 26 years at Accenture he held many global leadership roles. He was the Accenture Managing Partner of ASEAN from 1993 to 1996 and Managing Partner of Asia from 1997 to 1999. He was a member of the Accenture Global Management Council from 1997 to 2004 and sat on many global management committees, governing partner admission, rewards and compensation. He was also the Managing Partner of Corporate Development, Asia Pacific from 1999 to 2002 and managed the company’s multi-billion dollar Venture Fund for the Asia Pacific region.
Interest in Shares and Options – 14,220,384 ordinary shares in 8common Limited. Special Responsibilities – Member of the Remuneration Committee and member of the Audit Committee
Directorships held in other listed – He is a current Board member of Flexiroam Limited, Fatfish Internet Group entities during the last three years Limited, Rev Asia Bhd and Cloudaron Group Berhad. Previously a member of Cuscapi Bhd, Tropicana Corporation Bhd and Graphene Nanochem Plc.
Adrian Bunter
Independent, Non-Executive Director
Qualifications – Bachelor of Business (University of Technology, Sydney) and a Graduate Diploma in Applied Finance. Member of Chartered Accountants Australia and New Zealand, Senior Associate of Financial Services Institute of Australia
Experience – Adrian has 25 years’ experience in accounting, finance and a broad range of corporate advisory roles including mergers and acquisitions, divestments of business, debt/equity raisings and strategy development and execution. He is an executive director of Venture Advisory, one of Australia’s leading specialist technology, media and telecommunications financial advisory firms and is an executive committee member of Australia’s leading angel investing group, Sydney Angels.
Interest in Shares and Options – 66,000 ordinary shares in 8common Limited. Special Responsibilities – Member of the Remuneration Committee and member of the Audit Committee

8common Annual Report 2019

Directorships held in other listed – Non-Executive Director of Collaborate Corporation Limited (ASX: CL8) entities during the last three years

John Du Bois

– Independent, Non-Executive Director

Qualifications –[IAC (Institute of Administration & Commerce Zimbabwe) Law Economics ] and Accounts. Macquarie University Graduate School of Business - Banking and Finance. INSEAD Executive Leadership. Australian Graduate School of Management Leadership and Management Monash University NLP Advanced Techniques Chisholm Institute/Monash University Data Processing Programming Analysis Structure and Information Experience –[John has over 35 years’ experience in executive leadership leading ] transforming and building early stage and established businesses, including mergers, acquisitions and divestments. He is Chairman of Avigna, Global Mentor for Everwise, Council Member for GLG (Garson Lehrman Group) and does Advisory and Executive interim management. Interest in Shares and Options – 232,560 ordinary shares in 8common Limited Special Responsibilities – Member of the Remuneration Committee and member of the Audit Committee

Directorships held in other listed – N/A entities during the last three years

Meetings of Directors

During the financial year, 13 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

			Audit
	Directors’	Meetings	Committee		Remuneration Committee
	Number eligible	Number	Number eligible	Number	Number eligible	Number
	to attend	attended	to attend	attended	to attend	attended
Grant McCarthy	-	-	-	-	-	-
Kah Wui “Nic” Lim	10	10	-	-	-	-
Zoran Grujic	-	-	-	-	-	-
John Du Bois	6	6	2	2	1	1
Nyap Liou “Larry” Gan	10	9	2	2	1	1
Adrian Bunter	10	10	2	2	1	1

REMUNERATION REPORT - AUDITED

This report outlines the remuneration arrangements in place for Directors and key management personnel of the Group for FY2019. The remuneration report is set out under the following main headings:

A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service agreements
D. Share-based compensation

These disclosures have been audited, as required by section 308(3c) of the Corporations Act 2001.

Role of the remuneration committee

The remuneration committee is a committee of the Board. It is primarily responsible for making recommendations to the Board to ensure 8common’s remuneration structures are equitable and aligned with the long- term interests of 8common and its Shareholders. The remuneration committee will have regard to relevant company policies in attracting and retaining skilled executives, and structuring short and long-term incentives that are challenging and linked to the creation of sustainable Shareholder returns.

In relation to remuneration matters, the committee’s responsibilities are to ensure that 8common:

8common Annual Report 2019

has coherent remuneration policies and practices which enable 8common to attract and retain executives and Directors who will create value for Shareholders;
fairly and responsibly remunerates Directors and executives, having regard to the performance of 8common, the performance of the executives and the general remuneration environment; and
has effective policies and procedures to attract, motivate and retain appropriately skilled and diverse persons to meet 8common’s needs.

The Corporate Governance Statement provides further information on the role of this committee. The Chief Executive Officer and the Chief Financial Officer attend meetings by invitation to assist the Committee in its deliberations except on matters associated with their own remuneration.

A. Principles used to determine the nature and amount of remuneration

The performance of the Group depends on the quality of its Directors and executives.

To prosper, the Group must attract, motivate and retain highly skilled Directors and executives. To this end, the Group embodies the following principles in its remuneration framework:

provide competitive rewards to attract high calibre executives;
link executive rewards to shareholder value;
ensure that a significant portion of executive remuneration is ‘at risk’, and therefore dependent on meeting pre-determined performance benchmarks; and
establish appropriate performance hurdles in relation to variable executive remuneration.

The Board of Directors assesses the appropriateness of the nature and amount of remuneration of Directors and senior managers 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.

Remuneration structure

In accordance with the corporate governance principles and recommendation, the structure of Non-Executive Director and senior manager remuneration is separate and distinct.

Non-executive director remuneration

Objective

The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain Directors of the highest calibre, while incurring costs that are acceptable to shareholders.

Structure

Each Non-Executive Director will receive a fixed fee for being a Director of the Group.

The constitution and the ASX Listing Rules specify that the maximum aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting of shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the fixed fees paid to Directors are reviewed annually. The Board considers fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. The current aggregate amount as approved by the shareholders is $300,000.

Executive remuneration

Objective

The Company aims to reward key management personnel with a level and mix of remuneration commensurate with their position and responsibilities within the Company and:

Reward key management personnel for achievement of pre-determined key performance indicators;
Link reward with the strategic goals and performance of the Company; and

• Ensure total remuneration is competitive by market standards. The Remuneration for key management personnel and staff will include an annual review using a formal performance appraisal process. The Remuneration Committee recommends to the Board the level of fixed remuneration each year based on the performance of individuals.

8common Annual Report 2019

Structure

A policy of the Board is to establish employment or consulting contracts with the Chairman, Chief Executive Officer and other senior executives. At the time of this report there are employment agreements are in place for the members of the Board and senior management.

Current remuneration agreements only consist of fixed remuneration. The Board and senior management are reviewing the remuneration agreements with the view of incorporating long-term equity-based incentives that are subject to satisfaction of performance conditions. The equity-based incentives are intended to retain key executives and reward performance against agreed performance objectives.

Fixed remuneration

The level of fixed remuneration is set as to provide a base level of remuneration that is both appropriate to the position and is competitive in the market. Fixed remuneration comprises of payroll salary, superannuation and other benefits. Individuals, however, may choose to sacrifice part of their salary to increase payments towards superannuation or other benefits.

Remuneration Policy and Performance

The Company is currently reviewing the remuneration policies applicable to the CEO and CTO as well as the general manager and other senior personnel of the Company in relation to KPI’s and extent of remuneration, which is ‘at risk’. The review will assist the Company to better structure remuneration policies in accordance with current trends and practices in corporate remuneration.

Relationship between remuneration policy and company performance

The Company is currently reviewing its remuneration policies as indicated above.

Details of the remuneration of the Directors and other key management personnel (as defined in AASB 124 Related Party Disclosures) of 8common Limited are set out in the following tables.

B. Details of remuneration (audited)

		Post-Employment Benefits	Post-Employment Benefits
Name	Cash salary and fees	Superannuation	Share based payments	Total	Performance related
2019	$	$	$	$	%
Non-executive
directors
John Du Bois	16,664	-	-	16,664		-
Nyap Liou “Larry” Gan	25,000	-	-	25,000		-
Adrian Bunter	25,000	-	-	25,000		-
Total non-executive directors	66,664	-	-	66,664		-
Executive directors and	key management	personnel
Kah Wui “Nic” Lim (i)	150,000	-	-	150,000		-
Kadir Kudus (Chief Financial Officer) (ii)	23,750	-	-	23,750		-
Zoran Grujic (Chief Financial Officer) (iii)	43,050	-	-	43,050		-
Andrew Bond (Chief Operating Officer)	145,833	13,854	72,366	232,053		-
Rory Koehler (Chief Technology Officer) (iv)	120,000	-	34,460	154,460		-
Total executive
directors & key	482,633	13,854	106,826	603,313		-
management
Total	549,297	13,854	106,826	669,977		-

8common Annual Report 2019

(i) Mr Lim is not based in Australia and hence no superannuation is payable on his remuneration.
(ii) Mr Kudus resigned as Chief Financial Officer in October 2018.
(iii) Mr Grujic started as Chief Financial Officer in October 2018
(iv) Mr Koehler is not based in Australia and hence no superannuation is payable on his remuneration.

		Post-Employment Benefits	Post-Employment Benefits
Name	Cash salary and fees	Superannuation	Share based payments		Total	Performance related
2018	$	$	$		$	%
Non-executive
directors
Grant McCarthy	31,250	-		-	31,250		-
Nyap Liou “Larry” Gan	31,250	-		-	31,250		-
Adrian Bunter	31,250	-		-	31,250		-
Zoran Grujic	44,350	-		-	44,350		-
Total non-executive directors	138,100	-		-	138,100		-
Executive directors and	key management	personnel
Kah Wui “Nic” Lim (i)	141,886	-		-	141,886		-
Kadir Kudus (Chief Financial Officer) (ii)	155,000	-		-	155,000		-
Rory Koehler (Chief Technology Officer) (iii)	94,591	-		-	94,591		-
Total executive
directors & key	391,477	-		-	391,477		-
management
Total	529,577	-		-	529,577		-

(i) Mr Lim is not based in Australia and hence no superannuation is payable on his remuneration.

(ii) Mr Kudus is not based in Australia and hence no superannuation is payable on his remuneration

(iii) Mr Koehler is not based in Australia and hence no superannuation is payable on his remuneration.

C. Service agreements

Mr Kah Wui “Nic” Lim was appointed as the Executive Chairman and is based in Singapore, and reports to the Board by way of an executive service agreement. The appointment of Nic is for an unspecified term. Either 8common or Mr Lim may terminate the appointment with 6 months’ notice or alternatively in 8common’s case, payment in lieu of notice. Upon the termination of Mr Lim’s employment contract, he will be subject to a restraint of trade period of up to 12 months. The enforceability of the restraint clause is subject to all usual legal requirements. The fixed remuneration payable to Mr Lim was reviewed during the financial year and comprises a remuneration of $150,000 per annum.

D. Share-based compensation (audited)

Loans to directors and executives

There were no loans to Directors or executives during or since the end of the year.

8common Annual Report 2019

Share holdings of key management personnel.

Directors and key	Balance at the	Other changes	Balance at the
management personnel of	start of the year	during the year	end
8common Limited			of the year
ordinary shares
2019
Grant McCarthy (i)	550,000	(550,000)	-
John Du Bois	-	232,560	232,560
Nyap Liou “Larry” Gan	14,430,576	-	14,430,576
Adrian Bunter	44,000	22,000	66,000
Kah Wui “Nic” Lim	23,207,002	1,272,848	24,479,850
Zoran Grujic (i)	2,728,000	-	2,728,000
Andrew Bond	-	30,000	30,000
Rory Koehler	-	30,000	30,000
Total	40,959,578	1,587,408	41,996,986

Directors and key	Balance at the	Other changes	Balance at the
management personnel of	start of the year	during the year	end
8common Limited			of the year
ordinary shares
2018
Grant McCarthy (i)	550,000	-	550,000
Nyap Liou “Larry” Gan	4,614,631	9,815,945	14,430,576
Adrian Bunter	22,000	22,000	44,000
Kah Wui “Nic” Lim	11,603,501	11,603,501	23,207,002
Zoran Grujic (i)	1,364,000	1,364,000	2,728,000
Total	18,154,132	22,595,254	40,749,386

(i) Grant McCarthy and Zoran Grujic ceased to be directors on 18 July 2018

Options holdings of key management personnel.

Directors and key	Balance at the	Options acquired	Options	Balance at the
management personnel of	start of the year	or disposed of	exercised during	end
8common Limited options		during the year	the year	of the year
2019
Adrian Bunter	22,000	-	(22,000)	-
Kah Wui “Nic” Lim	11,603,501	-	(9,599,500)	2,004,001
Andrew Bond	-	2,100,000	-	2,100,000
Rory Koehler	-	1,000,000	-	1,000,000
Total	11,625,501	3,100,000	(9,621,500)	5,104,001

Description of options/rights issued and remuneration

3,100,000 options were issued under the employee share options plan to key management personnel during the period with an exercise price of $0.168 per option and an expiry date of 30 June 2022.

8common Annual Report 2019

There have been no unissued shares or interests under option of any controlled entity within the Group during or since reporting date.

END OF REMUNERATION REPORT

This Director’s report, incorporating the Remuneration report, is signed in accordance with a resolution of the Board of Directors.

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Nic Lim Managing Director

30 September 2019 Singapore

8common Annual Report 2019

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AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF 8COMMON LIMITED AND CONTROLLED ENTITIES

We declare that, to the best of our knowledge and belief, during the year ended 30 June 2019 there have been no contraventions of:

i. the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
ii. any applicable code of professional conduct in relation to the audit.

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Wali Aziz
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Walker Wayland NSW Wali Aziz Chartered Accountants Partner

Dated this 30[th] day of September 2019 Sydney

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019

	Note
		2019	2018
		$	$
REVENUE FROM CONTINUING OPERATIONS	3	3,474,175	2,638,401
OTHER INCOME	3	226,747	-
TOTAL REVENUE		3,700,922	2,638,401
EXPENSES FROM CONTINUING OPERATIONS
Cost of sales	4	(1,065,913)	(467,281)
Employee and contractor costs		(2,292,155)	(1,882,099)
Occupancy expenses		(79,499)	(131,442)
Administration expenses		(275,777)	(255,929)
Computer software/ maintenance		(155,602)	(73,356)
Accounting and legal costs		(114,235)	(163,961)
Marketing costs		(8,306)	(6,557)
Borrowing costs	4	(20,979)	(106,517)
Depreciation and amortisation	4	(693,010)	(638,815)
Share based payments	28	(263,629)	-
Other expenses from ordinary activities		(106,112)	(66,366)
TOTAL EXPENSES		(5,075,217)	(3,792,323)
NET LOSS BEFORE INCOME TAX		(1,374,295)	(1,153,922)
Income tax benefit / (expense)	5	18,073	(136,566)
NET LOSS FOR THE YEAR FROM CONTINUING OPERATIONS		(1,356,222)	(1,290,488)
DISCONTINUED OPERATIONS	8
Profit from discontinued operations after tax		-	307,507
NET LOSS FOR THE YEAR		(1,356,222)	(982,981)
Other comprehensive income
Other comprehensive income – translation of foreign
subsidiaries		-	56,659
Reserve adjustment – gain on revaluation of financial asset		478,750	-
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
		(877,472)	(926,322)
Net (loss) attributable to:
Owners of parent entity		(877,472)	(930,147)
Non-controlling interest		-	3,825
		(877,472)	(926,322)
Earnings per share
Basic loss per share – cents per share		(0.005)	(1.16)
Diluted loss per share – cents per share		(0.005)	(1.16)
The accompanying notes form part of these financial		statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

	Note	30 June 2019	30 June 2018
		$	$
Current assets
Cash and cash equivalents	10	1,033,383	533,594
Trade and other receivables	11	335,755	337,404
Other assets	15	30,384	55,813
Receivables from sale of assets	16	-	3,180,000
Total current assets		1,399,522	4,106,811
Non current assets
Intangible assets	14	2,051,207	2,716,650
Financial assets	16	3,560,779	-
Deferred tax assets	18	138,687	182,469
Deferred consideration	16	388,000	388,000
Property, plant and equipment	13	10,533	38,100
Total non-current assets		6,149,206	3,325,219
Total assets		7,548,728	7,432,030
Current liabilities
Trade and other payables	17	976,615	1,067,353
Contract liabilities		371,097	70,814
Provisions	19	96,171	75,045
Tax liabilities	18	-	130,087
Total current liabilities		1,443,883	1,343,299
Non current liabilities
Provisions	19	60,998	48,391
Total non current liabilities		60,998	48,391
Total liabilities		1,504,881	1,391,690
Net assets		6,043,847	6,040,340
Shareholders’ equity
Contributed equity	20	9,959,064	9,341,714
Accumulated Losses		(4,657,596)	(3,301,374)
Asset revaluation reserve		478,750	-
Share based payment reserve	28	263,629
Total shareholders’ equity		6,043,847	6,040,340

The accompanying notes form part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2019

Note CASH FLOW FROM OPERATING ACTIVITIES Receipts from operating activities Government grants and tax incentives Interest received Interest paid Payments to suppliers and employees Income tax paid Net cash (used in) operating activities 24a CASH FLOW FROM INVESTING ACTIVITIES Purchase of non current assets Net proceeds from sale of Financial assets Proceeds from 10% Sale of Realtors8 Pte Ltd Net cash provided by investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of ordinary shares Proceeds from options Transaction costs related to issue of shares, convertible notes or options Repayment of borrowings Net cash provided by financing activities NET INCREASE IN CASH HELD Cash and cash equivalent at beginning of financial year Effects of changes in exchange rates CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 10	2019 2018 $ $ 4,140,419 4,190,977 225,438 56,454 1,309 567 - (166,036) (4,483,519) (4,521,780) (14,145) (63,990)
	(130,498) (503,808)
	- (10,000) 30,400 - - 210,809
	30,400 200,809
	- 1,467,329 599,887 354,265 - (115,098) - (1,236,891)
	599,887 469,605
	499,789 166,607 533,594 382,562 - (15,575)
	1,033,383 533,594

The accompanying notes form part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019

Opening Balance Comprehensive income Loss for the year Other comprehensive income Total comprehensive income Transfer to retained earnings of reserves on disposal of foreign denominated group Derecognition of non- controlling interest upon disposal of Realtors8 Pte Ltd Issue of shares Shares issue costs BALANCE AT 30 JUNE 2018 Comprehensive income Loss for the year Other comprehensive income Total comprehensive income / (loss) Issue of shares Share based payment BALANCE AT 30 JUNE 2019	Contributed Equity (Accumulated Losses) Reserves Asset Revaluation Reserves Share based payment reserve Non- Controlling Interest Total $ $ $ $ $ $ $ 7,038,326 (2,556,084) 184,857 - - - 4,667,099 - (986,806) - - - 3,825 (982,981) - - 56,659 - - - 56,659
	- (986,806) 56,659 - - 3,825 (926,322) 241,516 (241,516) - - - - - - - - (3,825) (3,825) 2,394,388 - - - - - 2,394,388 (91,000) - - - - - (91,000)
	9,341,714 (3,301,374) - - - - 6,040,340
	- (1,356,222) - - - - (1,356,222) - - - 478,750- - 478,750
	- (1,356,222) - 478,750 - - (877,472) 617,350 - - - - - 617,350 - - - - 263,629 - 263,629
	9,959,064 (4,657,596) - 478,750 263,629 - 6,043,847

The accompanying notes form part of these financial statements

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements and notes represent those of 8common Limited and its Controlled Entities (the “consolidated group” or “group”).

The financial statements were authorised for issue on 30 September 2019 by the directors of the company.

Basis of Preparation

These general purpose financial statements have been prepared in accordance with the Corporations Act 2001 , Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.

Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

a)[Going Concern basis of accounting ]

The Group has incurred a net loss after tax for the year ended 30 June 2019 of $1,356,222 (2018: loss of $1,290,488), with the cash outflow used in operating activities of $130,498 (2018: cash outflows of $503,808). As at 30 June 2019, the Group has a net current asset deficit position of $44,361 which includes deferred revenue of $371,097 (30 June 2018: $2,763,512) due to contract liabilities of $371,097 in current liabilities which will be recognised over the coming period, which has no associated cash outflow.

The continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as they fall due is dependent upon the Group being successful in:

generating sufficient cash surpluses from operations resulting from meeting revenue forecasts
selling the investment in Cloudaron Shares to create liquidity should the need arise
receiving cash proceeds from 8common option holders exercising their options (the number of options
as at 30 September 2019 is 27,627,177 with an estimated exercise value of $966,950 should all the options be exercised)

The Directors believe there are reasonable grounds to believe that the Group will be able to continue as a going concern after consideration of the following factors:

The current business development prospects have improved, with 2H of FY2019 showing significant
improvements in both revenue (1H $1.47m vs 2H $2.0m) and cash receipts (1H $1.56m vs 2H $2.59m);
The strong revenue and cash receipt performance in 2H of FY2019 resulted in the group achieving a
cumulative operational cash surplus of $453,000 during the period;
Sale proceeds in the form of Cloudaron shares and option holders exercising their options provides
another avenue of liquidity should the business require it;
The Directors remain committed to the long-term business plan that is contributing to improved results
as the

business progresses; and

The budgets and forecasts reviewed by the Directors for the next twelve months anticipate the
business will continue to produce improved results.

Furthermore, the Directors have the option of seeking further funding to support working capital and the business development activities of the Group by way of equity or convertible note debt finance. The Directors are of the opinion that these factors will allow the Group to focus on growth areas and on improving profitability. The Directors continue to monitor the situation closely and are focused on taking all measures necessary to optimise the Group’s performance.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Going Concern basis of accounting (cont)

The Directors believe that the above indicators demonstrate that the Group will be able to pay its debts as and when they become due and payable and to continue as a going concern and be in a position to realise its assets and settle its liabilities and commitments in the normal course of business and at the amounts stated in the financial report. Accordingly, the Directors also believe that it is appropriate to adopt the going concern basis in the preparation of the financial statements.

In the event that the Group does not achieve the conditions stated by the Directors, the ability of the Company and therefore the Group to continue as a Going Concern may be impacted and therefore the Group may not be able to realise its assets and extinguish its liabilities in the ordinary course of operations and at the amounts stated in the financial report. No adjustments have been made to the recoverability and classification of recorded asset values and the amount and classification of liabilities that might be necessary should the Group and company not continue as going concerns.

b) Significant accounting judgments, estimates and assumptions

Management has identified the following critical accounting policies for which significant judgments, estimates and assumptions are made. Actual results may differ from these estimates under different assumption and conditions and may materially affect the financial results or the financial position reported in future years.

Key estimates

i. Impairment – Intangibles

The Group assesses impairment at the end of each reporting year by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations, which incorporate various key assumptions.

The impairment models for intangible asset balances incorporate growth rates in Australian (Expense8 and Perform8) revenues and expenses have been factored into valuation models for the next five years on the basis of management’s expectations regarding the Group’s continued ability to capture market share from competitors. The rates used incorporate an allowance for inflation. Pre-tax discount rates have been used in all models. These assets are considered to be sensitive to these assumptions and are carried in the statement of financial position at a writtendown value of $2,051,207 (2018: $2,623,144). The blended average revenue growth rate of 16.7% has been used for the periods 2020 to 2024. A terminal growth rate of 2.0% has been used.

No impairment has been recognised in relation to the intangible assets for the year ended 30 June 2019. Goodwill impairment is considered sensitive to the 2020 to 2024 revenue growth rate assumptions. The average growth rate would need to reduce to less than 11.7% for the period, with the WACC remaining at 8.7%, for an impairment of the intangible assets to occur on the reporting date.

ii. Provision for impairment of receivables

The directors have considered the recoverability of all trade receivable balances and they are of the opinion that no impairment provision is necessary. This estimate is based on their judgment.

iii. Intellectual Property – Software useful lives

Expense8 and Perform8 Software is recognised at the cost of acquisition. These assets are deemed to have an infinite useful life, however the directors based on their estimates and judgments have assessed a useful life of 5 years and are carried at cost less accumulated amortisation and any impairment losses.

iv. Capitalised Development Costs

Judgment is required in distinguishing the research and development phases of a new software development project. It is also required in determining whether the recognition requirements for the capitalisation of development costs are met. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.

v. Deferred Consideration

The deferred consideration receivable is based on the estimated EBITDA of the Realtor8 group for the year ended 31 March 2019 and year ending 31 March 2020.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES b) Significant accounting judgments estimates and assumptions (cont)

Capitalised developments costs –- as disclosed in Note 14 ‘Intangible Assets’ of $811,299 (2018: $1,054,026) have been capitalised on the basis that management expects future economic benefits to be derived by the Group. Capitalised development costs are being amortised over a period of 5 years, which is commensurate with managements’ expectations as to the period of expected future economic from the product development.

c) Discontinued Operations Accounting Policy

A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and:

represents a separate major line of business or geographical area of operations
is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
is a subsidiary acquired exclusively with a view to resale.

Profit or loss from discontinued operations, including prior year components of profit or loss, are presented in a single amount in the statement of profit or loss and other comprehensive income. This amount, which comprises the posttax profit or loss of discontinued operations and the post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale, is further analysed in Note 8. The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the reporting date for the latest period presented.

d) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the statement of financial position.

e) Trade and Other Receivables

Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting year are classified as current assets. All other receivables are classified as non-current assets.

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

f) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation.

The carrying amount of property, plant and equipment is reviewed annually by officers of the 8common Group to ensure it is not in excess of the recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employed and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts.

The depreciable amounts of all fixed assets are depreciated on a straight-line basis over their estimated useful lives commencing from the time the asset is held ready for use.

g) Financial assets at fair value through other comprehensive income

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
Financial assets at fair value through profit or loss

Financial assets at fair value through Other Comprehensive Income (OCI)

The Group measures debt instruments at fair value through OCI if both of the following conditions are met:

The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling

And

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.

The Group’s debt instruments at fair value through OCI includes investments in Cloudaron included under other non-current financial assets.

h) Principles of Consolidation

The consolidated financial statements incorporate all of the assets, liabilities and results of 8common Limited and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.

Business combinations

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. After initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional currency.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Nonmonetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES h) Principles of Consolidation (cont)

Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss.

Group companies

The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation currency, are translated as follows:

assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained Loss are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is disposed.

Goodwill

Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:

the consideration transferred;
any non-controlling interest (determined under either the full goodwill or proportionate interest
method); and
the acquisition date fair value of any previously held equity interest;

over the acquisition date fair value of net identifiable assets acquired.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements.

Fair value re-measurements in any pre-existing equity holdings are recognised in profit or loss in the year in which they arise. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss.

Goodwill on acquisition of subsidiaries is included in intangible assets.

Goodwill is tested for impairment annually and is allocated to the Group's cash-generating units or groups of cashgenerating units, representing the lowest level at which goodwill is monitored being not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity disposed.

Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not affect the carrying amounts of goodwill.

The accounting for the business combinations is considered provisional.

Intangibles Other than Goodwill

Intellectual Property – Software

Software is recognised at cost of acquisition. These assets are deemed to have an infinite life, however the directors have assessed a useful life of five (5) years and are carried at cost less accumulated amortisation and any impairment losses. These assets will be assessed for impairment on an annual basis.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES h) Principles of Consolidation (cont)

Development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the group can demonstrate:

The technical feasibility of completing the intangible asset so that the asset 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 measure reliably the expenditure during development; and
The ability to use the intangible asset generated.

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 the asset begins when development is complete and the asset is available for use. Travel and Expense Management product development costs are amortised over the period of expected future benefit being 5 years. Amortisation is recorded in expenses. During the period of development, the assets are tested annually for impairment.

i) Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the 8common Group prior to the end of the year and which are unpaid. The amounts are unsecured and are paid in accordance with supplier terms.

j) Deferred Consideration

The deferred consideration receivable has been recognised at the expected EBITDA for a 2 year period ending 31 March 2020 of the acquiree as explained in Note 16(iii).

k) Contract liabilities

Contract liabilities represent services billed by the Group in advance of meeting its performance obligations to the customer. These obligations typically exist of 12 months and as such are classified as a current liability.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

l) Employee Entitlements

Short-term employee benefits

Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.

Other long-term employee benefits

Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the changes occur.

The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

Defined contribution superannuation benefits

All Australian employees of the Group receive defined contribution superannuation entitlements, for which the Group pays the fixed superannuation guarantee contribution (currently 9.5% of the employee’s average ordinary salary) to the employee’s superannuation fund of choice. All contributions in respect of employees’ defined contribution entitlements are recognised as an expense when they become payable. The Group’s obligation with respect to employees’ defined contribution entitlements is limited to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting period. All obligations for unpaid superannuation guarantee contributions are measured at the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the Group’s statement of financial position.

m) Taxation

The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax expense/(income).

Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax expense/(income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

m) Taxation (con’t)

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

Tax Consolidation

8common Limited and its wholly owned Australian subsidiary (Expense8 Pty Limited) have formed an income tax consolidated group under tax consolidation legislation as of 3 March 2014. Each entity in the 8common Group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity. The 8common Group notified the Australian Taxation Office that it had elected to form an income tax consolidated group as of 3 March 2014.

n) Contributed equity

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.

o) Share based payments

The Group operates an employee option plan. Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.

p) Revenue

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Implementation fee revenue is taken to account as the work is performed as it is quoted on a time and materials basis as a fixed price calculation, and billed on agreed milestones. The groups software as a service (SaaS) revenue is invoiced on a historic basis for the duration of the contract.

Annual license fees for Australian revenue streams are recognised as revenue upon invoice date as all relevant and significant activities to ensure continued service and functionality of the product have been performed by the company.

Interest revenue is recognised using the effective interest method. All revenue is stated net of the amount of goods and services tax.

q) Consumption Taxes

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

r) New Accounting Standards Adopted in Current Period

Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:

[NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019]

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

r) New Accounting Standards Adopted in Current Period (con’t)

AASB 9 : Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018);

The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting.

The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.

The application of the expected credit loss model has not resulted in any credit losses in relation to trade receivable financial assets and deferred consideration receivable.

The investment in Cloudaron has been recognised as a Financial Asset at fair value through other comprehensive income as at year end.

AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15).

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers.

The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:

identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied

The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of initial application. There are also enhanced disclosure requirements regarding revenue.

The directors have determined that the adoption of AASB15 will not have any impact on the Group’s financial statements, as its implementation fees are related to actual work performed based on time and materials to ensure that customers IT system is compatible with our software, the customers accounting system is compatible with the software and the linkages between the relevant internal software and our product is complete. Unearned revenue on the statement of financial position has been reclassified to contract liabilities. Software go live dates have also been considered when recognising implementation revenue.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(s) New Accounting Standards for Application in Future Periods

AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).

When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

The main changes introduced by the new Standard include:

recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);

depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components
variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead account for all components as a lease; and
additional disclosure requirements.

The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.

The Directors do not believe that the adoption of AASB 16 will have an impact on the group as it does not have any long term leases in excess of 12 months.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 2: PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. Statement of Financial Position ASSETS Current assets Non-current assets TOTAL ASSETS LIABILITIES Current liabilities Non current liabilities TOTAL LIABILITIES EQUITY Issued capital Accumulated losses Reserves TOTAL EQUITY Statement of Profit or Loss and Other Comprehensive Income Total loss Total comprehensive loss	PARENT ENTITY 2019 $ 2018 $ 234,199 215,990 7,522,298 5,769,657
	7,756,497 5,985,647
	207,862 426,526 2,039,859 -
	2,247,721 426,526
	9,944,455 9,341,303 (4,914,429) (3,782,182) 478,750 -
	5,508,776 5,559,121
	(1,132,247) (1,897,398)
	(1,132,247) (1,897,398)

Guarantees

No cross guarantees existed during the year ended 30 June 2019.

Contingent liabilities

At 30 June 2019, 8common Limited is not responsible for any contingent liabilities of subsidiaries.

Contractual commitments

At 30 June 2019, 8common Limited was not responsible for any contractual commitments of any of its subsidiaries.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 3: REVENUE FROM CONTINUING OPERATIONS


NOTE 3: REVENUE FROM CONTINUING OPERATIONS a. Revenue from continuing operations – License and maintenance fees – Interest received – Research & development incentive income	Consolidated Group 2019 $ 2018 $ 3,474,175 2,635,826 1,309 2,575 225,438 -
	3,700,922 2,638,401

NOTE 4: EXPENSES FOR THE YEAR

Loss before income tax from continuing operations includes the
following specific expenses:
Expenses
Cost of sales
Borrowing costs on financial liabilities not at fair value through profit
or loss:
–
related parties – convertible notes
–
unrelated parties
Depreciation
Amortisation
Employee benefits expense:
–
defined contribution superannuation expense
Rental expense on operating leases

1,065,913
467,281
-
40,685
20,979
65,882
20,797
106,517
27,567
29,217
665,443
609,598
693,010
638,815
109,968
167,606
76,364
85,214

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 5: TAX (BENEFIT) / EXPENSE

a. The components of tax (expense)/income comprise: Current tax Deferred tax Income tax (expense)/income attributable to entity b. The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows: Prima facie tax payable on profit from ordinary activities before income tax Add: Tax effect of: – share issue costs – movement in provision Less: Tax effect of: – other Income tax (benefit) / expense attributable to entity The applicable weighted average effective tax rates are as follows:	Consolidated Group 2019 $ 2018 $ 61,855 (95,000) (43,782) (41,566)
	18,073 (136,566) (377,931) (317,329) 34,506 34,502 9,276 41,566 316,076 377,827
	(18,073) 136,566
	1% 12%

NOTE 6: KEY MANAGEMENT PERSONNEL COMPENSATION

Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June 2019.

The totals of remuneration paid to KMP of the company and the Group during the year are as follows:

Short-term employee benefits Post-employment benefits Share based Total KMP compensation	Consolidated Group 2019 $ 2018 $ 549,297 529,577 13,854 - 106,826
	669,977 529,577

Short-term employee benefits

These amounts include fees and benefits paid to the executive Chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.

Post-employment benefits

These amounts are the current-year’s estimated cost of providing for the Group’s defined benefits scheme postretirement, superannuation contributions made during the year and post-employment life insurance benefits.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 7: AUDITORS’ REMUNERATION Remuneration of the auditor, Walker Wayland NSW Chartered Accountants for: – auditing or reviewing financial statements – taxation services – Other services Remuneration of overseas subsidiary auditors	Consolidated Group 2019 $ 2018 $ 48,825 66,904 3,889 11,849 7,100 650
	59,814 79,403
	- 32,492

NOTE 8: DISCONTINUING OPERATIONS

During the financial year ended 30 June 2018, the consolidated group disposed Realtors8 Pte Ltd, a content management system (CMS) and customer relationship management (CRM) solution for real estate agents, thereby discontinuing its operations in this business segment.

The financial performance of the discontinued operation, which is included in profit/(loss) from discontinued operations per the statement of profit or loss and other comprehensive income, is as follows:

Revenue Expenses Profit before income tax Income tax (expense)/benefit Net profit for the year Profit/(loss) attributable to owners of the parent entity Profit/(loss) attributable to non-controlling interest Profit/(loss) on sale before income tax Income tax expense Profit/(loss) on sale after income tax Total profit/(loss) from discontinued operation attributable to owners of the parent entity Net cash inflow/(outflow) from operating activities Net cash inflow/(outflow) from investing activities Net cash inflow/(outflow) from financing activities Net decrease in cash generated from discontinued division	2019 2018 $ $ - 1,217,602 - (1,173,613)
	- 43,989 - 7,005
	- 50,994
	- 47,169 - 3,825
	- 50,994
	- 260,338 - -
	- 260,338
	- 307,507
	- 161,180 - - - (158,063)
	- 3,117

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

	Consolidated	Group
Note 9: LOSS PER SHARE	2019	2018
	$	$
a. Loss used to calculate basic and diluted loss per share	(1,356,222)	(982,981)
	No.	No.
b. Weighted average number of ordinary shares outstanding during the
year used in calculating basic loss per share	142,787,945	84,957,077
Weighted average number of ordinary shares outstanding during the
year used in calculating dilutive loss per share	142,787,945	84,957,077
NOTE 10: CASH AND CASH EQUIVALENTS
Cash at bank and on hand	1,033,383	533,594
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash
flows is reconciled to items in the statement of financial position as follows:
Cash and cash equivalents	1,033,383	483,595
Term deposits	-	49,999
	1,033,383	533,594
NOTE 11: TRADE AND OTHER RECEIVABLES
CURRENT
Trade and other receivables	335,755	337,404
	335,755	337,404

a. Provision for Impairment of Receivables

The directors have considered the recoverability of all trade receivable balances and they of the opinion that no impairment provision is necessary.

b. Credit Risk

The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties. The class of assets described as “trade and other receivables” is considered to be the main source of credit risk related to the Group.

The Group has no significant credit risk exposure in any country in which the Group trades.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 11: TRADE AND OTHER RECEIVABLES (continued)

The balances of receivables that are within initial trade terms (as detailed in the table) are considered to be of high credit quality.

2019 Trade and other receivables Total 2018 Trade and other receivables Total	Gross Amount $ Past Due and Impaired $ Past Due but Not Impaired (Days Overdue) Within Initial Trade Terms $ < 30 $ 31–60 $ 61–90 $ > 90 $ 335,755 - 37,465 43,240 1,100 - 253,950
	335,755 - 37,465 43,240 1,100 - 253,950
	Gross Amount $ Past Due and Impaired $ Past Due but Not Impaired (Days Overdue) Within Initial Trade Terms $ < 30 $ 31–60 $ 61–90 $ > 90 $ 337,404 - 98,896 31,960 30,567 - 175,981
	337,404 - 98,896 31,960 30,567 - 175,981

c. Financial Assets Classified as Loans and Receivables

Trade and other receivables: – total current Financial assets	Consolidated Group 2019 $ 2018 $ 335,755 337,404
	335,755 337,404

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 12: INTERESTS IN SUBSIDIARIES & ACQUISITIONS

a. Information about Principal Subsidiaries

The subsidiaries listed below have share capital consisting solely of ordinary shares or which are held directly by the Group. The proportion of ownership interests held equals the voting rights held by the Group. Each subsidiary’s principal place of business is also its country of incorporation.

	Principal Place of	Ownership	Interest Held by the
Name of Subsidiary	Business		Group
		2019	2018
		%	%
Expense8 Pty Limited	Australia	100	100
Payhero Holdings Pty Ltd	Australia	100	100
Expense8 Pte Ltd*	Singapore	0	100
Perform8 Pte Ltd*	Singapore	0	100

Entities have been deregistered during the June 2019 financial year.

Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the Group’s financial statements.

NOTE 13: PROPERTY, PLANT AND EQUIPMENT

Plant and Equipment Plant and equipment: At cost Accumulated depreciation	Consolidated Group 2019 $ 2018 $ 25,621 202,334 (15,088) (164,234)
	10,533 38,100

a. Movements in Carrying Amounts

Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:

Balance at beginning of year Additions Depreciation expense Balance at end of year	2019 2018 $ $ 38,100 35,335 - 31,982 (27,567) (29,217)
	10,533 38,100

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 14: INTANGIBLE ASSETS

Note Goodwill arising on acquisition of Expense8 Pty Limited Total Goodwill Trademark for Expense8 & 8common Total Trademarks Intellectual property – Expense8 Less: accumulated amortisation Development Costs Less: accumulated amortisation (i) Intellectual property – Payhero Less: accumulated amortisation Intellectual property – Perform8 Less: accumulated amortisation Total Intellectual Property & Development Costs Total Intangibles	30 June 2019 30 June 2018 $ $ 1,225,108 1,225,108
	1,225,108 1,225,108
	4,800 4,800
	4,800 4,800
	833,000 833,000 (833,000) (680,284)
	- 152,716
	1,427,413 1,427,413 (616,114) (373,387)
	811,299 1,054,026
	10,000 10,000 - -
	10,000 10,000
	900,000 900,000 (900,000) (630,000)
	- 270,000

	826,099 1,486,742

	2,051,207 2,716,650

Note:

(i) Travel and Expense Management product development costs are amortised over the period of expected future benefits being 5 years. Amortisation is recorded in expenses. During the period of development, the assets are tested annually for impairment.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 14: INTANGIBLE ASSETS (continued)

Consolidated Group: Year ended 30 June 2019 Balance at the beginning of the year Additions Amortisation charge Consolidated Group: Year ended 30 June 2018 Balance at the beginning of the year Additions Amortisation charge	Goodwill Acquired Intellectual property Software Development Costs Total $ $ $ $ 1,225,108 437,516 1,054,026 2,716,650 - - - - - (422,716) (242,727) (665,443)
	1,225,108 14,800 811,299 2,051,207
	1,225,108 774,117 1,204,601 3,203,826 - 10,000 112,422 122,422 - (346,601) (262,997) (609,598)
	1,225,108 437,516 1,054,026 2,716,650

Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the statement of profit or loss. Goodwill has an indefinite useful life. Development costs have been amortised since 1 January 2017.

Impairment disclosures

Goodwill is allocated to cash-generating units (CGU) which are based on the Group’s reporting segments:

	2019	2018
	$	$
Australian CGU – Expense8	1,225,108	1,225,108

The recoverable amount of the Australian CGU above is determined based on value-in-use calculations. Value-inuse is calculated based on the present value of cash flow projections over a 5-year period with the period extending beyond 5 years extrapolated using an estimated growth rate. The cash flows are discounted using the company’s weighted average cost of capital.

The following key assumptions were used in the value-in-use calculations:

		5 year
	Terminal Growth	Growth Rate	Discount Rate
Australian CGU	2.0%	16.7% pa	8.7%

Management has based the value-in-use calculations on budgets for each reporting segment. These budgets use historical weighted average growth rates to project revenue. Costs are calculated considering historical gross margins as well as estimated weighted average inflation rates over the year, which are consistent with inflation rates applicable to the locations in which the segments operate. Discount rates are pre-tax and are adjusted to incorporate risks associated with a particular segment.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 14: INTANGIBLE ASSETS (continued)

The blended average revenue growth rate of 16.7% has been used for the periods 2020 to 2024. A terminal rate of 2.0% has been used. Goodwill impairment is considered to be sensitive to the 2020 to 2024 growth rate assumptions. The average growth rate would need to reduce to less than 11.7% in order for an impairment of the intangible asset to occur at the reporting date.

NOTE 15: OTHER ASSETS

CURRENT Prepayments Other GST Paid NOTE 16: CONSIDERATION FROM SALE OF REALTORS8 PTE LTD Note Receivables from sale of assets (i) Financial assets at fair value through OCI (ii) Deferred consideration (iii)	Consolidated Group 2019 $ 2018 $ 29,831 43,681 553 - - 12,132 30,384 55,813 2019 2018 $ $ - 3,180,000 3,560,779 - 388,000 388,000
	3,948,779 3,568,000

Note:

As part of the sale and purchase agreement dated 15 February 2018 of the remaining 90% of Realtors8 Pte Ltd sale to Cloudaron Group Berhad (listed on Bursa Malaysia CLOUD:MK), a total consideration of SGD$4,230,000 was agreed to be paid in 2 tranches as follows:

(i) Tranche 1: Approximately A$3.18 million via the issuance of 39,413,450 shares of Cloudaron Group Berhad. This was booked accordingly as a receivable as at 30 June 2018 as the sale was completed on that date. The shares were received on the 7[th] of August 2018; and
(ii) This amount relates to the fair value of the shares held in Cloudaron Group Berhad as at 30 June 2019.
(iii) Tranche 2: Up to A$1.05 million vide the issuance of 13,013,875 shares, subject to the EBITDA Guarantee and adjustments in accordance with the terms of the Realtors8 SPA. The EBITDA Guarantee provided by 8common is that the combined EBITDA of Realtors8 Group for the FYE 31 March 2019 and 31 March 2020 shall be at least SGD$1,050,000. For illustrative purposes, if the if EBITDA achieved for the FYE 2019 and FYE 2020 is SGD$900,000, then shares in Cloudaron will be issued to the value of SGD$900,000 to 8common Limited.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 17: TRADE & OTHER PAYABLES

Note Unsecured liabilities: Trade payables Sundry payables and accrued expenses Amounts payable to related parties Australian Tax Office - GST & PAYG payable a. Financial liabilities at amortised cost classified as trade and other payables Trade and other payables: – total current – total non-current Financial liabilities as trade and other payables	Note	Consolidated Group 2019 2018 $ $ 351,920 84,314 348,993 494,581 103,136 115,945 172,566 372,513 976,615 1,067,353 976,615 1,067,353 - -

		976,615 1,067,353

NOTES TO THE FINANCIAL STATEMENTS FOR THE	NOTES TO THE FINANCIAL STATEMENTS FOR THE	NOTES TO THE FINANCIAL STATEMENTS FOR THE	YEAR ENDED	30 JUNE 2019
NOTE 18: TAX					Consolidated	Group
CURRENT					2019	2018
					$	$
Income tax payable					-	130,087
NON CURRENT
Deferred tax asset					138,687	182,469
Deferred tax asset
	Opening Balance	Charged to Income	Charged Directly to Equity	Changes in Tax Rate	Exchange Differences	Closing Balance
	$	$	$	$	$	$
NON-CURRENT
Deferred tax assets
Provisions	147,963	(9,276)	-	-	-	138,687
Share issue costs	34,506	(34,506)	-	-	-	-
Balance at 30 June 2019	182,469	(43,782)	-	-	-	138,687
NON-CURRENT
Deferred tax assets
Provisions	155,027	(7,064)	-	-	-	147,963
Share issue costs	69,008	(34,502)	-	-	-	34,506
Balance at 30 June 2018	224,035	(41,566)	-	-	-	182,469

NOTE 19: PROVISIONS Analysis of total provisions

Analysis of total provisions
Current – leave Non-current – leave Balance at beginning of year Additions in the year/(amounts used) Balance at end of year	Consolidated Group 2019 $ 2018 $ 96,171 75,045 60,998 48,391
	157,169 123,436
	123,436 126,206 33,733 (2,770)
	157,169 123,436

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 19: PROVISIONS (continued)

Provision for Employee Benefits

Provision for employee benefits represents amounts accrued for annual leave and long service leave.

The current portion for this provision includes the total amount accrued for annual leave entitlements that have vested due to employees having completed the required period of service. Based on past experience, the Group does not expect the full amount of the annual leave balance classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since the Group does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.

The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service.

In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have been discussed in Note 1(i).

NOTE 20: ISSUED CAPITAL

Date Price Balance as at 30 June 2018 Shares issued 20 July 2018 $0.035 Shares issued 2 November 2018 $0.035 Shares issued 9 May 2019 $0.035 Shares issued 24 May 2019 $0.035 Shares issued 6 June 2019 $0.035 Shares issued 20 June 2019 $0.035 Shares issued 28 June 2019 $0.035 Total Balance as at 30 June 2019	No. $ 136,130,136 9,341,714 20,000 700 9,599,500 335,983 177,994 6,230 1,642,500 57,488 1,440,167 50,406 651,448 22,801 4,106,951 143,742
	17,638,560 617,349
	153,768,696 9,959,064

Ordinary shares participate in dividends and the proceeds on winding-up of the parent entity in proportion to the number of shares held.

At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 20: ISSUED CAPITAL (continued)

a. Capital Management

Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-term shareholder value and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital include ordinary share capital, convertible notes and financial liabilities, supported by financial assets.

The Group is not subject to any externally imposed capital requirements.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

Total borrowings Less cash and cash equivalents Net Debt Total equity Total capital Gearing ratio	Consolidated Group 2019 $ 2018 $ - - (1,033,383) (533,594)
	(1,033,383) (533,594)
	6,043,847 6,040,340
	9,959,064 9,341,714
	0% 0%

NOTE 21: CAPITAL AND LEASING COMMITMENTS

Operating Lease Commitments

Non-cancellable operating leases contracted for but not recognised in the financial statements Payable – minimum lease payments: – not later than 12 months – between 1 year and 5 years	- 50,346 - -
	- 50,346

The company’s lease expired in January 2019 and the new premises are on a month to month lease.

NOTE 22: CONTINGENT LIABILITIES AND CONTINGENT ASSETS There are no contingent liabilities or contingent assets as at the date of this annual report.

NOTE 23: OPERATING SEGMENTS

The Group currently only has one reportable segment (FY18 it had two reportable segments), as described below, which are the groups strategic business units. The Group has identified its business units based on internal reports that are reviewed on a monthly basis and used by the executive management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The following summary describes the operations in each of the Group’s reportable geographic segments:

Productivity & Performance (including Expense8 and Perform8): Expense8 is a Travel & Expense management software solution that manages and streamlines the end-to-end processing of employeegenerated expenses. By using Expense8, clients’ administration of expenses charged to corporate credit cards is made easier. Perform8 is an advanced survey and action planning solution that diagnoses and prioritises areas for improvement across your business. Its unique methodology drives continuous improvement throughout your organisation, maximising employee engagement and boosting productivity levels.

The revenue and net profit figures below are based on the full financial year.

Year ended June 2019	Performance & Productivity	Realtors8	Head Office	Total
	$	$	$	$
Total segment revenue	3,475,313	-	225,609	3,700,923
Net Profit / (Loss) after tax
for the Period	1,286,204	-	(2,642,426)	(1,356,222)
Adjusted EBITDA	(52,831)	-	(368,465)	(421,296)
Total segment assets
30 June 2019	4,007,132	-	3,541,596	7,548,728
Total segment liabilities
30 June 2019	1,193,884	-	310,997	1,504,881
Year ended June 2018	Performance & Productivity	Realtors8	Head Office	Total
	$	$	$	$
Total segment revenue	2,638,401	1,217,602	-	3,856,003
Net profit / (loss) after tax
for the period	606,910	50,994	(1,897,398)	(1,239,494)
Adjusted EBITDA	1,488,808	74,111	(1,897,398)	(334,479)
Total segment assets
30 June 2018	3,073,167	-	4,358,863	7,432,030
Total segment liabilities
30 June 2018	904,132	-	487,558	1,391,690

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 24: CASH FLOW INFORMATION

a.
Reconciliation of Cash Flow from Operations with
Loss after Income Tax
Non-cash flows in profit:
-
Amortisation
-
Depreciation
-
Non-cash share based payment
-
Foreign exchange
Changes in assets and liabilities, net of the effects of purchase
and disposal of subsidiaries
-
(Increase) / Decrease in trade and other receivables
-
(Increase) / Decrease in other assets
-
Increase / (Decrease) in trade payables and accruals
-
Increase / (Decrease) in income tax payables
-
(Increase) / Decrease in deferred tax assets
-
Increase / (Decrease) in provisions
Cash flow from Operating activities
b.
Acquisition of Entities
Refer to Note 12: Interests in subsidiaries

Consolidated Group
2019
$
2018
$
(1,356,222)
(982,981)
665,443
609,598
27,567
29,217
263,629
-
-
56,659
1,649
(72,228)
40,029
(35,696)
(90,738)
(242,173)
240,630
95,000
43,782
41,566
33,733
(2,770)

(130,498)
(503,808)

c. There were no non cash investing and financing activities during the year.

NOTE 25: EVENTS AFTER THE REPORTING YEAR

8common Limited has receive $91,578 from the conversion of options into ordinary share of the company.

8common successfully received a $279,970 refund claim on 12 September 2019 under the Federal Government’s Research and Development (R&D) Tax Incentive Program

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 26: RELATED PARTY TRANSACTIONS

Related Parties

a. The Group’s main related parties are as follows:
(i) Entities exercising control over the Group:
- The ultimate parent entity that exercises control over the Group is 8common Limited, which is incorporated in Australia.
(ii) Key management personnel:

Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel.

(iii) Other related parties:

Other related parties include entities controlled by the ultimate parent entity and entities over which key management personnel have joint control.

b. Transactions with related parties:

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The following transactions occurred with related parties:

Current Year

There have been no transactions with related parties.

Prior Year

(i) Transactions with directors

During the year ended 30 June 2018, unsecured convertible notes amounting to $350,000 were held by directors at a coupon interest rate of 10%. These convertible notes matured on 8 January 2018 and were redeemed fully. Details of these related party transactions are as follows:

a) Kah Wui “Nic” Lim – $150,000, Nyap Liou “Larry” Gan - $200,000

Interest expense for the year ended 30 June 2018 of $21,096 in relation to above convertible notes is as follows:

b) Kah Wui “Nic” Lim – $9,041, Nyap Liou “Larry” Gan - $12,055

In addition, during the year, operational fees amounting to $124,578 were paid to 8common Sdn. Bhd, a Malaysian company that provides Information Technology services. 8common Sdn. Bhd is controlled by Kah Wui “Nic” Lim.

(ii) Transactions with related party
a) During the year ended 30 June 2018, unsecured convertible notes amounting to $325,000 were held by Zenyen Limited at a coupon interest rate of 10%

Interest expense for the year ended 30 June 2018 of $19,589 in relation to above convertible notes is as follows:

b) Zenyen Limited - $19,589

8common Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 27: FINANCIAL RISK MANAGEMENT

The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, shortterm investments, account receivable and payable, loans to and from subsidiaries, bills and leases.

The totals for each category of financial instruments, measured in accordance with AASB 139: Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements, are as follows:

are as follows:
	Note	Consolidated Group
		2019	2018
		$	$
Financial assets
Cash and cash equivalents	10	1,033,383	533,594
		1,033,383	533,594
Trade and other receivables	11	335,755	337,404
Receivables from sale of assets	16	-	3,180,000
Financial assets	16	3,560,779	-
		3,896,534	3,517,404
Total financial assets		4,929,917	4,050,998
Financial Liabilities
Financial liabilities at amortised cost:
- trade and other payables	17	976,615	1,067,353
Total financial liabilities		976,615	1,067,353

Financial Risk Management Policies

The Audit Committee has the responsibility of managing the financial risk exposures of the consolidated group. The consolidated entity’s activities expose it to a variety of financial risks: market risks (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The Committee’s overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, while minimising potential adverse effects on financial performance.

Specific Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk, foreign currency risk. There have been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or the Board’s objectives, policies and processes for managing or measuring the risks from the previous year.

a. Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the consolidated group. The consolidated groups has adopted a policy of generally dealing with reputable counterparties as a means of mitigating the risk of financial loss from defaults

Trade receivables consist of a large number of customers and ongoing credit evaluation is performed on the accounts regularly. The consolidated entity does not have any significant credit risk exposure to any single counterparty or any group of counterparties. The carrying amounts of financial assets recorded in the financial statements, net of any allowance for losses, represent the consolidated entity’s maximum exposure to credit risk.

8common Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2019

NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINUED)

b. Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors, who has built an appropriate liquidity risk management framework for the management of the consolidated entity’s short, medium and long-term funding and liquidity management requirements. The consolidated entity manages liquidity by maintaining adequate reserves and by continually monitoring forecast and actual cash flows and matching the maturity profiles of financial assets with financial liabilities.

Consolidated Group Financial liabilities due for payment Trade payables Total contractual outflows Consolidated Group Financial liabilities due for payment Trade payables Total contractual outflows	Within 1 Year 1 to 5 Years Over 5 Years Total 2019 2019 2019 2019 $ $ $ $ 976,615 - - 976,615 976,615 - - 976,615
	Within 1 Year 1 to 5 Years Over 5 Years Total 2018 2018 2018 2018 $ $ $ $ 1,067,353 - - 1,067,353 1,067,353 - - 1,067,353

d. Fair values

The fair values of financial assets and financial liabilities at balance date equate to their carrying values.

c.

Market risk

(i) Interest rate risk:

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting year whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. No material interest rate risk exists as the convertible notes have a fixed interest rate of 10%. Interest rate risks on interest earning cash balances are not considered material.

8common Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2019

NOTE 28: SHARE BASED PAYMENTS

Employee Share Option Plan

The Group established the 8common Employee Share Option Scheme on 30 November 2016 as a long-term incentive scheme to recognise talent and motivate employees to strive for group performance. All employees are entitled to participate in the share option scheme. Employees are granted options which vest over two years. The options are issued for no consideration and carry no entitlements to voting rights or dividends of the Group. The number available to be granted is determined by the Board and is based on performance measures including growth in shareholder return, return on equity, cash earnings and Group earnings per share growth.

On 30 June 2019, 7,650,000 share options were granted to employees in the 8common Limited employee share option plan to take up ordinary shares at an exercise price of $0.168 each. The options are exercisable on or before 30 June 2022. The options hold no voting or dividend rights and are not transferable.

Options granted to all employees are as follows:

Employee type Key Management Personnel All other employees Total	Number issued Vested as at 30 June 2019 3,100,000 1,550,000 4,550,000 2,275,000
	7,650,000 3,825,000

Further details of these options are provided in the directors’ report. The options hold no voting or dividend rights and are unlisted. The options lapse within 30 days when a key management personnel ceases their employment with the Group should they not exercise their option. No employee share options were exercised during the year.

Balance as at beginning of the year Options granted Balance as at 30 June 2019	Number Weighted Average exercise price $ - 7,650,000 0.168 7,650,000 0.168

The weighted average remaining life of options outstanding at year-end was 3 years. The exercise price of outstanding shares at the end of the reporting period was $0.168.

The fair value of the options granted to employees is considered to represent the value of the employee services received over the vesting period.

The weighted average fair value of options granted during the year was $263,629 (2018: $NA). These values were calculated using the Black-Scholes option pricing model applying the following inputs:

were calculated using the Black-Scholes option	pricing model applyi
Weighted average exercise price:	$0.168
Weighted average life of the option:	3 years
Expected share price volatility:	74.5%
Risk-free interest rate:	0.99%
Fair value per option	$0.068

Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future movements.

The life of the options is based on the historical exercise patterns, which may not eventuate in the future.

8common Annual Report 2019

NOTE 29: DIFFERENCES IN LOSS REPORTED COMPARED TO APPENDIX 4E DISCLOSURE

The Appendix 4E reporting included a net loss after tax of $1,238,966 and a net asset position of $6,161,103. This 30 June 2019 Annual report discloses a net loss after tax of ($1,356,222) and a net asset position of $6,043,847. This net loss has increased by $117,256 when compared to Appendix 4E and is due to:

a reduction of deferred tax asset from $182,469 to $138,687, resulting in an income tax expense of $43,782,
reversal of an income tax provision of $76,000,
additional accrual for cost of sales of $28,510,
additional amortisation of development costs of $120,964.

NOTE 30: COMPANY DETAILS

The registered office of the company is:

8common Limited Level 11, Suite 11.01 60 Castlereagh Street SYDNEY NSW 2000

The principal places of business are:

8common Limited Expense8 Pty Limited Level 2 383 George Street SYDNEY NSW 2000

8common Annual Report 2019

DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of 8common Limited, the directors of the company declare that:

the financial statements and notes, as set out on pages 16 to 50 are in accordance with the Corporations Act 2001 and:
a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and
b. give a true and fair view of the financial position as at 30 June 2019 and of the performance for the year ended on that date of the consolidated group;
in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer.

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…………………………………………………………………………………………………………………….

Kah Wui “Nic” Lim

Director

Dated this 30[th] day of September 201

8common Annual Report 2019

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INDEPENDENT AUDIT REPORT TO THE SHAREHOLDERS OF 8COMMON LIMITED

REPORT ON THE FINANCIAL REPORT

OPINION

We have audited the accompanying financial report of 8common Limited (the Company) and its controlled entities (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, 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, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

In our opinion:

(a) 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 2019 and of its performance for the year ended on that date; and
II. complying with Australian Accounting Standards and the Corporations Regulations 2001.

(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.

BASIS FOR OPINION

We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s responsibility section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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KEY AUDIT MATTERS

The key audit matters, are the matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. The matters were addressed in the context of our audit of the financial report, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters	How our audit addressed the key audit matter
Going Concern Basis of Accounting (Note 1a) The Group has incurred a net loss after tax for the year ended 30 June 2019 of $1,356,222 (2018: loss of $982,981) and incurred a cash outflow from operating activities of $130,498 (2018: cash outflow of $503,808). These conditions may cast significant doubt on the entity’s ability to continue as a going concern, however, the directors have made the assessment that no material uncertainty exists in relation to the Group’s ability to continue as a going concern as a result of the mitigating factors referred to below, accordingly the directors have determined that the use of the going concern basis of accounting is appropriate in preparing the financial report. The mitigating factors are reliant on the Group’s ability to generate sufficient cash surpluses from operations, selling its investment in Cloudaron shares, continuing to receive financial support from its directors and shareholders. This area is a key audit matter due to the subjectivity and judgment required by management in preparing the cash flow forecast for the period to 12 months from the date of the signing of the financial report, on which the group’s ability to continue operating as a going concern has been based.	Our procedures included, amongst others: • assessing management’s ability to prepare accurate forecasts by comparing prior year forecasts to actual results; • assessing the forecast growth in revenue by reviewing service contracts signed subsequent to 30 June 2019; • assessing the reasonableness of the significant assumptions used in the cash flow forecast; • testing the mathematical accuracy of the cash flow forecast and agreeing the opening cash position to the audited balances; • performing sensitivity analysis in relation to key assumptions including the sales revenue growth rate, cash outflows from operations and incorporating the impact of events that have occurred subsequent to the balance sheet date but prior to the date of the signing of financial report; and • assessing the adequacy of the related disclosures within the financial report.

Key audit matters

How our audit addressed the key audit matter

Going Concern Basis of Accounting (Note 1a)
The Group has incurred a net loss after tax for the
year ended 30 June 2019 of $1,356,222 (2018: loss
of $982,981) and incurred a cash outflow from
operating activities of $130,498 (2018: cash outflow
of $503,808). These conditions may cast significant
doubt on the entity’s ability to continue as a going
concern, however, the directors have made the
assessment that no material uncertainty exists in
relation to the Group’s ability to continue as a going
concern as a result of the mitigating factors referred
to below, accordingly the directors have determined
that the use of the going concern basis of
accounting is appropriate in preparing the financial
report.
The mitigating factors are reliant on the Group’s
ability to generate sufficient cash surpluses from
operations, selling its investment in Cloudaron
shares, continuing to receive financial support from
its directors and shareholders.
This area is a key audit matter due to the
subjectivity and judgment required by management
in preparing the cash flow forecast for the period to
12 months from the date of the signing of the
financial report, on which the group’s ability to
continue operating as a going concern has been
based.

Our procedures included, amongst others:
•
assessing management’s ability to prepare
accurate forecasts by comparing prior year
forecasts to actual results;
•
assessing the forecast growth in revenue by
reviewing service contracts signed subsequent
to 30 June 2019;
•
assessing the reasonableness of the significant
assumptions used in the cash flow forecast;
•
testing the mathematical accuracy of the cash
flow forecast and agreeing the opening cash
position to the audited balances;
•
performing sensitivity analysis in relation to key
assumptions including the sales revenue growth
rate, cash outflows from operations and
incorporating the impact of events that have
occurred subsequent to the balance sheet date
but prior to the date of the signing of financial
report; and
•
assessing
the
adequacy
of
the
related
disclosures within the financial report.

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How our audit addressed the key audit matter Our procedures included, amongst others:

Key audit matters

Deferred Consideration Receivable (Note 16) – Our procedures included, amongst others: Valuation and Recoverability • reviewing the operating performance of the During the 2018 financial year, the group disposed Realtors Group in order to assess the valuation of its investment in the Realtors8 real estate listings of the deferred consideration receivable; business. assessing the deferred contingent consideration, which is based on future EBITDA, In relation to this disposal, the Group has by comparing it to historical data; and recognised a non-current deferred consideration • Discussing the recoverability of the deferred receivable of $388,000 in the consolidated consideration receivable with management.

In relation to this disposal, the Group has recognised a non-current deferred consideration receivable of $388,000 in the consolidated statement of financial position as at 30 June 2019. The deferred consideration receivable is to be received in Cloudaron shares upon certain EBITDA targets being met.

This area is a key audit matter due to the complexity of the calculation of the fair value of the deferred consideration which involves subjectivity and judgment in estimating the deferred contingent consideration receivable to be recognised.

Intangible Assets – Impairment Testing (Note 14) The group has intangible assets recorded on the consolidated statement of financial position at 30 June 2019 of $2,051,207 (2018: $2,716,650). No impairment has been recognised in the year.

AASB 136 Impairment of Assets requires that an intangible asset with an indefinite useful life, such as goodwill, is tested annually for impairment and an intangible asset with a definite useful life, such as capitalised development costs, be reviewed for indicators of impairment.

This is a key audit matter due to the judgment and assumptions applied in preparing a value-in-use model to satisfy the impairment test. Forecasting future cash flows and applying an appropriate discount rate inherently involves a high degree of estimation and judgment by management.

Our	procedures included, amongst others:
•	assessing managements’ ability to prepare
	accurate forecasts by comparing prior year
	forecasts to actual results;
•	assessing the assumptions used for the growth
	rate by comparing the normalised average
	growth rate from 2014 to 2019 to the growth
	rate adopted in the impairment model in
	conjunction with the knowledge and
	information we have obtained regarding future
	growth expectations;
•	assessing the key assumptions for long term
	growth in the forecast cash flows by comparing
	them to industry forecasts;
•	assessing the discount rate applied to reflect the
	cost of capital of the group;
•	testing the mathematical accuracy of the value-
	in-use model;
•	agreeing the inputs in the value-in-use model to
	relevant data including approved budgets and
	latest forecasts;
•	performing sensitivity analysis in relation to key
	assumptions including growth rate, discount
	rate and terminal value; and
•	assessing the adequacy of the related
	disclosures within the financial report.

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Key audit matters	How our audit addressed the key audit matter
Capitalised Development Costs – Recognition and Carrying Value (Note 14) Capitalised development costs at 30 June 2019 have a net carrying value in the consolidated statement of financial position of $811,299 (2018: $1,054,026) in relation to the Expense8 suite of products. AASB 138 Intangible Assets requires that specific criteria are met in order to capitalise development costs. The costs are being amortised over a period of 5 years as this is the period over which management expects to generate future economic benefits from license sales. This area is a key audit matter due to subjectivity and management judgment applied in the assessment of whether the costs meet the capitalisation criteria and in determining the useful life of the product that forms the amortisation period.	Our procedures included, amongst others: • assessing the group’s accounting policy in respect of product development costs for adherence to AASB 138; • testing a sample of amounts capitalised to supporting documentation and assessing compliance with the recognition criteria of AASB 138; • recalculating the amortisation expense of assets available for use; • assessing the reasonableness of the amortisation period by reference to comparable market data; and • assessing the adequacy of related disclosures within the financial report.
Share based payments expense – Measurement (Note 28) During the year ended 30 June 2019, share based payments expense in relation to employee share options granted has been recognised in the statement of profit and loss amounting to $263,629. This area is a key audit matter due to the subjectively and management judgement applied in the assessment of the fair value of the options pursuant to AASB 2 Share Based Payments. Subjectivity and judgement is involved in assessing the expected future stock price volatility of 8common’s shares which is to be used for use in the Black Scholes Option Valuation Model.	Our procedures included, amongst others: • agreeing the options issued to signed documentation from the respective employees; • agreeing the inputs in the model to third party evidence; • reviewing the volatility calculation by reference to historical stock price data and comparable company volatilities; and • assessing the adequacy of related disclosures within the financial report.
Revenue Recognition (Note 3) The Group has reported revenue from continuing operations of $3,474,175 as set out in Note 3. Revenue is based on detailed customer contracts that contain different pricing schedules and varying revenue recognition triggers. Complexity exists because of the specific nature of each customer contract which can include license fees, maintenance fees, implementation fees and consulting fees. Management judgement is required to estimate revenue recognition where cash flows do not align to contract performance obligations. We have included revenue recognition as a key audit matter due to the significance of revenue to the financial statements and the specific nature of the customer contracts.	Our procedures included, amongst others: • reviewing the revenue recognition policy; • Assessing management’s assessment of the impacts of AASB 15 Revenue from Contracts with Customers; • Testing a sample of revenue recognised to Contracts with Customers; • testing a sample of revenue transactions by agreeing them to invoices, bank statements and contracts (where applicable); • testing a sample of deferred revenue balances by agreeing amounts to invoices, bank statements and contracts; and • testing the completeness and occurrence of revenue by comparing the total receipts from the bank statements to the total revenue recognised in the general ledger.

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OTHER INFORMATION

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

DIRECTORS’ RESPONSIBILTY FOR THE FINANCIAL REPORT

The directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australia Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparations of the financial report that give a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Australian Accounting Standards AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards.

In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the financial report based on our audit. 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 than an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

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As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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REPORT ON THE REMUNERATION REPORT

We have audited the Remuneration Report included the Directors’ Report on pages 9 to 14 for the year ended 30 June 2019. The Directors of the Group 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 with Australian Auditing Standards.

OPINION

In our opinion, the Remuneration Report of 8common Limited for the year ended 30 June 2019, complies with Section 300A of the Corporations Act 2001.

RESPONSIBILITIES

The Directors of the Group 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 Australia Auditing Standards.

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Wali Aziz
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Walker Wayland NSW Wali Aziz Chartered Accountants Partner

Dated this 1[st] of October 2019, Sydney

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

The following information is current as at 19 September 2019.

Shareholding

Shareholding
a. Distribution of Shareholders Category (size of holding): 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Number Ordinary 25 23 132 254 108
	542

b. The number of shareholdings held in less than marketable parcels is 45.
c. The names of the substantial shareholders listed in the holding company’s register are:

he names of the substantial shareholders listed in the holding ompany’s register are:
Holder Name	Holding Balance
8CAPITA LIMITED	20,471,848
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	18,707,245
ZENYEN LIMITED	8,326,652
MAXWEALTH CAPITAL LIMITED	8,326,652
MR KOK FUI LAU	8,098,246
INTERNATIONAL RESOURCEHOUSE LIMITED	7,867,527

d. Voting Rights

The voting rights attached to each class of equity security are as follows:

Ordinary shares

Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

e. 20 Largest Shareholders – Ordinary Shares No. Name 1 8CAPITA LIMITED 2 HSBC CUSTODY NOMINEES 3 MAXWEALTH CAPITAL LIMITED 4 ZENYEN LIMITED 5 MR KOK FUI LAU 6 INTERNATIONAL RESOURCEHOUSE 7 CITICORP NOMINEES PTY LIMITED 8 PUNTERO PTY LTD 9 J P MORGAN NOMINEES AUSTRALIA 10 KAH WUI "NIC" LIM 11 BNP PARIBAS NOMINEES PTY LTD 12 TWENTY TEN ENTERPRISES PTY LTD 13 MS MEI YUN HUANG 14 MARCUS DELL PTY LTD 15 CASTLEREAGH HOLDINGS PTY LTD 16 MR ALAN CONIGRAVE 17 ASSET GROWTH FUND PTY LTD 18 AUSTRALIAN EXECUTOR TRUSTEES 19 TEN GOALS PTY LTD 20 MR ALAN LINDSAY CONIGRAVE Total	Number % 20,471,848 13.31% 18,707,245 12.17% 8,326,652 5.42% 8,326,652 5.42% 8,098,246 5.27% 7,867,527 5.12% 6,509,194 4.23% 4,516,667 2.94% 4,452,162 2.90% 4,008,002 2.61% 2,968,906 1.93% 2,841,667 1.85% 2,760,000 1.79% 2,754,185 1.79% 2,636,000 1.71% 2,300,000 1.50% 1,900,000 1.24% 1,875,000 1.22% 1,843,000 1.20% 1,800,000 1.17%
	114,962,953 74.76%

e.
20 Largest Shareholders – Ordinary Shares
No. Name
1
8CAPITA LIMITED
2
HSBC CUSTODY NOMINEES
3
MAXWEALTH CAPITAL LIMITED
4
ZENYEN LIMITED
5
MR KOK FUI LAU
6
INTERNATIONAL RESOURCEHOUSE
7
CITICORP NOMINEES PTY LIMITED
8
PUNTERO PTY LTD
9
J P MORGAN NOMINEES AUSTRALIA
10
KAH WUI "NIC" LIM
11
BNP PARIBAS NOMINEES PTY LTD
12
TWENTY TEN ENTERPRISES PTY LTD
13
MS MEI YUN HUANG
14
MARCUS DELL PTY LTD
15
CASTLEREAGH HOLDINGS PTY LTD
16
MR ALAN CONIGRAVE
17
ASSET GROWTH FUND PTY LTD
18
AUSTRALIAN EXECUTOR TRUSTEES
19
TEN GOALS PTY LTD
20
MR ALAN LINDSAY CONIGRAVE
Total

Number
%
20,471,848
13.31%
18,707,245
12.17%
8,326,652
5.42%
8,326,652
5.42%
8,098,246
5.27%
7,867,527
5.12%
6,509,194
4.23%
4,516,667
2.94%
4,452,162
2.90%
4,008,002
2.61%
2,968,906
1.93%
2,841,667
1.85%
2,760,000
1.79%
2,754,185
1.79%
2,636,000
1.71%
2,300,000
1.50%
1,900,000
1.24%
1,875,000
1.22%
1,843,000
1.20%
1,800,000
1.17%

114,962,953
74.76%

ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

Directors	Kah Wui Lim (Chairman)
	Adrian Bunter
	Nyap Liou Gan
	John Du Bois
Chairman and CEO	Kah Wui Lim
Company Secretary	Dean Jagger
Corporate Governance Statement	Refer to http://www.8common.com/wp-
	content/uploads/2015/03/Corporate-Governance-Statement1.pdf
Registered Office	Level 11, Suite 11.01, 60 Castlereagh Street, SYDNEY NSW 2000
Principal place of	Level 2
Business	383 George Street
	Sydney NSW 2000
Share Registry	Automic Registry Services
	Level 5, 126 Phillip Street,
	SYDNEY NSW 2000
Auditor	Walker Wayland NSW Chartered Accountants
	Level 11, Suite 11.01,
	60 Castlereagh Street,
	SYDNEY NSW 2000
Stock Exchange Listing	8common Limited and Controlled entities shares are listed on the
	Australian Securities Exchange (ASX code: 8CO)
Web site	www.8common.com

==> picture [531 x 512] intentionally omitted <==

==> picture [30 x 23] intentionally omitted <==

[email protected] Level 2, 383 George St Sydney, NSW, Australia

==> picture [30 x 39] intentionally omitted <==

AI assistant

8COMMON LIMITED — Annual Report 2019

64263_rns_2019-09-30_d6a7d00e-f0c8-4549-83cc-7b7edf96b0cc.pdf

And its Controlled Entities 2019 Annual Report

Contents

Chairman’s Message

Chairman’s Message (continued)

Strong Expense8 performance in 2H19

Corporate activity

Staff and management update

Chairman’s Message (continued)

Outlook for FY20

Nic Lim

DIRECTORS’ REPORT

General Information

Directors

Principal Activities

Operating Results and Review of Continuing Operations

Financial Position

Significant Changes in State of Affairs

Events after Reporting Year

Environmental Issues

Dividends Paid or Recommended

Indemnifying and insurance of officers

Indemnifying and insurance of auditor

Proceedings on Behalf of Company

Non-audit Services

Employee Share Options

Auditor’s Independence Declaration

Auditor

Options

Information Relating to Directors

John Du Bois

Meetings of Directors

REMUNERATION REPORT - AUDITED

Role of the remuneration committee

A. Principles used to determine the nature and amount of remuneration

Remuneration structure

Non-executive director remuneration

Objective

Structure

Executive remuneration

Objective

Structure

Fixed remuneration

Remuneration Policy and Performance

Relationship between remuneration policy and company performance

B. Details of remuneration (audited)

C. Service agreements

D. Share-based compensation (audited)

Loans to directors and executives

Share holdings of key management personnel.

Options holdings of key management personnel.

Description of options/rights issued and remuneration

END OF REMUNERATION REPORT

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF 8COMMON LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

a)[Going Concern basis of accounting ]

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Going Concern basis of accounting (cont)

b) Significant accounting judgments, estimates and assumptions

Key estimates

i. Impairment – Intangibles

ii. Provision for impairment of receivables

iii. Intellectual Property – Software useful lives

iv. Capitalised Development Costs

v. Deferred Consideration

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES b) Significant accounting judgments estimates and assumptions (cont)

c) Discontinued Operations Accounting Policy

d) Cash and Cash Equivalents

e) Trade and Other Receivables

f) Property, Plant and Equipment

g) Financial assets at fair value through other comprehensive income

8COMMON LIMITED Annual Report 2019