EX-99.1 2 t1602120_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Appendix 4E

Preliminary Final Report

 

Appendix 4E

 

Preliminary Final Report

to the Australian Securities Exchange

 

Part 1: Details of entity, reporting period

 

Name of Entity MOKO Social Media Limited
ABN 35 111 082 485
Financial Period

Year ended 30 June 2016

Previous Corresponding Reporting Period

Year ended 30 June 2015

 

Part 2: Results for announcement to the market

 

  $’000 Percentage
increase
/(decrease)
over previous
corresponding
period
Revenue 85 (95%)
(Loss) after income tax benefit (20,065) 6%
Net (Loss) attributable to members of the parent entity (20,719) 4%

 

Dividends (distributions) Amount per security Franked amount per
security
Final Dividend Nil Nil
Interim Dividend Nil Nil
Record date for determining entitlements to the dividends (if any) Not Applicable
       

 

Brief explanation of any of the figures reported above necessary to enable the figures to be understood:

 

Refer to attachment.

 

 

MOKO Social Media Limited Page 1

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 3: Contents of ASX Appendix 4E

 

Section   Contents
Part 1   Details of entity, reporting period
Part 2   Results for announcement to the market
Part 3   Contents of ASX Appendix 4E
Part 4   Consolidated statement of profit or loss and other comprehensive income
Part 5   Accumulated losses
Part 6   Consolidated statement of financial position
Part 7   Consolidated statement of changes in equity
Part 8   Consolidated statement of cash flows
Part 9   Basis of preparation
Part 10   Commentary on results
Part 11   Revenue and other income
Part 12   Expenses
Part 13   Property, plant and equipment
Part 14   Intangibles
Part 15   Available-for-sale financial investments
Part 16   Discontinued operations
Part 17   Details relating to dividends
Part 18   Earnings per share
Part 19   Net tangible assets per security
Part 20   Issued securities
Part 21   Segment information
Part 22   Subsequent events
Part 23   Audit Status
     

 

MOKO Social Media Limited Page 2

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 4: Consolidated statement of profit or loss and other comprehensive income

 

    Consolidated
 

Note

 

2016

 

2015

(restated)*

    $ $
Revenue and other income      
Revenue 11 84,830 1,592,934
Interest income 11 17,830 187,085
Other income 11 1,049,481 947,845
Expenses      
Cost of providing services   (87,102) (1,309,753)
License fee   (2,320,960) (1,539,910)
Computer expenses   (446,614) (336,994)
Marketing expenses   (1,540,871) (3,293,889)
Travel and entertainment expenses   (472,066) (806,946)
Occupancy expenses   (496,146) (422,726)
Administration expenses   (1,105,658) (903,100)
Exchange loss   (79,725) 55,582
Finance costs   (65,201) (6,635)
Legal and professional fees   (2,239,824) (2,125,799)
Employee benefits expenses 12 (6,199,744) (7,333,024)
Share based payments 12 (1,263,528) (1,875,674)
Depreciation and amortisation 12-14 (443,876) (1,014,523)
Other expenses   (11,015) -
Product cost   (936,202) (977,131)
Impairment of intangible assets 12-14 (3,515,823) -
       
Loss before income tax   (20,072,214) (19,162,658)
Income tax benefit   6,889 166,723
       
Loss after income tax expense from continuing operations   (20,065,325) (18,995,935)
Loss after income tax expense from discontinued operations   (738,675) (1,298,072)
       
Loss after income tax   (20,804,000) (20,294,007)
       
Other comprehensive income for the year, net of tax      
Items that may be reclassified subsequently to profit or loss      
Exchange differences on translation of foreign operations   590,423 1,397,333
Total comprehensive income for the year, net of tax   (20,213,577) (18,896,674)
       
Total comprehensive income for the year is attributable to:      
Continuing operations   (19,474,902) (17,598,602)
Discontinued operations   (738,675) (1,298,072)
Total comprehensive income for the year   (20,213,577) (18,896,674)
       
Loss attributable to:      
Owners of the Company   (20,719,488) (20,013,288)
Non-controlling interest   (84,512) (280,719)
    (20,804,000) (20,294,007)

 

MOKO Social Media Limited Page 3

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 4: Consolidated statement of profit or loss and other comprehensive income (continued)

 

    Consolidated
 

Note

 

2016

 

2015

(restated)*

    $ $
Total comprehensive income for the year attributable to owners of the company:      
Continuing operations   (19,474,902) (17,598,602)
Discontinued operations   (654,163) (1,017,353)
Owners of the Company   (20,129,065) (18,615,955)
       
Total comprehensive income for the year attributable to non-controlling interests:      
Continuing operations   - -
Discontinued operations   (84,512) (280,719)
Non-controlling interests   (84,512) (280,719)

 

*The restatement of comparatives is related to discontinued operations. Please refer to Part 16 Discontinued operations for further details.

 

Part 5: Accumulated losses

 

    Consolidated
  Note 2016 2015
    $ $
Accumulated losses brought forward   (58,942,958) (38,929,670)
Movement in accumulated losses from changes in non-controlling interest   (269,248)
Loss after income tax expenses for the year   (20,719,488) (20,013,288)
    (79,931,694) (58,942,958)
         

 

MOKO Social Media Limited Page 4

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 6: Consolidated statement of financial position

 

    Consolidated
  Note 2016 2015
    $ $
Current assets      
Cash and cash equivalents   2,546,772 7,219,908
Trade and other receivables   38,660 501,472
Other current assets   326,643 1,017,204
Total current assets   2,912,075 8,738,584
       
Non-current assets      
Property, plant and equipment 13 136,731 255,961
Intangibles 14 100,835 3,814,088
Available-for-sale financial assets 15 1,297,811 1,297,811
Total non-current assets   1,535,377 5,367,860
Total assets   4,447,452 14,106,444
       
Current liabilities      
Trade and other payables   1,047,672 2,569,262
Employee benefits   123,510 411,076
Total current liabilities   1,171,182 2,980,338
       
Non-current liabilities      
Employee benefits   56,518 45,530
Total non-current liabilities   56,518 45,530
Total liabilities   1,227,700 3,025,868
       
Net assets   3,219,752 11,080,576
       
Equity      
Issued capital 20 69,142,733 58,214,371
Reserves 7 14,053,478 12,213,980
Accumulated losses 5 (79,931,694) (58,942,958)
Non-controlling interest 7 (44,765) (404,817)
Total equity   3,219,752 11,080,576
         

 

MOKO Social Media Limited Page 5

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 7: Consolidated statement of changes in equity

 

Consolidated Issued
Capital
Foreign
currency
Translation
Reserve
Option
Reserves
Accumulated
Losses
Non-
controlling
interest
Total
  $ $ $ $ $ $
Balance at 30 June 2014 41,679,662 570,172 8,420,632 (38,929,670) (124,098) 11,616,698
             
Loss after income tax expense for the period - - - (20,013,288) (280,719) (20,294,007)
Other comprehensive income - 1,397,333 - - - 1,397,333
Total comprehensive income for the year - 1,397,333 - (20,013,288) (280,719) (18,896,674)
             
Transactions with owners in their capacity as owners            
Issue of ordinary shares on exercise of options 7,800,973 - - - - 7,800,973
Issue of ordinary shares on capital raising 8,762,325 - - - - 8,762,325
Issue of ordinary shares to consultants 300,000 - - - - 300,000
Issue of ordinary shares to employees 115,324 - - - - 115,324
Issue of ordinary shares as consideration for business combination 200,000 - - - - 200,000
Capital raising costs (643,913) - - - - (643,913)
Share based payments - Options - - 1,825,843 - - 1,825,843
             
Balance at 30 June 2015 58,214,371 1,967,505 10,246,475 (58,942,958) (404,817) 11,080,576
             
Loss after income tax expense for the year  -  -  -  (20,719,488)  (84,512)  (20,804,000)
Non-controlling interest changes  -  -  -  (269,248)  444,564  175,316
Other comprehensive income  -  590,423  -  -  -  590,423
Total comprehensive income for the year  -  590,423  -  (20,988,736)  360,052  (20,038,261)
             
Transactions with owners in their capacity as owners            
Issue of ordinary shares on capital raising  11,778,867  -  -  -  -  11,778,867
Issue of ordinary shares to consultants  360,128  -  -  -  -  360,128
Issue of ordinary shares to employees  15,097  -  -  -  -  15,097
Capital raising costs  (1,225,730)  -  -  -  -  (1,225,730)
Share based payments - Options  -  -  1,249,075  1,249,075
             
Balance at 30 June 2016  69,142,733  2,557,928  11,495,550  (79,931,694)  (44,765)  3,219,752

 

MOKO Social Media Limited Page 6

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 8: Consolidated statement of cash flows

 

    Consolidated
    2016 2015
  Note $ $
       
Cash flows from operating activities      
       
Net receipts from customers    1,588,278 6,930,339
Research & Development tax refund    905,747 947,845
Payments to suppliers and employees   (16,756,352) (26,241,545)
Interest received    20,655 232,058
Interest and other finance costs paid    (74,341) (26,119)
Income taxes refund / (paid)   6,889 (74,022)
Net cash used in operating activities    (14,309,124) (18,231,444)
       
Cash flows from investing activities      
Proceeds from sale of property, plant and equipment    15,910 -
Payment for acquisition of business, net of cash acquired    - (175,115)
Payment for sale of business    (69,224)
Payment for investments    (1,042,142) (256,813)
Payment for property, plant and equipment    (7,561) (210,811)
Payments for disposal of subsidiary    - (132,395)
Net cash used in investing activities    (1,103,017) (775,134)
       
Cash flows from financing activities      
       
Proceeds from issues of shares    11,778,867 16,860,777
Share issue transaction cost    (1,056,746) (641,407)
Proceeds from borrowings    1,500,000 -
Repayment of borrowings    (1,500,000) -
Net cash provided by financing activities    10,722,121 16,219,370
       
Net decrease in cash held    (4,690,020) (2,787,208)
       
Cash and cash equivalents at beginning of the year    7,219,908 9,878,011
       
Effects of exchange rate changes on cash    16,884 129,105
Cash and cash equivalents at end of the year    2,546,772 7,219,908

 

MOKO Social Media Limited Page 7

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 9: Basis of preparation

 

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

 

The consolidated financial statements of MOKO Social Media Limited (the Company) as at and for the year ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the Group).

 

Part 10: Commentary on results

 

During the year the principal continuing activity of the Consolidated Entity was the development and branding of mobile social media platforms for tailored audiences to enable communities of large, like-minded groups of people to socialize and communicate around their common interests. The following key milestones were achieved:

 

-from September 2015, the Company made the strategic decision to focus its resources on its core high school and college student products, preserve cash flow and exit other business categories, with the college and high school market offering a major opportunity for the Company;
-significant growth in user acquisition and engagement following the portfolio realignment was achieved. MOKO’s core product, REC*IT, continued to record strong growth in the US academic year ended in 2016. It has now had more than 752,000 first launches (‘user acquisition’), with more than 480,000 first launches in the year, an increase of 114%, and an average of 9.87 screen views per session (‘engagement’), up 32% from 7.5 the previous year;
-MOKO increased its exposure to more than half of the US college student population, with a further 125 colleges added in the six months to 30 June 2016;
-REC*IT's first marketing partnership with a major US brand was executed; and
-development of a new app commenced, REC*IT Plus, a “white label” subscription product targeted at recreation centre administrators, to help them manage recreational facilities and programs.

 

MOKO’s decision to re-align its product portfolio and focus on the REC*IT suite targeting the US student market is well under way.

 

The net loss after tax from continuing operations of $20.07m increased by $1.07m or 6% against the prior year’s result of $19.00m. The total comprehensive loss for the year increased by 7% to $20.21m (2015: $18.90m) which included a foreign currency translation benefit of $0.59m (2015: $1.40m).

 

Revenues decreased by 95% to $0.08m for the year (2015: $1.59m). The decrease was largely due to a re-positioning of the Mobile Advertising operations to focus on building users and market share rather than short-term revenues in order to better position the business to maximise its future monetization potential. Ongoing revenues in Mobile Advertising are expected to be earned from the monetization of MOKO's student products, including REC*IT, Big Teams powered by REC*IT and REC*IT Fitness. As these products are not yet commercialized, there remains uncertainty over this expectation.

 

For 2016, MOKO’s expenses decreased by 3% to $21.22m (2015: $21.89m) resulting from a reduction in marketing expenses (decreased by $1.75m or 53%), employee benefit expenses (decreased by $1.13m or 15%), share based payments (decreased by $0.61m or 33%) and other operating overhead such as depreciation and amortization (decreased by $0.57m or 56%).

 

Net operating cash flows for the year improved from $(18.23)m in 2015 to $(14.31)m in 2016. Investing cash outflows increased by 42% to $1.10m (2015: $0.76m) primarily due to payments related to the acquisition of a 10% interest in BigTeams LLC (2016: $1.04m vs 2015: $0.26m). Financing cash inflows decreased by 34% to $10.72m (2015: $16.22m) due to lower net proceeds received from equity capital raisings during the period.

 

During the year the Company issued 904.31m new ordinary shares including net proceeds from the pro-rata entitlement issue completed in April 2016 (2015: 202.63m). The unlisted options increased to 921.71m (2015: 66.22m).

 

MOKO Social Media Limited Page 8

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Going concern

 

The Consolidated Entity is currently operating on a negative cash flow basis. Net cash used in operations for the year ended 30 June 2016 was $14,31m (2015: $18.23m). The Consolidated Entity made a continuing operating loss of $20.07m for the year ended 30 June 2016 (2015: loss of $19.00m).

 

In order to continue as a going concern, the Consolidated Entity needs to raise additional funds. The directors acknowledge that the requirement to raise additional funding represents a material uncertainty which may cast significant doubt over the ability of the Consolidated Entity to continue as a going concern.

 

The Consolidated Entity is pursuing a number of fund raising options but there is no certainty that additional funding will be available to us.

 

Should the Consolidated Entity be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities that might result should the Consolidated Entity be unable to continue as a going concern and meet its debts as and when they fall due.

 

MOKO Social Media Limited Page 9

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 11: Revenue and other income

 

  Consolidated
 

2016

 

2015

(restated)

  $ $
Revenue 84,830 1,592,934
     
Interest received 17,830 187,085
     
Other income    
Research & development tax refund 905,747 947,845
Rental income 143,734 -
  1,049,481 947,845

 

Part 12: Expenses

 

Loss before income tax includes the following specific expenses:

 

  Consolidated
  2016

2015

(restated)

  $ $
Employee benefits expense    
Salaries and wages (including contractors, annual leave) 5,459,847 6,526,214
Superannuation, Healthcare & Workers Compensation 739,897 806,810
Total employee benefits expense 6,199,744 7,333,024
     
Share based payments 1,263,528 1,875,674
     
Depreciation    
Computer equipment 78,769 25,557
Furniture and fittings 9,094 6,602
Leasehold Improvement 7,239 3,476
Total depreciation 95,102 35,635
     
Amortisation    
Computer software 88,523 36,894
Capitalised product development - 19,649
Intellectual Property 260,251 922,345
Total amortisation 348,774 978,888
     
Total depreciation and amortisation 443,876 1,014,523
     
Impairment expense    
Intellectual Property 1,935,919 -
Goodwill 1,579,904 -
Total impairment 3,515,823 -
       

 

MOKO Social Media Limited Page 10

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 13: Property, plant and equipment

 

Consolidated Computer equipment Furniture
and fittings
Leasehold Improvements Total
2015        
Cost 772,604 80,064 33,902 886,570
Accumulated depreciation (590,881) (35,542) (4,186) (630,609)
Balance at 30 June 2015 181,723 44,522 29,716 255,961
         
Reconciliation        
Balance at 1 July 2014 75,063 12,663 - 87,726
Additions 137,622 39,287 33,902 210,811
Depreciation expense (25,557) (6,602) (3,476) (35,635)

Depreciation expense

(discontinued operations)

(3,134) - - (3,134)
Effects of movements in exchange rates (2,271) (826) (710) (3,807)
Balance at 30 June 2015 181,723 44,522 29,716 255,961
         
2016        
Cost 746,300 67,536 34,982 848,818
Accumulated depreciation (661,008) (39,521) (11,558) (712,087)
Balance at 30 June 2016 85,292 28,015 23,424 136,731
         
Reconciliation        
Balance at 1 July 2015 181,723 44,522 29,716 255,961
Additions 3,682 4,420 1,080 9,182
Disposal (18,706) (11,981)  (30,687)

Disposal

(discontinued operations)

(2,543) (597) - (3,140)
Depreciation expense (78,769) (9,094) (7,239) (95,102)

Depreciation expense

(discontinued operations)

(2,107) (85) - (2,192)
Effects of movements in exchange rates 2,012 830 (133) 2,709
Balance at 30 June 2016 85,292 28,015 23,424 136,731

 

MOKO Social Media Limited Page 11

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 14: Intangibles

 

  Computer software Intellectual Property Goodwill TOTAL
Consolidated
 
  $ $ $ $
2015        
Cost 220,646 4,837,947 2,387,346 7,445,939
Accumulated amortisation (121,862) (2,795,527) (714,462) (3,631,851)
Balance at 30 June 2015 98,784 2,042,420 1,672,884 3,814,088
         
Reconciliation        
Balance at 1 July 2014 3,283 2,472,621 1,117,880 3,593,784
Acquisitions through business combinations - - 339,570 339,570
Additions 132,395 - - 132,395
Amortisation expense (36,894) (922,345) - (959,239)
Effects of movements in exchange rates - 492,144 215,434 707,578
Balance at 30 June 2015 98,784 2,042,420 1,672,884 3,814,088
         
2016        
Cost 312,746 5,273,257 1,759,631 7,345,634
Accumulated amortisation (211,911) (3,337,338) - (3,549,249)
Impairment - (1,935,919) (1,759,631) (3,695,550)
Balance at 30 June 2016 100,835 - - 100,835
         
Reconciliation        
Balance at 1 July 2015 98,784 2,042,420 1,672,884 3,814,088
Additions 92,100 - - 92,100
Amortisation expense (88,523) (260,251) - (348,774)
Impairment expense - (1,935,919) (1,579,904) (3,515,823)
Impairment expense (discontinued operations) - - (179,727) (179,727)
Effects of movements in exchange rates (1,526) 153,750 86,747 238,971
Balance at 30 June 2016 100,835 - - 100,835

 

MOKO Social Media Limited Page 12

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 14: Intangibles (continued)

 

Impairment testing

 

Intellectual property and Goodwill acquired through business combinations has been allocated to the cash-generating units:

 

Intellectual property  Mobile
Advertising (1)
Mobile
Commerce (2)
Total
  $ $ $
2015      
Cost  4,788,477  49,470  4,837,947
Accumulated Amortisation  (2,746,057)  (49,470)  (2,795,527)
Balance at 1 July 2015  2,042,420  -  2,042,420
Amortisation expense  (260,251)  -  (260,251)
Impairment  (1,935,919)  -  (1,935,919)
Effects of movements on foreign exchange rates  153,750  -  153,750
Balance at 30 June 2016  -  -  -

 

Goodwill  Mobile
Advertising (1)
Mobile
Commerce (2)
Total
  $ $ $
       
Balance at 1 July 2015  1,493,157  179,727  1,672,884
Impairment  (1,579,904)  (179,727)  (1,759,631)
Effects of movements on foreign exchange rates  86,747  -  86,747
Balance at 30 June 2016 - - -

 

Impairment testing

 

(1)Mobile Advertising Cash Generating Unit

 

Ongoing revenues from Mobile Advertising are expected to be earned from the monetization of MOKO's student products, including REC*IT and REC*IT Fitness. As these products are not yet commercialized and cash inflows have not occurred as forecast, there is uncertainty over this expectation. As a result, the carrying value of the goodwill and intellectual property of this cash generating unit was deemed unrecoverable and fully impaired.

 

(2)Mobile Commerce Cash Generating Unit (discontinued operations)

 

MOKO sold Deals I Love (Australia) Pty Ltd on 30 March 2016. As a result, the carrying value of the goodwill of this cash generating unit was written down to nil.

 

MOKO Social Media Limited Page 13

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 15: Available-for-sale financial assets

 

On 24 April 2015, MOKO signed a Share Purchase Agreement with Big Teams LLC (“BigTeams”), a limited liability company located in the US. MOKO invested One Million U.S. Dollars (US$1,000,000 or A$ 1,297,811) to acquire a 10% equity stake in BigTeams.

 

BigTeams is the largest high school sports software platform in the US, providing online tools and data for US high schools to assist with sports team administration, event management and fundraising.

 

MOKO launched a tailored version of its REC*IT app in November 2015, specifically targeted at the students and parents of more than 3,400 US high schools that are currently serviced by BigTeams, using data generated by BigTeams. This investment has significantly expanded its offering for US students and provided access to the high school market.

 

Under the terms of purchase agreement, MOKO paid US$200,000 (A$256,813) in the year ended 30 June 2015, and further US$800,000 (A$1,042,142) in the current year.

 

  2016 2015
$ $
Unlisted ordinary shares 1,297,811  1,297,811

 

The unlisted ordinary shares are held in Big Teams LLC. Fair value information relating to this investment has not been disclosed because the shares are not quoted in an active market and fair value cannot be measured reliably. Management currently has no plans to dispose of the shares.

 

There is no impairment related to BigTeams as at 30 June 2016.

 

MOKO Social Media Limited Page 14

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 16: Discontinued operations

 

On 31 October 2015, the operations of Tagroom Pty Ltd and Moko Performance Network (formerly OfferMobi) were discontinued. These entities were operated as part of the mobile advertising segment.

 

On 30 March 2016, MOKO sold Deals I Love (Australia) Pty Ltd (“DIL”) to Hedgeabelli Pty Ltd. As a condition to the occurrence of Completion, MOKO advanced $37,500 to DIL as part of the Completion Loan. On the completion date, Moko released DIL from any outstanding loan balances amounting to $1,092,084.

 

On 29 April 2016, Moko Door Foundation was discontinued operation and filed for dissolution in the State of Delaware in the US. The dissolution was duly authorised on 6 June 2016.

 

(a)Financial performance

 

  2016

2015

(restated)

$ $
Revenue  1,099,346  4,694,199
Interest received  2,825  2,685
Cost of providing goods and services  (822,479)  (3,268,279)
Expenses  (836,448)  (2,737,081)
Depreciation and amortisation  (2,192)  (3,134)
Impairment expense  (179,727)  -
Loss before tax from discontinued operations  (738,675)  (1,311,610)
     
Income tax benefit  -  13,538
     
Loss after income tax  (738,675)  (1,298,072)
     
Loss after income tax benefit from discontinued operations  (738,675)  (1,298,072)
     
Owners of the Company  (654,163)  (1,017,353)
Non-controlling interests  (84,512)  (280,719)
   (738,675)  (1,298,072)

 

(b)Cash flow information

 

  2016

2015

(restated)

$
Operating activities  (248,046)  (1,515,583)
Investing activities  (26,253)  13,859
Financing activities* 144,553 1,180,805
Net cash (outflow) / inflow  (129,746)  (320,919)

 

* Financing activities are fund transfers from parent company, Moko Social Media Limited.

 

MOKO Social Media Limited Page 15

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 17: Details Relating to Dividends

 

Date the dividend is payable Not Applicable
Record date to determine entitlement to the dividend Not Applicable
Amount per security Not Applicable
Total dividend Not Applicable
Amount per security of foreign sourced dividend or distribution Not Applicable
Details of any dividend reinvestment plans in operation Not Applicable
The last date for receipt of an election notice for participation in any dividend reinvestment plans Not Applicable

 

Part 18: Earnings per Share

 

  2016

2015

(restated)

  $ $
(a) Earnings per share from continuing operations    
Loss after income tax attributable to owners of MOKO Social Media Limited (20,065,325) (18,995,935)
Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share 976,674,881 609,883,178
     
  cents cents
Basic earnings per share (2.05) (3.11)
     
(b) Earnings per share from discontinued operations    
Loss after income tax attributable to owners of MOKO Social Media Limited (654,163) (1,017,353)
Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share 976,674,881 609,883,178
     
  cents cents
Basic earnings per share (0.07) (0.17)
     
(c) Total Earnings per share from loss    
Loss after income tax attributable to owners of MOKO Social Media Limited (20,719,488) (20,013,288)
Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share 976,674,881 609,883,178
     
  cents cents
Basic earnings per share (2.12) (3.28)

 

MOKO Social Media Limited Page 16

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 18: Earnings per Share (continued)

 

(b) Diluted earnings per share

 

Options issued to shareholders and related parties are considered to be potential ordinary shares and have been considered in the determination of diluted earnings per share. The calculation of dilutive earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share. Diluted earnings per share are therefore not different from basic earnings per share.

 

Part 19: Net Tangible Assets per Security

 

  Consolidated
  2016 2015
     
Net tangible asset backing per ordinary security    
Fully paid ordinary shares 1,659,796,126 (30 Jun 2015: 755,486,679 shares) 0.19 cents 0.96 cents
       

 

Part 20: Issued securities

 

(a)Share capital

 

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares presents at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

 

  Consolidated
  2016 2015
  $ $
Fully paid ordinary shares 1,659,796,126 (30 Jun 2015: 755,486,679 shares) 69,142,533 58,214,171
Fully paid performance shares 20,000,000 (30 June 2015: 20,000,000) 200 200
  69,142,733 58,214,371
       

 

MOKO Social Media Limited Page 17

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 20: Issued securities (continued)

 

(b)Movement in ordinary share capital during the year

 

The following movements in ordinary share capital occurred during the year:

 

Date Details Numbers of
shares
Issue
Price
$
Amount
$
1 July 2015 Opening Balance 755,486,679 Various  58,214,171
5 November 2015 NASDAQ placement 60,000,000 0.06  3,600,000
12 November 2015 Capital raising fees 2,000,000 0.06  120,000
27 November 2015 Issue under US Omnibus Plan 400,000 0.04  14,997
12 April 2016 Entitlement Issue 817,886,679 0.01  8,178,867
28 April 2016 Underwriting fees 16,500,000 0.01  165,000
28 April 2016 Broker commission 3,398,384 0.01  33,984
28 April 2016 Short term loan fees & interest 4,124,384 0.01  41,244
  Capital raising costs -    (1,225,730)
  Closing Balance 1,659,796,126   69,142,533

 

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares presents at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorized capital.

 

(c)Performance shares

 

Date Details Number of
Shares
Issue
Price
Amount
$
Variation
Price
 
 
28 November 2013 Share issue to Director pursuant to shareholder approval 20,000,000 $0.00001 200 $0.10  

 

A Performance Share Plan was approved by shareholders at MOKO’s 2013 Annual General Meeting and involves the issuance of a new class of ordinary shares (“Performance Shares”) to eligible participants for their market value assessed by an independent expert and based on the rights and conditions attached to the Performance Shares (the “Issue Price”) by means of a payment to the Company of the Issue Price.

 

Performance Shares remain outstanding for a period equal to earlier of 3 years from the date of original purchase or the occurrence of the relevant Performance Event (such earlier date, the “End Date”). If the Performance Shares have not been ‘varied’ by the End Date, which can include events such as termination, the VWAP share price hurdle having been met, a takeover offer among others (any such event, a “Variation Event”) then the Performance Shares will be redeemed by the Company for their Issue Price. If a Variation Event does occur prior to the End Date, the holder has twelve months from the date of the Variation Event to provide notice and payment (a “Variation Payment”) to the Company.

 

Upon payment of the Variation Payment to the Company, the relevant Performance Shares will rank pari passu all with existing ordinary shares of the Company and trade together in the public market. On the other hand, at no time prior to a Variation Event will the holder be permitted to transfer any Performance Shares, and no dividend or voting rights will attach to any Performance Shares unless and until varied. In the event that the Variation Event does not occur prior or upon to the End Date, the Company will pay the Issue Price that it received from the holder for the applicable Performance Shares and then redeem and cancel those Performance Shares.

 

All above performance shares will expire on 28 November 2016.

 

MOKO Social Media Limited Page 18

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 20: Issued securities (Continued)

 

Unlisted options over ordinary shares

 

Date Details No of
options
Exercise
Price
Expiry Date
Opening Balance
01-Jul-15 Opening Balance 59,800,000 Various Various
Options granted        
27-Nov-15 Unlisted Options – Director 2,000,000 0.15 27-Nov-18
28-Apr-16 Unlisted Options – Director 1,000,000 0.02 28-Apr-18
28-Apr-16 Unlisted Options – Director 1,000,000 0.03 28-Apr-18
12-Apr-16 Entitlement Issue 408,943,371 0.02 12-Apr-17
28-Apr-16 Underwriting fees 8,250,000 0.02 12-Apr-17
28-Apr-16 Broker commission 1,699,192 0.02 12-Apr-17
28-Apr-16 Short term loan fees & interest 2,062,192 0.02 12-Apr-17
28-Apr-16 Corporate advisory fees   10,000,000 0.02 12-Apr-17
12-Apr-16 Entitlement Issue 408,943,371 0.04 12-Apr-19
28-Apr-16 Underwriting fees 8,250,000 0.04 12-Apr-19
28-Apr-16 Broker commission 1,699,192 0.04 12-Apr-19
28-Apr-16 Short term loan fees & interest 2,062,192 0.04 12-Apr-19
28-Apr-16 Corporate advisory fees   10,000,000 0.04 12-Apr-19
         
Options expired
24-Oct-15 Unlisted Options – Other (3,450,000) 0.155 24-Oct-15
28-Nov-15 Unlisted Options – Director (16,000,000) 0.40 28-Nov-15
28-Nov-15 Unlisted Options – Director (6,400,000) 0.10 28-Nov-15
31-Dec-15 Unlisted Options – Other (1,000,000) U$0.15 31-Dec-15
31-Jan-16 Unlisted Options – Director (2,000,000) 0.20 31-Jan-16
30-Jun-16 Unlisted Options – Other (250,000) US$0.17 30-Jun-16
30-Jun-16 Unlisted Options – Employee (1,000,000) US$0.05 30-Jun-16
30-Jun-16 Unlisted Options – Employee (1,000,000) US$0.075 30-Jun-16
         
  CLOSING BALANCE 894,609,510    

 

MOKO Social Media Limited Page 19

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 20: Issued securities (Continued)

 

Unlisted options

 

Unlisted ADS options

(ADS: American Depositary Shares (where one ADS = 40 Ordinary shares)

 

Date Details No of
options
(in ADS)
No of
options
(in ordinary
shares)
Exercise
Price
(per ADS in
US$)
Expiry
Date
Opening Balance
01-Jul-15 Opening Balance 160,500 6,420,000 various various
ADS options granted
19-Sep-15 Unlisted Options - Employee  20,000  800,000 $4.00 31-Jul-17
22-Sep-15 Unlisted Options - Employee  25,000  1,000,000 $3.00 22-Sep-17
27-Nov-15 Unlisted Options - Director  150,000  6,000,000 $5.35 27-Nov-19
27-Nov-15 Unlisted Options - Director  150,000  6,000,000 $5.35 27-Nov-20
27-Nov-15 Unlisted Options - Director  75,000  3,000,000 $3.55 27-Nov-18
27-Nov-15 Unlisted Options - Director  75,000  3,000,000 $3.55 27-Nov-18
27-Nov-15 Unlisted Options - Director  50,000  2,000,000 $3.55 27-Nov-18
15-Jan-16 Unlisted Options - Director  100,000  4,000,000 $1.14 31-Dec-18
ADS options expired
31-Dec-15 Unlisted Options - Employee (25,000) (1,000,000) $4.07 31-Dec-15
31-Dec-15 Unlisted Options - Employee (7,500) (300,000) $5.55 31-Dec-15
30-Jun-16 Unlisted Options - Employee  (53,000)  (2,120,000) $7.50 30-Jun-16
30-Jun-16 Unlisted Options - Employee  (2,500)  (100,000) $6.66 30-Jun-16
30-Jun-16 Unlisted Options - Other  (25,000)  (1,000,000) $4.00 30-Jun-16
ADS options cancelled (vesting conditions not met)
19-Sep-15 Unlisted Options - Employee (7,500) (300,000) $4.58 3-Nov-17
19-Sep-15 Unlisted Options - Employee (7,500) (300,000) $4.58 3-Nov-18
           
  CLOSING BALANCE 677,500 27,100,000    

 

These options do not entitle the holder to participate in any share issue of the Company or any other entity.

 

MOKO Social Media Limited Page 20

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 21: Segment information

 

MOKO Social Media Limited is organized into three operating segments: Mobile Social, Mobile Advertising and Mobile Commerce. Mobile Commerce was sold in March 2016. (2015: three operating segments including Mobile Social, Mobile Advertising and Mobile Commerce). These operating segments are based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. Segment Mobile Commerce was discontinued after MOKO sold Deals I Love (Australia) on 30 March 16.

 

Types of products and services

 

The principal products and services of each of these operating segments are as follows:

 

Mobile Social MOKO’s proprietary mobile social networks and community/chat products
Mobile Advertising MOKO’s own proprietary mobile performance ad network and customised mobile publishing division
Mobile Commerce MOKO’s subsidiary e-commerce platform. Sales volumes and average revenue per user grew via diversified marketing channels and product range

 

Intersegment transactions

 

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment receivables, payables and loans are eliminated on consolidation.

 

Operating segment information

 

    Continuing  operations    
 

Mobile
Advertising

 

Mobile
Social

 

Mobile
Commerce

 

Intersegment
eliminations/
unallocated

 

Total
Consolidated - 30 June 2016 $ $ $ $ $
Total segment revenue 57,024 27,806 - - 84,830
           
EBITDA (16,086,626) 21,482 - - (16,065,144)
           
Depreciation and amortisation (443,876) - - - (443,876)
Goodwill and Intangible assets impairment (3,515,823) - - - (3,515,823)
Other income 17,830 - - - 17,830
Finance costs (65,201) - - - (65,201)
Loss before income tax         (20,072,214)
Income tax benefit         6,889
Loss after income tax         (20,065,325)
           
Assets 4,447,452 - - - 4,447,452
Liabilities 1,227,700 - - - 1,227,700
             

 

MOKO Social Media Limited Page 21

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 21: Segment information (continued)

 

Operating segment information (continued)

 

    Continuing  operations    
 

Mobile
Advertising

 

Mobile
Social

 

Mobile
Commerce

 

Intersegment
eliminations/
unallocated

 

Total

Consolidated –

30 June 2015 (restated)

$ $ $ $ $
Total Segment Revenue 869,244 723,690 - - 1,592,934
           
EBITDA (18,687,667) 359,082 - - (18,328,585)
           
Depreciation and amortisation (1,014,523) - - - (1,014,523)
Interest income 1,346 185,739 - - 187,085
Finance costs (6,635) - - - (6,635)
Loss before income tax         (19,162,658)
Income tax benefit         166,723
Loss after income tax         (18,995,935)
           
Assets (continuing operations) 14,274,887 93,285 - (994,584) 13,373,588
Assets (discontinued operations) 410,093 - 322,763 - 732,856
Assets 14,684,980 93,285 322,763 (994,584) 14,106,444
           
Liabilities (continuing operations) 2,471,072 5,136 - - 2,476,208
Liabilities (discontinued operations) 293,908 - 1,250,336 (994,584) 549,660
Liabilities 2,764,980 5,136 1,250,336 (994,584) 3,025,868
                   

 

Geographical information

 

    Continuing operations  
  Australia Europe US TOTAL
Consolidated - 30 June 2016 $ $ $ $
         
Sales to external customers  14,362  -  70,468 84,830
Add: Interest income  17,696  -  134 17,830
Add: Other income  905,747  -  143,734 1,049,481
Less: Cost of providing services  (6,325)  -  (80,777) (87,102)
Less: Expenses *       (21,137,253)
Loss before income tax       (20,072,214)
Income tax benefit       6,889
Loss after income tax       (20,065,325)
         
Assets  2,543,647  -  1,903,805 4,447,452
Liabilities  475,479  -  752,221 1,227,700

* Overhead expenses are not associated to any one particular segment.

 

MOKO Social Media Limited Page 22

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 21: Segment information (continued)

 

Geographical information(continued)

 

    Continuing operations
  Australia Europe US TOTAL
Consolidated - 30 June 2015 (restated) $ $ $ $
         
Sales to external customers 723,690  - 869,244 1,592,934
Add: Interest income 185,739  - 1,346 187,085
Add: Other income 947,845  - - 947,845
Less: Cost of providing services (364,608)  - (945,145) (1,309,753)
Less: Expenses **       (20,580,769)
Loss before income tax       (19,162,658)
Income tax benefit       166,723
Loss after income tax       (18,995,935)
         
Assets (continuing operations) 7,168,232  6,693 6,198,663 13,373,588
Assets (discontinued operations) 356,801  - 376,055 732,856
Assets 7,525,033  6,693 6,574,718 14,106,444
         
Liabilities (continuing operations) 505,856  3,487 1,966,865 2,476,208
Liabilities (discontinued operations) 290,626  - 259,034 549,660
Liabilities 796,482  3,487 2,225,899 3,025,868

 

** Overhead expenses are not associated to any one particular segment.

 

Part 22: Subsequent events

 

Sales agreement:

On 16 August 2016, MOKO entered into an asset sales agreement with Competitor Group, Inc. (“CGI”), under which CGI will acquire RunHaven, MOKO’s running website and social media assets for an undisclosed amount.

 

MOKO and CGI have also entered a marketing alliance in which they will facilitate introductions to each other’s partners to explore potential sponsorship and media opportunities.

 

No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect:

 

(a) MOKO Social Media Limited operations in future financial years, or

(b) The results of those operations in future financial years, or

(c) MOKO Social Media Limited’s state of affairs in future financial years.

 

MOKO Social Media Limited Page 23

 

 

 

 

Appendix 4E

Preliminary Final Report

 

Part 23: Audit status

 

This report is based on accounts to which one of the following applies:

(Tick one)

The accounts have been audited

 

  The accounts have been subject to review  
The accounts are in the process of being audited or subject to review ü The accounts have not yet been audited or reviewed  

 

If the accounts have not yet been audited or subject to review and are likely to be subject to dispute or qualification, a description of the likely dispute or qualification:

 

The auditors have advised that they are yet to obtain sufficient evidence to conclude as to whether the $1,297,811 investment in Big Teams LLC is impaired. The shares in Big Teams LLC are not quoted in an active market and fair value cannot be measured reliably. If the Company is unable to provide further evidence to support the carrying value of the investment, then the investment may be impaired in the audited Annual Report for the year ended 30 June 2016.

 

If the accounts have been audited or subject to review and are subject to dispute or qualification, a description of the dispute or qualification:

 

Not Applicable

 

MOKO Social Media Limited Page 24