Enabling
Digital
Transformation
Annual
Report
2020
COSOL Ltd
FY20 Financial
Highlights
(Proforma)
25
25
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2018 A
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2018 A
Group
Revenue
64%
up YoY
Group
EBIT
42%
up YoY
Group
NPBT
37%
up YoY
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Group Net Profit
4.0
Before Tax ($M)
4.0
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Group EBIT Actual
vs Prospectus Forecast ($M)
4.0
4.0
4.0
4.0
4.0
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2020 A
2018 A
2019 A
2020 A
2019 A
2020 A
2020 A
2018 A
2019 A
2020 A
2019 A
2020 A
0
0
0
2018 A
0
2018 A
0
2019 A
2018 A
0
2019 A
2018 A
2020 A
2018 A
2019 A
2020 A
2019 A
2020 A
3.6
3.6
3.6
3.6
2020 F
2020 A
2020 F
2020 A
2020 F
2020 A
3.6
3.6
2020 A
2018 A
2019 A
2020 A
2019 A
2020 A
2020 F
2020 A
2020 F
2020 F
2020 A
2020 A
Group Earnings
Before Interest & Tax ($M)
Group Net Profit
After Tax ($M)
Cosol Aust EBIT Actual
vs Prospectus Forecast ($M)
4.0
4.0
4.0
4.0
4.0
4.0
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Contents
Financial Highlights
Chairman’s Report
Industry Review
Business Review
Board of Directors
01
02
04
05
09
10 Management Team
11
Financial Report
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2018 A
2020 A
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2018 A
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2020 A
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3.8
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2020 A
01
2020 A
2018 A
2019 A
2019 A
2020 A
2020 A
2020 F
2020 A
2020 F
2020 F
2020 A
2020 A
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Chairman’s
Report
“ I am delighted that we have shown flexibility and
agility to rapidly adapt to new ways of working
while continuing to deliver on our promise to
clients, business partners and our shareholders.
Dear Shareholder,
Major highlights for last 12 months:
• Exceeded prospectus forecasts: Despite
the challenges presented by the COVID-19
pandemic, COSOL Limited has exceeded
the financial performance forecast in its IPO
prospectus and our results are also slightly
above the profit guidance update we recently
provided to the ASX.
The financial performance of COSOL Limited
in the successful first 6 months of business and
trading as a listed company, has seen COSOL’s
share price recently trading at a 365% premium
to its listing price. This was due to a very strong
12-month operating period for our principal
operating business, COSOL Australia. The
strong financial results of COSOL Australia,
in combination with our responsible financial
controls, disciplined management of expenditure
and a conservative and well-funded balance
sheet, has produced the following highlights.
On behalf of the Board of Directors I am pleased
to present to you the inaugural Annual Report for
COSOL Limited.
COSOL Limited was formed in August 2019
with the intent of creating a listed digital
product, services and solutions company to take
advantage of the expanding Enterprise Resource
Planning/Enterprise Asset Management sector.
It is the goal of the Board and management that
COSOL will provide the platform for domestic
and international growth to become a leader
in Enterprise Asset Management solutions by
delivering innovative digital solutions, products
and services to companies globally.
The 2020 financial year has been a challenging
year for society and businesses all over the world.
The COVID-19 pandemic has forced everyone to
adapt to a new operating environment and ensure
they initiate measures to protect staff, customer
relationships, whilst also maintaining a focus on
strategies to deliver shareholder value and growth
into the future.
Through the excellent leadership of our Board and
the COSOL Executive Management team, greatly
assisted by Executive Consultant Ben Buckley;
together with the efforts and enthusiasm of the
staff of COSOL Australia Pty Ltd (the operating
company of COSOL Limited), ably led by CEO
Scott McGowan, I am delighted that we have
shown flexibility and agility to rapidly adapt to
new ways of working while continuing to deliver
on our promise to clients, business partners and
our shareholders.
• Successful IPO: COSOL Limited successfully
listed on the Australian Securities Exchange
after raising $12million. The purpose of the
capital raising was to fund a major acquisition
and provide the necessary working capital for
ongoing operations and opportunities. Such
was the success of the IPO that the placement
was oversubscribed.
• Establishment of an experienced Board:
COSOL Limited has appointed a Board
of Directors that all have industry specific
knowledge and expertise, decades of experience
in managing publicly listed companies and a
complementary set of skills across commercial,
legal, accounting, mergers and acquisitions
and strategic planning. This Board has a
proven track-record and reputation in growing
businesses and returning value to shareholders
and stakeholders alike.
• Acquisition of COSOL Australia: COSOL Limited
completed the successful acquisition of COSOL
Australia on 16 January 2020. Established in
2000, COSOL Australia is a profitable Australian
based solutions and digital transformation IT
business with a focus on asset intensive industries
including energy, utilities, mining, defence and
public infrastructure, both in Australia and
internationally.
COSOL Australia uses its proprietary software
and its service and project delivery capabilities
in respect to Enterprise Asset Management
software and systems to optimise the utilisation
and cost efficiencies of its clients’ assets.
02
COSOL Annual Report 2020 Chairman’s
Report
continued
“ Our delivery of innovative digital solutions to clients is only
possible due to the skills and expertise of our people, and
I unreservedly thank them for their commitment and loyalty
during these extraordinary times.
Financial highlights for the year include:
COSOL Australia Operating Highlights
• Revenue Growth: COSOL Australia’s full year
revenue increased by over $8.7 million or 64%
on the previous full year.
• Earnings Before Interest & Tax (EBIT)
Growth: COSOL Australia Pty Ltd’s full year
EBIT increased to $4.45 million up 61% YOY.
• Net Profit After Tax: The Group recorded net
profit after tax of $1.51 million for the period
ended 30 June 2020.
• Strong Cash Flows: The Group recorded net
post tax operating cash flow of $2.92 million for
the period ended 30 June 2020. Group cash was
$6.8 million at 30 June 2020.
• Debt Position: Net Debt, including deferred
consideration amounted to $0.12 million
at 30 June 2020.
• Research & Development Expenditure:
During the year the group spent $1.58 million
on the further development of its proprietary
software products (principally RPConnect and
BPConnect) and this expenditure was expensed
to the Profit and Loss account during the period.
• New Bank Finance Facility: Since year end the
group has put in place a new finance facility
of up to $6.5 million on favorable terms, so as
allow for future strategic expansion.
• Major Client Wins: New client contracts
secured with Australian Defence Force and
CleanCo (a company focused on providing clean
energy options to Queensland households),
an extension of sustainment services with
Energy Queensland, an upgrade for Queensland
Urban Utilities , and a new data management/
cleansing and migrations services project with
Anglo American.
• Growth of digital platform RPConnect:
RPConnect has continued to position COSOL
in sole sourced transformation engagements
including CleanCo, Department of Defence and
Anglo American.
• Our ABB Practice, the largest in the APAC
region, continues to position COSOL in sole
sourced enagagements due to our proprietary
skillset including Department of Defence and
Queensland Urban Utilities.
• Increased Support and IP Based Revenue:
COSOL has increased its support and IP
based (product and product services) revenue
contribution to over 55% of total revenue
• Greater development in RPConnect platform:
The RPConnect platform has been enhanced
to incorporate further functionality accelerating
SAP ECC6 to SAP S/4 transformations.
RPConnect’s data management functionality
was enhanced and deployed into Anglo
American to provide a platform to drive data
cleaning through data quality KPI’s.
• Opening of the Melbourne office: Expanded
the reach of COSOL within Australia with the
opening of an office in Melbourne to service key
clients, win new accounts and penetrate markets
in the Southern and Western regions of Australia.
complementary and synergistic companies to
deliver COSOL an expanded suite of software
and services, intellectual property, geographical
representation, access to new clients and
additional core capabilities.
The Year Ahead
While uncertainty and caution may persist in
markets as the COVID-19 pandemic continues,
we remain optimistic about the opportunities to
continue to grow the business in the year ahead.
We are confident that COSOL Australia will
continue to grow organically through greater
penetration of the market with its industry-leading
proprietary software RPConnect and BPConnect,
through enlarged representation in new regions
such as Victoria, Canberra and Western Australia,
as well as an improved ability to quickly and
decisively develop and implement digital Enterprise
Asset Management solutions to its clients.
We will continue to invest in our proprietary
digital IP, our data cleansing and preparation
functionality, and business process automation
capabilities to deliver efficiencies and business
outcomes for our clients. Our unique EAM
capability is underpinned by key partnership with
industry leading software products including
Hitatchi-ABB, IFS and SAP which will continue
to provide us with sole sourced / tender exempt
opportunities leading to a premium for COSOL
services and higher than average profit margins.
While continuing to focus on organic growth,
COSOL Limited will remain steadfast in its search
for the right strategic opportunities to acquire
By the very nature of their business, our clients
are reliant on the exploitation of their assets to
satisfy the provision of critical services such as
water, defence and public infrastructure, and
drive Australia’s economy with their mining and
energy production. During these challenging times
they rely evermore on the effective and efficient
management of their assets to deliver services and
economic activity to the Australian public, and they
know that they can rely on COSOL to help optimise
the efficient utilisation of their assets. COSOL is
proud to have earned this trust, and I would like
to thank them for their continued support.
Our delivery of innovative digital solutions to
clients is only possible due to the skills and
expertise of our people, and I unreservedly thank
them for their commitment and loyalty during
these extraordinary times.
Finally, I would like to thank our shareholders who
have supported us during this last financial year.
I look forward to providing further updates about
COSOL’s successes in due course, including at our
Annual General Meeting to be held in November.
Best regards
Geoff Lewis Chairman
03
COSOL Annual Report 2020 Industry
Overview
What is Enterprise Resource
Management?
Enterprise Asset Management (EAM) is the
process of managing the lifecycle of physical
assets to:
• Maximise their use,
• Maximise their economic return and viability,
• Improve the quality and efficiency of business
operations, and
• Safeguard health, safety and the environment.
By helping to ensure that high-value assets
operate, and are maintained, in the way they
are designed to, EAM can both minimise risks
and costs, while enhancing and optimising
business value.
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Enterprise Systems
Operational Systems
Solutions
Support
04
Industry
Overview
continued
Global EAM market
is predicted to reach
$25.9B
USD by 2030
The market
The global EAM market stood at USD 5.5 billion
in 2019, and is expected to grow at a compound
annual growth rate CAGR of 17% during
the period 2020 – 2030, with its market size
predicted to reach USD 25.9 billion. Key drivers
underpinning the predicted growth include:
• The strong focus on the best utilisation of
assets,
• Growing need to reduce maintenance and
procurement expenses,
• Digitalisation in industries resulting in increased
market competitiveness,
• The increasing preference globally for cloud-
based/Software as a Service (SaaS) solutions,
and
• Growing internet penetration through the
Internet of Things (IOT)
Historically the North American EAM market has
been dominant. Major factors for this have been
regulatory requirements, a strong presence of
EAM vendors, and the investment by private &
public organisations in the better management
and exploitation of their asset base. Although
a mature market, next generation technologies
such as predictive maintenance, real time data
collection and exploitation, machine learning,
and IOT have contributed strongly to the growth
in this sector.
However, the Asia-Pacific (APAC) region is
forecast to be the fastest growing geographic
market. The key drivers for this growth,
particularly in an Australian context, are the
fact that large business operations and utilities
are asset intensive and that organisations are
adopting, and continuing to refine their use of,
EAM solutions to augment their competitiveness,
efficiency and expansion. Government initiatives
and associated funding, particularly in the post-
COVID 19 economic climate, are likely to facilitate
major social and physical infrastructure expansion
for existing players and new entrants.
It is worth noting that the Small and Medium
Enterprise (SME) category is expected to contribute
significantly to the growth in EAM adoption. This
growth will be underpinned by leveraging the
developing technologies, and the adoption of cloud
based/SaaS operating models, in order to compete
with/disrupt larger players while establishing
themselves in the broader industry marketplace.
Trends
In order to support this convergence between
business and assets, there is an increasing move
to exploit the value in the data held within EAM
systems. Increasingly, software and service
vendors are positioning to provide new sources of
data to the EAM via IOT. This is attributable to the
growing deployment of IOT in mobile devices and
sensors, as well as the exploitation of the data
through artificial intelligence (AI) applications. For
the industrial sector alone, it is forecast by leading
market research organisation MarketWatch that
the global IOT market will exceed USD 176 billion
by 2022.
This drive to maximise the data assets that reside
within an organisation’s EAM environment has
seen significant investment being made by key
vendors such as IBM, Hitachi/ABB, SAP and IFS
– all of which have been acknowledged as being
in the forefront of EAM solution development by
respected research organisation Gartner Group.
The level of investment made includes:
• The acquisition of intellectual property (IP)
through M&A transactions,
• Research spending on data and analytics
(IBM spends one-third of their research budget
of this), and
• The major redevelopment of existing EAM
solutions to create new generation, data
intensive platforms:
– SAP with S/4 Hana,
– IFS Applications 10 – released in May 2018,
– Ellipse Digital Enterprise currently being
developed by Hitachi/ABB.
At the core of these trends is the ability to
understand the underlying data, its impact on the
business and an ability to automate the creation
and maintenance of this broad base of EAM
related data. Given that this data will be coming
from, and going to, a variety of different systems,
having a proven capability, and the IP, to support
this complex requirement offers a service provider
with a competitive advantage.
Segmentation of the EAM market
The market is categorised into software, service
and solutions – with the line between services and
solutions increasingly being blurred by specialist
companies, such as COSOL. Increasingly,
the ability to understand the underlying data
attributes that contribute to, and the impact they
have on, business outcomes is becoming a key
service differentiator, with clients opting to sole
select such organisations without undertaking to
a competitive tender scenario.
While the software category is expected to lead
throughout the forecast period, the combined
service and solutions categories are the areas
predicted to experience the most increase in
growth .
Increasingly the predicted growth in services is
forecast to be driven by the demand of both large
enterprises and SMEs in moving away from ‘on
premise’ system implementations/operations
to cloud/SaaS offerings.
This growth in services is further compounded
by new releases of core software (such as SAP’s
Enterprise Resource Planning System S/4 Hana,
IFS Application 10, and Ellipse Digital Enterprise).
In essence such changes in software force
enterprises to review their EAM operations and
either upgrade their existing platform or migrate
to a new EAM platform. In all these instances,
seamless data management, integration and
migration is key.
The strength, reputation, proven IP, and
capability of the professional services provider
to successfully mitigate an enterprise’s risk to
maintaining business operations during these
exercises places COSOL in a strong position
to exploit this projected growth in services
& solutions.
05
COSOL Annual Report 2020 Business
Overview
What is COSOL’s core business offering?
COSOL’s pedigree in the provision of business-
critical services, focused on optimising business
processes and reducing business expenditure
for its clients, has seen COSOL recognised
globally as a trusted partner for clients and EAM
providers alike. By providing business solutions,
including business process and strategic reviews,
implementation of Enterprise Resource Planning
(ERP)/EAM solutions, data migration and ongoing
support services to clients, COSOL offers its
clients a true ‘one stop shop’ for the execution,
facilitation and ongoing development of IP based
digital solutions within the EAM sphere.
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Energy & Utilities
Defence
Mining & Minerals
Processing
Oil, Gas &
Petrochemical
Public Infrastructure
& Transport
Health Services
06
Business
Overview
continued
How does COSOL Australia’s Business
Generate Revenue?
How does COSOL Australia market
its business?
COSOL Australia is focused on establishing long-
term revenue-generative relationships with
clients as a trusted advisor to support new
versions of the core software which underpins
their EAM systems and to deliver business
services which drive optimisation and efficiencies.
COSOL Australia’s revenue-generation model
is predicated on:
COSOL Australia undertakes and markets its
sales initiatives in three ways:
1 Directly in its own right,
• targeting diversified pre-determined industry
2 Indirectly as part of a consortium
Customers, Client Profile
Our team of consultants are experts in tailoring
business process and IT solutions to a range of
asset intensive organisations, both large and
small. We have experience in helping our clients
within the energy utilities, defence, mining &
minerals processing, public infrastructure and oil,
gas & petrochemical industries:
500
SAP clients in
Australia alone
will potentially
need to upgrade
their systems
sectors; and
• offering digital solutions, operational efficiency
and product leadership and innovation to its
existing and potential new clients.
Specifically, COSOL Australia’s revenue is primarily
generated from three key service streams, being:
• EAM/ERP implementation and support services;
• data migration, and
• legacy data services.
Underpinning these service streams is COSOL’s
ability to deploy both third-party and its own
proprietary IP in providing these services which
provides clients with cost effective solutions and
affords COSOL the ability to drive gross margin
while maintaining what is effectively a static/
marginally increased overhead position. The
use of, and continued exploitation of, proprietary
IP (such as RPConnect) provides a material
differentiator for COSOL from pure service only
competitors and peers.
Historically, revenue has been generated through
services provided to clients in the following
industry sectors, which continue to be areas
of focus for the business moving forward, given
their resilience during times of economic stress:
• Mining and minerals processing;
• Energy and utilities;
• Public infrastructure and transport;
• Defence;
• Health services; and
• Oil, gas and petrochemical.
typically led by either a multinational
systems integrator or professional
services partner (including IBM,
Accenture, Deloitte, and DXC
Technology), and
3 Through strategic relationships
as a preferred partner of third-
party software providers
(including Gartner defined
visionaryproviders such as ABB/
Hitachi, IFS and SAP). These
strategic relationships provide
business expansion opportunities
for COSOL, as well as providing
our clients with the opportunity to
undertake their own strategic EAM
imperatives knowing COSOL’s
breadth of capability will assist
in mitigating their operational risk.
The fact that COSOL has over 60% of ABB/
Hitachi’s Ellipse EAM APAC customers as their
client, as well as the successful completion
of over 20 SAP migrations in Australia and
internationally, bears testimony to the both the
effectiveness of these strategic relationships and
the importance of COSOL to these multinational
organisations. This importance is only likely
to increase as the new version of ABB/Hitachi’s
Ellipse software is released and existing clients
upgrade, and SAP support for non-S/4 Hana
versions of their ERP is wound down, meaning
that over 500 SAP clients in Australia alone
will potentially need to upgrade their systems.
07
COSOL Annual Report 2020 Background
COSOL Solution
Project Summary
Business
Overview
continued
Case
Study
Solution delivered for our customer, a
multinational mining company with key
management located in South Africa and the
United Kingdom. The company has operations
in sites across Africa, Asia, Australasia, Europe,
North America and South America.
Our customers organization is currently in the
process of undertaking a global standardisation of
its ERP platform from Ellipse to SAP. This program
commenced in 2017 with completion planned for
mid-2021. As part of the program, several SAP
modules were introduced to the system landscape
to support redesigned business processes. This
new system required conversion of data from the
existing ERP system in order to support the new
processes. In addition, our customer required
data from the existing production system and
legacy Ellipse systems to be retained, while
enabling the legacy systems themselves to be
decommissioned.
“
To assist in change management as well
as to understand the impact of decisions
during the project has provided significant
value to our customers business.
Challenges
The customer organisation was concerned that
due to the quality of their data they would not
be able to realise the benefits outlined in the
business case for their new ERP investment. Key
sites for the program of work covered 4 global
business units across Chile, Australia, South
Africa and Brazil which each have unique cultural,
language and system configuration differences.
COSOL’s solution needed to cater for these unique
challenges and take responsibility for the end to
end data solution.
COSOL has delivered the end to end service for
the Chile and Australian operations and the data
assessment and consolidation activities for South
Africa and Brazil.
The ability to translate Ellipse and SAP terminology
into business relevant terms to assist in change
management as well as to understand the impact
of decisions during the project has provided
significant value to our customers business,
ensuring that the focus is on high value areas and
not detailed data cleansing activities.
The customer organisation were also able to
reduce the management, licensing and operational
costs significantly by decommissioning their
obsolete Ellipse systems. The RPConnect solution
also provided decision makers with an immediate
view to accurate data and reports, as opposed
to wasting weeks in searching for, securing and
filtering the large volume data.
This process has safeguarded valuable enterprise data
so that any changes, upgrades or implementations
in new systems driven by operational, statutory or
or regulatory priorities, can be embarked upon with
the knowledge that RPConnect
has secured their future
legacy system data.
COSOL undertook data assessments to determine
the current state of the data in terms of quality
and then delivered functionally focused data
cleansing & enrichment services that were
completed in the source system by functional
specialists. These specialists understand the
source system as well as the intricacies and
impact to the current and future state business
process. COSOL is uniquely qualified with
experience and capability in both Ellipse and SAP
to undertake this critical activity as a repeatable
service. The RPConnect toolset provides data
analysis and profiling that focuses cleansing and
enrichment effort on key aspects of consolidation
such as inventory, cost centres, equipment and
employee data to remove duplication and to
ensure the data is of high quality and aligned with
the customer own data standards, whilst ensuring
the integrity of the data is maintained across
traditional functional silos.
COSOL has revolutionised the resource-intensive
Extract, Transform and Load (ETL) approach for
ERP data migrations by investing in a robust,
repeatable and auditable toolset (RPConnect) to
manage the end-to-end data migration process.
RPConnect provides our customer with an out-of-
the-box standard Ellipse to SAP data mapping,
therefore, all but eliminating the effort required for
the development of migration scripts and allows
data analysts to configure and modify conversion
scripts storing them in a managed repository
to expedite repeatable data conversions with
certainty of outcome. This has resulted in a low
risk, high quality outcome for our customer and
ultimately has enabled them to realise the benefits
of the new SAP ERP platform, populated with high
quality, validated and cleansed data.
Finally, to be able to realise the benefits of our
customers business case, their legacy systems
must be decommissioned. In addition to its role
during the project for data migration, RPConnect
also provides the legacy data storage repository
that eliminates the requirement to continue
licencing of all legacy systems, hence reducing
requirements for support staff, vendor contracts
and data centres, yet still providing access to
data for legislative, regulatory and operational
requirements.
08
COSOL Annual Report 2020 Board of
Directors
Geoffrey Lewis
Non-Executive Chairman
Stephen Johnston CA
Non-Executive Director
Grant Pestell LLB
Independent Non-Executive Director
Gerald Strautins
Independent Non-Executive Director
Geoff Lewis has over 20 years’ experience in the
global delivery of IT services and outsourcing.
He established ASG Group Limited (formerly ASX
listed, ASX: ASZ), an IT business solutions provider,
in 1996 and was its Managing Director until it was
acquired in late 2016 for $350 million by Japanese
multinational IT services and consulting business
Nomura Research Institute, Ltd. Geoff was
appointed as a director on 10 September 2019.
• Other current listed directorships: none
• Former listed directorships in the last three
years: none
• Special responsibilities: Chairman
Stephen Johnston has significant international
experience in investment, corporate finance,
mergers and acquisitions and commercial
management gained over 25 years in Australian
industrial and investment organisations.
Stephen was the managing director and founder
shareholder of Schutz DSL Group, an industrial
packaging group with operations in Australia
and south east Asia, and was an independent
non-executive director of ASG Group Limited
(formerly ASX listed, ASX: ASZ), an IT business
solutions provider, until it was acquired in late
2016 for $350 million by Japanese multinational
IT services and consulting business Nomura
Research Institute, Ltd. Stephen was appointed
as a director on 10 September 2019.
• Other current listed directorships: none
• Former listed directorships in the last three
years: none
• Special responsibilities: Chairman of the Audit
Committee and Member of the Remuneration
& Nomination Committee.
Grant Pestell was a founding director and has
been the managing director of Perth-based legal
firm Murcia Pestell Hillard since 2000. He has
extensive experience advising both listed and
private companies, particularly in the ICT, energy
and resources and mining services industries.
Grant is regularly involved in and advises on
complex commercial disputes, strategic contract
negotiations, mergers and acquisitions, risk
management and large-scale financing. Grant
was an independent non-executive director
of ASG Group Limited (formerly ASX listed,
ASX: ASZ), an IT business solutions provider, until
it was acquired in late 2016 for $350 million by
Japanese multinational IT services and consulting
business Nomura Research Institute, Ltd. Grant
was appointed as a director on 7 August 2019.
• Other current listed directorships: RooLife
Group Limited (ASX: RLG)
• Former listed directorships in the last three
years: none
• Special responsibilities: Chairman of the Risk
Committee and Member of the Audit Committee.
Gerald Strautins has extensive executive, M&A,
consulting, programme and business management
experience, with particular strength in formulating,
implementing & managing strategic managed
service/outsourcing operations and transformation
initiatives. Gerald’s strategic business consultancy
and corporate management experience was
gained through extensive work in Australia, Europe
and Asia. He was the Executive – Strategy and
M&A of ASG Group Limited (formerly ASX listed,
ASX: ASZ), an IT business solutions provider, and
was responsible for the strategic direction of the
organisation, while also completing in excess
of $500 million in M&A transactions. Gerald was
appointed as a director on 4 October 2019.
• Other current listed directorships: none
• Former listed directorships in the last three
years: none
• Special responsibilities: Chairman of the
Remuneration & Nomination Committee and
Member of the Risk Committee.
09
COSOL Annual Report 2020 Management
Team
COSOL Limited Management Team
COSOL Australia Management Team
Andrew McVinish
Chief Financial Officer, COSOL Limited
Scott McGowan
Chief Executive Officer, COSOL Australia
Leo Quinn
GM, Sales & Marketing
David Rowcliff
GM, Industry – Mining & Utilities
Andrew has over 20 years’ experience in advising
businesses on financial management, compliance and
strategy having previously held a senior role at Findex,
a mid-tier accountancy and wealth management
firm. Andrew holds a Bachelor of Business degree
and is a member of Chartered Accountants Australia
& New Zealand.
Scott is the Chief Executive Officer of COSOL’s operating
subsidiary and is a highly experienced executive manager
with a demonstrated ability to lead diverse teams of
professionals to new levels of success in highly competitive
markets. Scott has over 20 years of experience in both
start-ups and global multinational corporations and
possesses strong technical and business qualifications
with an impressive track record in strategic planning,
business unit development, project management, product
development and system engineering strategies.
Leo joined COSOL in 2019 and is responsible for leading
the sales and marketing team through acquiring new
logos and working with our existing customers to optimise
their business. Leo has over 35 years’ experience in senior
sales roles at leading consulting and software companies
including Hitachi ABB, Wipro, Oracle, GE Digital as well
as more recently at Symantec. Leo is passionate about
ensuring his team are driven to deliver tangible business
outcomes – both internally and for our customers.
With over 30 years of Telecommunications and Information
Technology industry experience, David is a senior Sales,
Technical and Management Executive. He has a proven
track record of developing new and existing business,
motivating a team as well as consistently exceeding targets.
David has been responsible for the delivery and success
of COSOL’s Managed Services and the development of
COSOL’s capabilities in line with the needs of its clients.
Ben Secrett
Company Secretary
Garry Tuckwell
GM, Business & Solution Development
Fiona Parker
GM, People, Process & Technology
Jamie Miller
GM, Delivery
Ben has over 10 years of experience providing corporate
advisory, legal, risk and governance services to Australian
and foreign listed and unlisted entities, having worked
as a corporate lawyer and also as a Principal Adviser
in ASX Listings Compliance. Ben has qualifications
in economics, law and corporate governance.
Garry has 30 years of experience in senior roles and
brings a wealth of knowledge from a wide variety of
Service Delivery, Program Management, Consulting,
Strategic Planning and Senior Executive positions that
can add value in a variety of ways to many organisational
and technological change programs. Garry has been at
the intersection of many technology & digital disruptions
that businesses have had to navigate their way through.
Fiona is a senior Human Resources professional with 25
years’ experience across IT, digital, telecommunications
and professional services industries. Fiona specialises
in talent strategy, delivery and people performance with
a particular focus on culture and engagement for fast
growth companies. Over the past 10 years, Fiona has
consulted to some of the largest and fastest growing
digital technology companies across Australia, UK and
the United States. Previous to this, Fiona worked for
leading Human Resource and Technology Consulting
firms within their change and transformation vertical
building large complex project teams.
Jamie is a senior management professional with over
25 years of experience in people leadership delivering
services and projects within the public and private sector.
For the past 15 years Jamie has held numerous roles
providing Cx level advice and guidance on the delivery
of ICT Strategy and projects. He has held accountability
for Capex and Opex budgets in excess of $50m annually
and lead teams in excess of 80 staff and contractors.
10
COSOL Annual Report 2020
Directors’ Report
The Directors of COSOL Limited present their report on the consolidated entity, consisting of COSOL Limited and
its controlled entities, for the financial year ended 30 June 2020.
Directors
COSOL was incorporated on 7 August 2019, and the following persons were Directors of COSOL during the financial
year from their date of appointment and up to the date of this report.
• Grant Pestell was appointed as a Director on 7 August 2019, and has served for 1 year.
• Geoff Lewis and Stephen Johnston were appointed as Directors on 10 September 2019, and have served for
11 months.
• Gerald Strautins was appointed as a Director on 4 October 2019, and has served for 10 months.
Details of the Directors’ qualifications, experience and special responsibilities are set out on pages 09 of the
Annual Report.
Directors’ Interests in Shares and Options of COSOL
The Directors hold relevant interests in the following shares and other securities of COSOL as at the date of this
Directors’ Report.
Director
G Lewis
S Johnston
G Pestell
G Strautins
Total
Shares
Options
24,250,000
24,250,000
2,500,000
3,000,000
54,000,00
Nil
Nil
Nil
Nil
Nil
Company Secretary
Ben Secrett was appointed as Secretary on 8 October 2019.
Details of his qualifications and experience are set out on page 10 of the Annual Report.
Meetings of Directors
The number of Directors’ meetings (including meetings of committees of Directors) and the number of meetings
attended by each Director during the financial year are detailed below.
Committees
Director
Board
Audit
Risk
G Lewis
S Johnston
G Strautins
G Pestell
E
8
8
7
8
A
8
8
7
7
E
N/A
1
N/A
1
A
N/A
1
N/A
1
E
N/A
N/A
1
1
A
N/A
N/A
1
1
E = total number of meetings held during the financial year that the Director was eligible to attend
A = number of meetings attended by the Director
N/A = not a member of the relevant committee
Remuneration &
Nomination
E
N/A
1
1
A
N/A
1
1
N/A
N/A
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Directors’ Report continued
Principal Activities
The principal activities of the consolidated entity during the financial year were the provision of information
technology services.
The consolidated entity utilises proprietary software and services to deliver solutions for clients operating in
asset‑intensive industries, with a particular focus on resource and capital‑intensive enterprise asset management
(EAM) and infrastructure‑focused systems.
The consolidated entity aims to optimise business processes and reduce business expenditure for its clients by
providing digital business solutions, including business process and strategic reviews, implementation of enterprise
resource planning (ERP)/EAM solutions, data migration and ongoing support services.
Results
The activities of the consolidated entity for the financial year resulted in revenue of $11,668,928 and a net profit
after income tax of $1,506,412. Further details about the consolidated entity’s financial results are set out in its
financial statements.
Review of Operations
A review of the operations of the consolidated entity during the financial year is set out on pages 2 and 3 of the
Annual Report and forms part of this Directors’ Report, and should be read in conjunction with the following.
COSOL was incorporated on 7 August 2019 as a proprietary company limited by shares.
During the financial year, COSOL:
•
raised $2,150,000 through the issue of ordinary shares;
• converted to a public company limited by shares;
• prepared and on 10 December 2019 lodged a prospectus for an initial public offering, and raised $12,000,000
through the issue of ordinary shares under the IPO;
• prepared and lodged an application for admission to the official list of ASX;
• entered into an agreement to and subsequently acquired COSOL Australia Pty Ltd on 16 January 2020, at which
time the consolidated entity of COSOL and COSOL Australia was formed;
• was admitted to the official list of ASX on 22 January 2020; and
• on 24 January 2020 had its ordinary shares commence quotation and trading on ASX.
As at 30 June 2020, the consolidated entity:
• held cash reserves of $6,774,535; and
• had generated revenue of $11,668,928 and net profit after tax of $1,506,412 for the financial year.
12
Directors’ Report continued
Key highlights for the consolidated entity during the financial year include:
• Major client wins – building on its history of delivering innovative and cost effective solutions to the EAM
market, the consolidated entity secured significant client wins to grow revenue through new and expanded
work engagements for professional services, digital products and ongoing support services, with clients
including the Australian Department of Defence, CleanCo Queensland, New Hope Corporation Limited,
Queensland Urban Utilities, Ok Tedi Mining Limited, Energy Queensland and Anglo American.
•
Increased IP product revenue – revenue generated from the provision of support and deployment of products
based on the consolidated entity’s digital IP has increased to more than 55% of total revenue.
• Growth in RPConnect deployment – RPConnect continued to be a significant digital IP asset to be deployed
for data management in large scale digital transformation projects, including upgrades to the data intensive
next generation of EAM platforms.
•
IP development – continued to develop RPConnect to incorporate functionality to accelerate transformations
to SAP S/4 HANA.
• New talent – attracted new talent and made internal promotions to strengthen the business development,
defence sector servicing and product sales teams.
• New office – opened a Melbourne office to expand the consolidated entity’s geographic reach to support client
servicing, win new business in new markets and industry sectors, and provides a base to penetrate new
Australian markets.
The COVID‑19 pandemic continues to impact the Australian and global economies, however the consolidated entity
has not observed any material financial impact during the financial year, or as at the date of this Directors’ Report,
on its business operations, revenue generated from current projects or its pipeline of future work. The continued
good health of the consolidated entity’s staff and clients is a priority and the consolidated entity has implemented
processes to maintain their health and safety and ensure continued service delivery. These processes have
included maintaining social distancing requirements and good hygiene and cleanliness practices, quarantine,
travel restrictions and the ability for staff to work from home. At this time the consolidated entity has seen no
deterioration in the business development opportunities currently in negotiation and does not expect this to change.
The consolidated entity has not participated in the Commonwealth Government’s JobKeeper Payments scheme.
Dividends
No dividends were paid or declared by COSOL to members during the financial year.
Significant Changes in the State of Affairs
Other than the developments reported elsewhere in this report there were no significant changes in the state
of affairs of the consolidated entity during the financial year ended 30 June 2020.
Likely Developments and Expected Results of Operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations
have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice
to the consolidated entity. However, the Directors and management of the consolidated entity intend to continue
operations as conducted during the financial year and in a manner consistent with the consolidated entity’s business
model and growth strategy (which includes organic and acquisitive growth).
Environmental Regulation
The consolidated entity’s operations are not regulated by any particular and significant law of the Commonwealth
or of a State or Territory of Australia relating to the environment.
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Directors’ Report continued
Economic, Environmental and Social Sustainability Risks
The consolidated entity does not consider that it has any material exposures to environmental and social
sustainability risks.
COSOL’s IPO prospectus disclosed the risks that may have a material impact on its financial performance and the
market price for its shares. This disclosure included possible material exposure to a decline in economic conditions
and the general economic outlook. The consolidated entity recognises that the COVID‑19 pandemic has and may
continue to have a negative impact on the Australian and global economies and may have a negative impact on the
financial performance of the consolidated entity’s clients. To date the consolidated entity has not seen a deterioration
in its business development opportunities, nor experienced a negative financial impact, from the COVID‑19 pandemic.
However, in response to the pandemic, the consolidated entity is maintaining discipline in its cash flow management,
identifying and deferring non‑essential operating and capital expenditure, and ensuring the timely collection of
accounts receivable, while also remaining vigilant in monitoring and assessing any developments which may cause
clients to reduce the size or extent of their engagement of the consolidated entity. The consolidated entity’s client base
of resources, infrastructure and defence entities and organisations appears to be continuing to perform with minimal
adverse impact from the COVID‑19 pandemic, and the consolidated entity will continue to monitor developments.
Remuneration Report
The Remuneration Report, which forms part of this Directors’ Report, is presented separately from page 17 of this
Annual Report.
Shares Under Options
As at the date of this Directors’ Report, unissued ordinary shares of COSOL under option are detailed below.
Expiry Date
15 October 2021
2 September 2022
2 September 2023
15 October 2023
Total
Exercise
Price
Number of
Options
$0.3625
2,000,000
$0.61
$0.70
762,500
762,500
$0.415
3,000,000
6,525,000
No ordinary shares have been issued during or since the end of the financial year as a result of the exercise of
options over unissued ordinary shares.
Events Subsequent to the End of the Financial Year
The following events have occurred since 30 June 2020.
• On 10 August 2020 COSOL issued 1,525,000 unquoted options to employees of the consolidated entity under
an employee incentive scheme.
• The consolidated entity secured $6,500,00 in funding from Bankwest. The funding is comprised of a term debt
facility of $3,000,000, working capital multi‑option facility of $3,250,000 and a corporate credit card facility
of $250,000.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of
affairs in future financial years.
14
Directors’ Report continued
Indemnification and Insurance of Directors and Officers
Indemnification
The consolidated entity has indemnified, to the extent permitted by law, the Directors and officers of the
consolidated entity against any liability incurred by a Director or officer in or arising out of the conduct of the
business of the consolidated entity or in or arising out of the discharge of that officer’s duties. No amount was
paid pursuant to these indemnities during the financial year, nor subsequently to the date of this Annual Report.
During the financial year the consolidated entity paid a premium in respect of a contract to insure the Directors and
officers of the consolidated entity against any liability incurred by a Director or officer in or arising out of the conduct
of the business of the consolidated entity or in or arising out of the discharge of that officer’s duties. Under the terms
of that contract, the details of the nature and extent of the liabilities insured against and the amount of premiums
paid are confidential.
Proceedings on Behalf of the Company
No person has applied to a court under section 237 of the Corporations Act 2001 for leave, or been granted leave,
to bring proceedings on behalf of the Company, or to 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 part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company pursuant to section 236 with leave
of the Court under section 237 of the Corporations Act 2001.
Non‑Audit Services
During the financial year, the consolidated entity’s auditor, Elderton Audit Pty Ltd, did not perform any other services
in addition to the review and audit of the financial statements. It is noted that Elderton Capital Pty Ltd, a related
practice of Elderton Audit Pty Ltd, acted as investigating accountant to COSOL’s initial public offering.
Details of the amounts paid or payable to Elderton Audit Pty Ltd and Elderton Capital Pty Ltd for services provided
during the financial year are detailed in Note 23 to the consolidated entity’s financial statements.
For good governance purposes, and pursuant to a resolution of the Board of Directors, the Directors are satisfied
that the provision of non‑audit services by a related practice of Elderton Audit Pty Ltd during the financial year is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non‑audit services by a related practice of Elderton Audit Pty Ltd did
not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons.
• All non‑audit services are reviewed and approved by the Board or the Audit Committee to ensure they do not
impact the impartiality and objectivity of the auditor.
• None of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for the company, acting as advocate for the company or jointly sharing
economic risk and rewards.
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Directors’ Report continued
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 24 of the Annual Report.
Auditor
The consolidated entity has not, during or since the end of the financial year, indemnified or agreed to indemnity the
auditor of the consolidated entity against a liability incurred by the auditor. During the financial year, the consolidated
entity has not paid a premium in respect of a contract to insure the auditor of the consolidated entity.
Elderton Audit Pty Ltd continues in office in accordance with the Corporations Act 2001.
No Director has been a partner in an audit firm or a director of an audit firm that is an auditor of the consolidated entity.
Rounding of Amounts
The amounts in this report and the financial statements have been rounded to the nearest dollar, in accordance
with ASIC Corporations (Rounding of Financial/Directors’ Reports) Instrument 2016/191. Any discrepancies between
totals and sums of components in tables and figures contained in this Annual Report are due to rounding.
Signing
This Directors’ Report is made in accordance with a resolution of the Directors, and is signed for and on behalf
of the Directors.
Geoff Lewis
Chairman
25 August 2020
16
Remuneration Report
The Directors present this Remuneration Report for the consolidated entity for the financial year ended
30 June 2020. This Remuneration Report forms part of the Directors’ Report in accordance with the requirements
of the Corporations Act 2001 and its regulations. For the purposes of this Remuneration Report, key management
personnel (KMP) (as defined in AASB 124 Related Party Disclosures) of the consolidated entity are those persons
having authority and responsibility for planning, directing and controlling the major activities of the Company, directly
or indirectly. The KMP of the consolidated entity during the financial year were the Directors of the Company, and
the Chief Executive Officer and Chief Financial Officer of COSOL Australia Pty Ltd.
Remuneration Policy and Principles
The remuneration policy of the consolidated entity has been designed to align KMP objectives with shareholders’
interests and business objectives by providing a fixed remuneration component and offering specific long‑term
incentives based on key performance areas regarding the consolidated entity’s financial results. The Board believes
that the remuneration policy is appropriate and effective in its ability to attract and retain the best KMP to run and
manage the consolidated entity, as well as create alignment between the goals and interests of Directors,
management and shareholders.
Remuneration levels for KMP are competitively set to attract and retain appropriately qualified and experienced
directors and management for the consolidated entity. The remuneration structures are designed to attract suitably
qualified candidates, fairly and responsibly reward the achievement of strategic and financial performance
objectives, and incentivise the creation of value for shareholders. The remuneration mix for KMP includes fixed
compensation, short and long term incentives including equity‑based compensation, and superannuation
contributions, except that non‑executive Directors do not receive equity‑based compensation.
The Company’s Nomination and Remuneration Committee reviews compensation levels on an annual basis which
considers the individual performance of KMP and the performance of the consolidated entity. The Nomination and
Remuneration Committee may engage external consultants to provide advice on remuneration matters and to assist
it in making remuneration decisions. No external remuneration consultant was engaged during the financial year.
The consolidated entity has designed separate and distinct remuneration structures for non‑executive Directors
and other KMP (including executive Directors).
Non‑Executive Directors
The consolidated entity’s policy is to remunerate non‑executive Directors based on market practices, duties and
accountability, with independent external advice sought when required. The fees paid to non‑executive Directors is
reviewed annually, and the current maximum aggregate amount of fees that can be paid to non‑executive Directors
is $300,000 per annum which can be increased only with prior shareholder approval. The non‑executive Directors
do not receive additional fees for serving on committees of the Board, and are not entitled to any termination
benefits or retirement (other than superannuation) benefits.
Other KMP (including executive Directors)
The Board’s policy for determining the nature and amount of remuneration for other KMP including executive Directors
is to reward those personnel based on their position and responsibility, subject to annual reviews. The remuneration
structure includes fixed base pay, short term incentives, long term incentives (including equity‑based compensation),
and other remuneration such as superannuation and long service leave.
This structure implements the consolidated entity’s practice of directly linking incentive components of the
remuneration of KMP and other management personnel to the performance of the consolidated entity through total
shareholder return, EBITDA, sustainable business practices and EBIT and return on capital measures is designed to
ensure continued and sustainable growth in the consolidated entity’s business, financial and share price performance.
Remuneration Report Approval
This Remuneration Report for the financial year ended 30 June 2020 will be put to shareholders for approval at
COSOL’s AGM which will be held during November 2020. COSOL has not previously held an AGM and shareholders
have not previously voted on a remuneration report of the COSOL.
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Remuneration Report continued
Details of Remuneration
Details of the remuneration of the Directors and KMP (for the financial year since incorporation on 7 August 2019)
of the consolidated entity are detailed below.
Short Term Employment Benefits
Post Employment Benefits
Long Term
Employ
ment
Benefits
Proportion
of Remu
neration
Cash
salary
and fees
$
Bonus8
$
Non
Monetary
$
Other
(including
Annual
Leave)
$
Super
annua tion
$
Other
$
Long
Service
Leave
$
Share
Based
Payments
Total
$
Perfor
mance
based
Directors and
KMP
G Lewis1
S Johnston2
G Pestell3
G Strautins4
Year
2020
2020
2020
2020
$28,132
$22,831
$19,901
$22,831
$21,792
$25,000
$19,901
$22,831
S McGowan5
2020
$104,642
$175,000
$4,842
$4,060
$0
$4,060
$9,832
$6,394
M Woodward7
Total
Remu neration
$32,730
$14,610
$38,909
$6,586
2020
$227,098
$283,103
$38,909
$29,380
$6,394
$584,884
1 Appointed 10 September 2019
2 Appointed 10 September 2019
3 Appointed 7 August 2019; director’s fees are paid to a service company without a component of superannuation.
4 Appointed 4 October 2019
5
Employed as Chief Executive Officer by COSOL Australia Pty Ltd which became part of the consolidated entity on 16 January 2020.
6 On 8 May 2020 the Company granted 1,200,000 unquoted $0.3625 options expiring 15 October 2021 and 1,800,000 unquoted $0.415 options
expiring 15 October 2023 to a related party of S McGowan as part of his remuneration.
7
Employed as Chief Financial Officer by COSOL Australia Pty Ltd which became part of the consolidated entity on 16 January 2020; ceased
employment with COSOL Australia Pty Ltd on 19 March 2020.
8 A cash bonus of $25,000 (inclusive of superannuation if applicable) was agreed and paid to each of the Directors during the financial year.
A cash bonus of $175,000 was agreed and paid to Mr McGowan during the financial year.
The Company was incorporated and the consolidated entity was formed during the financial year and this 2020
Annual Report (including Directors’ Report and financial statements) is the first released by the consolidated entity.
The consolidated entity’s earnings results and shareholders’ returns for the financial year, against which KMP
remuneration and the consolidated entity’s remuneration principles and policies can be discussed, are detailed below.
Revenue
EBITDA
Net profit after income tax
Share price
$11,668,928
$2,050,616
$1,506,412
$0.595 (as at 30 June 2020 – IPO price of $0.20 and closed
at $0.80 on 25 August 2020)
Basic earnings per share
$0.02
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Remuneration Report continued
KMP Remuneration
The consolidated entity has entered into an executive services agreement with Scott McGowan on the following
material terms.
• Position: Chief Executive Officer of COSOL Australia Pty Ltd.
• Commencement date: 16 January 2020.
• Term: Until agreement is validly terminated in accordance with its terms.
• Notice period: Either party may terminate the agreement without cause by providing the other party with no
less than 6 months’ written notice. Mr McGowan may terminate if a material breach of the agreement by COSOL
Australia is not remedied within 14 days of receiving notice. COSOL Australia may terminate the agreement
with no less than 3 months’ written notice where Mr McGowan is absent for more than 3 months in any rolling
12 month period, or immediately with cause in circumstances considered standard for agreements of this nature
in Australia, including serious or persistent breaches of the agreement, grave misconduct or wilful neglect in the
discharge of his duties under the agreement.
• Salary: $250,000 per annum (inclusive of statutory superannuation).
• Cash short term performance‑based incentive: up to $250,000 per annum (inclusive of statutory
superannuation), payable quarterly on the following terms.
–
Incentive payment based on delivery of annual target EBIT for COSOL Australia (subject to adjustment
by the Board), with quarterly targets calculated as on a quarter of the annual target.
– Entitled to 80% of the incentive payment if 80% of the target EBIT for the quarter is achieved, and an
additional 1% of the incentive for every 1% by which actual EBIT exceeds target EBIT for the quarter.
– EBIT for COSOL Australia is calculated after all incentives and bonuses for staff have been calculated.
–
If target EBIT is not achieved in a quarter, there is an ability to “catch‑up” in subsequent quarters.
– Payment of any bonus is subject to satisfaction of a number of agreed prerequisite conditions.
–
Incentive payment will be paid for accrued completed quarters should Mr McGowan cease employment
with COSOL Australia.
• Expenses: The consolidated entity will reimburse Mr McGowan for all reasonable expenses incurred by him
in the performance of his duties in connection with the consolidated entity.
• Leave: The agreement otherwise contains leave entitlements, termination and confidentiality provisions and
general provisions considered standard for an agreement of this nature.
COSOL Australia had entered into an employment agreement with Melanie Woodward on the following material
terms (Ms Woodward ceased employment with COSOL Australia on 19 March 2020.
• Position: Chief Financial Officer of COSOL Australia Pty Ltd.
• Commencement date: On or about 21 September 2018.
• Term: Until agreement is validly terminated in accordance with its terms.
• Notice period: Either party may terminate the agreement without cause by providing the other party with no less
than 30 days’ written notice. COSOL Australia may terminate the agreement immediately with cause in
circumstances considered standard for agreements of this nature in Australia, including serious or persistent
breaches of the agreement.
• Salary: $200,385 per annum (inclusive of statutory superannuation).
• Cash short term performance‑based incentive: Up to $40,800 per annum (inclusive of statutory superannuation).
• Expenses: The Company will reimburse Ms Woodward for all reasonable expenses incurred by her in the
performance of his duties in connection with the COSOL Australia.
• Leave: The agreement otherwise contains leave entitlements, termination and confidentiality provisions and
general provisions considered standard for an agreement of this nature.
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Remuneration Report continued
The Company has entered into agreements with its Directors, and agreed the following remuneration.
Director
G Lewis
S Johnston
G Pestell
G Strautins
Total
Annual Remuneration
inclusive of Superannuation
$65,000
$45,000
$45,000
$45,000
$200,000
The Directors each serve until retirement, subject to re‑election as required by the Company’s constitution and the
Corporations Act 2001.
Share Based Compensation to KMP
Unquoted options issued to KMP carry no dividend or voting rights, and each option is convertible into one
ordinary share. The following options were granted to Scott McGowan during the financial year pursuant to the
Company’s Employee Option Plan as performance based compensation, and the options have been valued using
a Monte Carlo simulation.
Scott McGowan – unquoted options
Tranche 1
Tranche 2
Tranche 3
Grant Date
Expiry Date
Share Price at Grant Date
Exercise Price
Vesting Conditions
Number Granted
Total Fair Value
Remuneration Expense – 2020
Remuneration Expense – 2019
24 April 2020
24 April 2020
24 April 2020
15 October 2021
15 October 2022
15 October 2023
$0.30
$0.3625
See below
1,200,000
$20,264
$2,478
–
$0.30
$0.415
$0.30
$0.415
See below
See below
900,000
$28,812
$2,247
–
900,000
$25,500
$1,396
–
Mr McGowan’s share‑based payment expense for the financial year constituted 2.2% of this total compensation.
The key terms, including performance conditions, of the options granted to Mr McGowan are detailed below.
• Vesting:
Tranche 1: 2,000,000 vest on 21/8/2021 (FY21), exercisable from 1/9/2021
Tranche 2: 900,000 vest on 21/82022 (FY22), exercisable from 1/9/2022
Tranche 3: 900,000 vest on 21/8/2023 (FY23), exercisable from 1/9/2023
Any options which do not vest will automatically lapse.
• Performance Milestones:
– 20% of each tranche based on total shareholder return indexed against the ASX Small Industrials Index
(50% vest if TSR equals the Index, and an additional 4% vest for each 1% by which TSR exceeds the Index)
– 40% each of each tranche based on achieving strategic initiatives as defined by the board (including
non‑financial measures) (4% vest for each percentile achieved above the 75th percentile)
– 40% each of each tranche based on achieving budgeted EBIT and ROC for COSOL Australia Pty Ltd
(4% vest for each percentile achieved above the 75th percentile)
20
Remuneration Report continued
• Claw‑back:
The Board reserves the right to ‘claw‑back’ vested options in the event that material errors in satisfaction
of performance milestones are discovered.
The performance milestones applicable to the LTI options granted to KMP during the financial year were
chosen because they create an appropriate link between the KMP’s remuneration and the performance of
the consolidated entity, and deliver on an objective of encouraging continued and sustainable growth in the
consolidated entity’s business, financial and share price performance.
In respect of TSR, the ASX Small Industrials Index, as an external factor for determining satisfaction of a
performance milestone, was chosen as it is an index containing a number of peer companies in the IT sector
and companies of a size and financial performance that the consolidated entity is striving to achieve.
Option Holdings of KMP
Directors and KMP
G Lewis
S Johnston
G Pestell
G Strautins
S McGowan
M Woodward
Total
Options
Held at
7 August
2019
Granted
as LTI
Remu
neration
Exercised
Other
Changes
Options
Held at
30 June
2020
Unvested
at 30 June
2020
–
–
–
–
–
–
–
–
–
–
–
3,000,000
–
3,000,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,000,000
3,000,000
–
–
3,000,000
3,000,000
The Company has established an Employee Option Plan for the basis of providing participants with a component
of equity‑based remuneration. The Company has a policy of discouraging participants in the Employee Option Plan
from entering into transactions (whether through the use of derivatives or otherwise) which limit the economic risk
of participating in the Employee Option Plan.
Ordinary Share Holdings of KMP
Shares
Held at
7 August
2019
Share
Based
Payments
Exercise
of Options
Issued
for Cash
Issued as
Considera
tion
Shares
Held at
30 June
2020
Shares
Held at
Date of
Report
–
–
1
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
24,250,000
24,250,000
2,499,999
3,000,000
–
–
–
–
–
–
24,250,000
24,250,000
24,250,000
24,250,000
2,500,000
2,500,000
3,000,000
3,000,000
4,500,000
4,500,000
4,500,000
–
–
–
– 53,999,000
4,500,000 58,500,000 58,500,000
Directors
and KMP
G Lewis1
S Johnston2
G Pestell3
G Strautins4
S McGowan5
M Woodward
Total
1. Held directly
2. Held directly, except for 1,250,000 held indirectly
3. Held beneficially
4. Held beneficially
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Remuneration Report continued
5. Held indirectly
Other transactions
There were no loans made, guaranteed or secured by the consolidated entity with a Director, KMP or a close family
member of a Director or KMP during the financial year or as at the date of this Remuneration Report.
Mr Pestell, a non‑executive Director, is Managing Director and part owner of, and has significant influence over,
MPH Lawyers, the consolidated entity’s Australian legal adviser. MPH Lawyers is not a material services supplier to
the consolidated entity and the consolidated entity is not a material client of MPH Lawyers. During the financial year,
the consolidated entity paid a total of $241,874 in legal fees in connection with the IPO and in the provision of other
legal services. These transactions occurred within a normal customer‑supplier relationship and on terms and
conditions no more favourable than those available to other parties on an arms‑length basis.
There were no other Director or KMP transactions.
End of Audited Remuneration Report
22
Corporate Governance Statement
COSOL and its Board of Directors are committed to achieving and demonstrating high standards of corporate
governance. COSOL has adopted (where suitable for its circumstances) the Corporate Governance Principles and
Recommendations (Third Edition) published by the ASX Corporate Governance Council. COSOL has reviewed its
corporate governance practices against the Third Edition for the financial year ended 30 June 2020. The Council
released the Fourth Edition in February 2019, effective for financial years beginning on or after 1 January 2020,
and COSOL will report against the Fourth Edition for the financial year ending 30 June 2021.
COSOL’s 2020 Corporate Governance Statement reflects its corporate governance practices for the financial
year ended 30 June 2020 and was approved by the Board on 25 August 2020. COSOL’s 2020 Corporate
Governance Statement and Corporate Governance Plan are available on COSOL’s website at
https://www.COSOL.com.au/investor‑centre/#corporate‑governance.
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Auditor’s Independence Declaration
Auditor's Independence Declaration
To those charged with the governance of COSOL Limited
As auditor for the audit of COSOL Limited for the period ended 30 June 2020, I declare that, to the best of my
knowledge and belief, there have been:
• no contraventions of the independence requirements of the Corporations Act 2001 in relation to the
audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.
Elderton Audit Pty Ltd
Nicholas Hollens
Managing Director
25 August 2020
24
Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2020
Revenue
Other income
Cost of Sales
Expenses
Salaries & Wages
Depreciation and amortisation expense
Operating & General Expenses
Profit before income tax
Income Tax
Profit after income tax for the period attributable
to the owners of COSOL Limited
Other comprehensive income
Total comprehensive income for the period attributable
to the owners of COSOL Limited
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
3
4
4
5
2020
$
11,668,928
551,625
(8,133,251)
(1,023,170)
(94,434)
(1,009,818)
1,959,880
(453,468)
1,506,412
–
1,506,412
$0.02
$0.02
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
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Statement of Financial Position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments and other receivables
Total current assets
Non‑current assets
Property, plant and equipment
Deferred tax
Goodwill
Right of use assets
Total Non‑current assets
Total Assets
Liabilities
Current liabilities
Trade and other payables
Income tax
Provisions
Accrued and other liabilities
Deferred consideration
Lease liability
Total current liabilities
Non‑current liabilities
Lease liability
Deferred consideration
Total non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total Equity
Note
2020
$
6
7
8
9
11
26
10
12
14
15
16
18
13
17
18
19
20
6,774,535
4,021,414
127,355
10,923,304
109,671
364,249
18,209,183
418,355
19,101,458
30,024,762
1,457,534
206,401
473,736
1,490,386
3,704,619
101,531
7,434,207
290,124
2,795,381
3,085,505
10,519,712
19,505,050
17,987,986
10,652
1,506,412
19,505,050
26
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Statement of Changes in Equity
For the period 7 August 2019 to 30 June 2020
Issued
capital
$
Reserves
$
Balance at 7 August 2019
Profit for the period
Total comprehensive income
for the year
Transactions with owners
in their capacity as owners:
Contributions of equity, net
of transaction costs (note 19)
–
–
–
17,987,986
Share‑based payments (note 20)
–
Retained
profits
$
–
1,506,412
1,506,412
Share based
payment
reserve
$
–
–
–
Total equity
$
–
1,506,412
1,506,412
–
–
–
17,987,986
10,652
10,652
Balance at 30 June 2020
17,987,986
1,506,412
10,652
19,505,050
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Statement of Cash Flows
For the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Income taxes paid
Net cash after tax from operating activities
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Repayment of lease liabilities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Note
2020
$
29
26
12,860,610
(9,390,376)
3,470,234
3,698
(550,499)
2,923,433
(9,347,793)
(48,364)
(9,396,157)
13,327,245
(79,986)
13,247,259
6,774,535
–
–
6,774,535
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
28
Notes to the Financial Statements
30 June 2020
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ and
for lessees eliminates the classifications of operating leases and finance leases. Except for short‑term leases and
leases of low‑value assets, right‑of‑use assets and corresponding lease liabilities are recognised in the statement
of financial position. Straight‑line operating lease expense recognition is replaced with a depreciation charge for
the right‑of‑use assets (included in operating costs) and an interest expense on the recognised lease liabilities
(included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16
will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in
operating activities and the principal portion of the lease payments are separately disclosed in financing activities.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations
Act 2001, as appropriate for for‑profit oriented entities. These financial statements also comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative
financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in note 25.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of COSOL Limited
(‘company’ or ‘parent entity’) as at 30 June 2020 and the results of all subsidiaries for the period then ended. COSOL
Limited and its subsidiaries together are referred to in these financial statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity 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 to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the consolidated entity. They are de‑consolidated from
the date that control ceases.
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Notes to the Financial Statements continued
Note 1. Significant accounting policies continued
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non‑controlling interest acquired is recognised
directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill,
liabilities and non‑controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The consolidated entity recognises the fair value of the consideration received and the
fair value of any investment retained together with any gain or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is COSOL Limited’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial period‑end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair
value of the consideration received or receivable, taking into account contractually defined terms of payment and
excluding discounts, rebates, customer returns and other sales taxes or duty. The following specific recognition
criteria must also be met before revenue is recognised:
The Group recognises revenue from contracts with customers based on a five step model as set out in IFRS 15:
1. Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties
that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
2. Identify the performance obligations in the contract: A performance obligation is a promise in a contract with
a customer to transfer a good or service to the customer.
3. Determine the transaction price: The transaction price is the amount of consideration to which the Group expects
to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected
on behalf of third parties.
4. Allocate the transaction price to the performance obligations in the contract: For a contract that has more than
one performance obligation, the Group will allocate the transaction price to each performance obligation in an
amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for
satisfying each performance obligation.
5. Recognise revenue when (or as) the entity satisfies a performance obligation at a point in time or over time.
30
Notes to the Financial Statements continued
Note 1. Significant accounting policies continued
The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
• The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the
Group performs; or
• The Group’s performance creates or enhances an asset that the customer controls as the asset is created or
enhanced; or
• The Group’s performance does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date.
For performance obligations where any one of the above conditions are not met, revenue is recognised at a point in
time at which the performance obligation is satisfied. The Group is required to assess each of its contracts with
customers to determine whether performance obligations are satisfied over time or at a point in time in order to
determine the appropriate method of recognising revenue.
Revenue is recognised in the statement of profit or loss and other comprehensive income to the extent that it is
highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and the
revenue and costs, if applicable, can be measured reliably.
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration
received or receivable, net of returns and discounts. Revenue is recognised in the profit or loss when significant risk
and reward of ownership have been transferred to the customer, recovery of consideration is probable, the
associated costs and possible return of goods can be estimated reliably, there is no continuing management
involvement with the goods can be estimated reliably, there is no continuing management involvement with the
goods and amount of revenue can be measured reliably.
The Group assessed its revenue streams and the following measurement methods have been identified and adopted
in the preparation of these financial statements:
Revenue Streams
Sale of licences
Set‑up and support activities
Maintenance services
Consulting services
Interest
Measurement Methods
Revenue for license sold is recognised at a point in time.
Revenue is recognised for arrangements involving software including
implementation support over time till the implementation services
are completed.
Revenue is recognised through out the period of maintenance contract
i.e. over time.
Revenue is recognised over the time based on the time spent on the
provision of the consulting services
Interest revenue is recognised as interest accrues using the effective interest method.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match
them with the costs that they are intended to compensate.
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on
the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods,
where applicable.
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Notes to the Financial Statements continued
Note 1. Significant accounting policies continued
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither
the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised
to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same
taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
COSOL Limited (the ‘head entity’) and its wholly‑owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated
group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied
the ‘separate taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to
members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each
subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that
the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting
in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Current and non‑current classification
Assets and liabilities are presented in the statement of financial position based on current and non‑current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non‑current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non‑current.
Deferred tax assets and liabilities are always classified as non‑current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short‑term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows
presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within
borrowings in current liabilities on the statement of financial position.
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Note 1. Significant accounting policies continued
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped
based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of
the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based
on both the business model within which such assets are held and the contractual cash flow characteristics of the
financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified
as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for
trading, where they are acquired for the purpose of selling in the short‑term with an intention of making a profit,
or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are
recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as
such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are
either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the consolidated entity’s assessment at the end of each reporting period as to whether
the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12‑month
expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses
that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become
credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on
the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis
of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at
the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases,
the loss allowance reduces the asset’s carrying value with a corresponding expense through profit or loss.
Property, plant and equipment
Land and buildings are shown at cost, based on periodic, at least every 3 years, valuations by external independent
valuers, less subsequent depreciation and impairment for buildings. The valuations are undertaken more frequently
if there is a material change in the fair value relative to the carrying amount. Any accumulated depreciation at the
date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to
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Note 1. Significant accounting policies continued
the revalued amount of the asset. Increases in the carrying amounts arising on revaluation of land and buildings
are credited in other comprehensive income through to the revaluation surplus reserve in equity. Any revaluation
decrements are initially taken in other comprehensive income through to the revaluation surplus reserve to the
extent of any previous revaluation surplus of the same asset. Thereafter the decrements are taken to profit or loss.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight‑line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Buildings
Leasehold improvements
Plant and equipment
40 years
3–10 years
2–5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the
assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Right‑of‑use assets
A right‑of‑use asset is recognised at the commencement date of a lease. The right‑of‑use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right‑of‑use assets are depreciated on a straight‑line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right‑of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right‑of‑use asset and corresponding lease liability for
short‑term leases with terms of 12 months or less and leases of low‑value assets. Lease payments on these assets
are expensed to profit or loss as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite
life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life
intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of
finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life
are accounted for prospectively by changing the amortisation method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually
for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and
are not subsequently reversed.
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Note 1. Significant accounting policies continued
Impairment of non‑financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non‑financial assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value‑in‑use. The value‑in‑use
is the present value of the estimated future cash flows relating to the asset using a pre‑tax discount rate specific to
the asset or cash‑generating unit to which the asset belongs. Assets that do not have independent cash flows are
grouped together to form a cash‑generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of
the financial period and which are unpaid. Due to their short‑term nature they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for
an equivalent non‑convertible bond and this amount is carried as a non‑current liability on the amortised cost basis
until extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised
as a finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and
included in shareholders equity as a convertible note reserve, net of transaction costs. The carrying amount of the
conversion option is not remeasured in the subsequent periods. The corresponding interest on convertible notes
is expensed to profit or loss.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease
payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option
when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable
lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability
is remeasured, an adjustment is made to the corresponding right‑of use asset, or to profit or loss if the carrying
amount of the right‑of‑use asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are
expensed in the period in which they are incurred.
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Notes to the Financial Statements continued
Note 1. Significant accounting policies continued
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result
of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a
current pre‑tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
Employee benefits
Short‑term employee benefits
Liabilities for wages and salaries, including non‑monetary benefits, annual leave and long service leave expected
to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when
the liabilities are settled.
Other long‑term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting
date are measured at the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Share‑based payments
Equity‑settled and cash‑settled share‑based compensation benefits are provided to employees.
Equity‑settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash‑settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
The cost of equity‑settled transactions are measured at fair value on grant date. Fair value is independently
determined using the Monte Carlo option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
The cost of equity‑settled transactions are recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting
period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting
date less amounts already recognised in previous periods.
The cost of cash‑settled transactions is initially, and at each reporting date until vested, determined by applying
either the Monte Carlo option pricing model, taking into consideration the terms and conditions on which the award
was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
• during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied
by the expired portion of the vesting period.
•
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability
at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash‑settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all
other conditions are satisfied.
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Notes to the Financial Statements continued
Note 1. Significant accounting policies continued
If equity‑settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share‑based compensation benefit as at the date of modification.
If the non‑vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity‑settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non‑financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non‑financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date
and transfers between levels are determined based on a reassessment of the lowest level of input that is significant
to the fair value measurement.
For recurring and non‑recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation
and a comparison, where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial period and no longer at the discretion of the company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition‑date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any
non‑controlling interest in the acquiree. For each business combination, the non‑controlling interest in the acquiree
is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
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Note 1. Significant accounting policies continued
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the consolidated entity’s operating or accounting policies and other pertinent conditions in existence
at the acquisition‑date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition‑date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition‑date fair value.
Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is
accounted for within equity.
The difference between the acquisition‑date fair value of assets acquired, liabilities assumed and any
non‑controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of
any pre‑existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the
pre‑existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase
to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition‑date,
but only after a reassessment of the identification and measurement of the net assets acquired, the non‑controlling
interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in
the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition‑date. The
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of COSOL Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the
financial period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation
to dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or
as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
tax authority.
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Notes to the Financial Statements continued
Note 1. Significant accounting policies continued
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended
30 June 2020. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards
and Interpretations, most relevant to the consolidated entity, are set out below.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020
and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well
as new guidance on measurement that affects several Accounting Standards. Where the consolidated entity has
relied on the existing framework in determining its accounting policies for transactions, events or conditions that are
not otherwise dealt with under the Australian Accounting Standards, the consolidated entity may need to review
such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected
to have a material impact on the consolidated entity’s financial statements.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases
its judgements, estimates and assumptions on historical experience and on other various factors, including
expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities (refer to the respective notes) within the next financial year are discussed below.
Coronavirus (COVID‑19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID‑19) pandemic has had, or
may have, on the consolidated entity based on known information. This consideration extends to the nature of the
products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated
entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant
impact upon the financial statements or any significant uncertainties with respect to events or conditions which may
impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus
(COVID‑19) pandemic.
Share‑based payment transactions
The consolidated entity measures the cost of equity‑settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined by using either
the Monte Carlo Method taking into account the terms and conditions upon which the instruments were granted.
The accounting estimates and assumptions relating to equity‑settled share‑based payments would have no impact
on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or
loss and equity. Refer to note 32 for further information.
Revenue from contracts with customers involving sale of goods
When recognising revenue in relation to the sale of goods to customers, the key performance obligation of the
consolidated entity is considered to be the point of delivery of the goods to the customer, as this is deemed to be
the time that the customer obtains control of the promised goods and therefore the benefits of unimpeded access.
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Note 2. Critical accounting judgements, estimates and assumptions continued
Determination of variable consideration
Judgement is exercised in estimating variable consideration which is determined having regard to past experience
with respect to the goods returned to the consolidated entity where the customer maintains a right of return
pursuant to the customer contract or where goods or services have a variable component. Revenue will only be
recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised under the contract will not occur when the uncertainty associated with the variable consideration is
subsequently resolved.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based
on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall
expected credit loss rate for each group. These assumptions include recent sales experience, historical collection
rates, the impact of the Coronavirus (COVID‑19) pandemic and forward‑looking information that is available. The
allowance for expected credit losses, as disclosed in note 12, is calculated based on the information available at
the time of preparation. The actual credit losses in future years may be higher or lower.
Note 3. Revenue
Revenue from contracts with customers
Sale of goods
Rendering of services
Other income
Reimbursement of Expenses
Government Grants
Interest Income
Note 4. Expenses
Profit before income tax from continuing operations includes the following specific expenses:
Cost of sales
Depreciation
Plant and equipment
Buildings right‑of‑use assets
Total depreciation
Superannuation expense
Superannuation expense
Share‑based payments expense
Share‑based payments expense
40
2020
$
316,232
11,352,696
11,668,928
320,181
227,746
3,698
551,625
2020
$
8,133,251
13,982
80,452
94,434
536,874
10,652
Notes to the Financial Statements continued
Note 5. Income tax expense
Income tax expense
Current tax
Deferred tax – origination and reversal of temporary differences
Total tax expense per income statement
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 27.50%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non deductible expenses
Other assessable income
Non assessable income
Deductible equity raising costs
Income tax expense booked to statement of comprehensive income
Deferred tax expensed (credited) directly to equity
Relating to equity raising costs
Note 6. Current assets – cash and cash equivalents
Cash at bank
Note 7. Current assets – trade and other receivables
Trade receivables
Sundry receivables
Accrued income
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n
u
a
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p
o
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t
2
0
2
0
2020
$
507,926
(54,458)
453,468
1,959,880
538,967
16,628
482
(62,424)
(40,185)
453,468
(160,741)
(160,741)
2020
$
6,774,535
6,774,535
2020
$
3,018,851
3,018,851
227,746
774,817
4,021,414
Allowance for expected credit losses
The consolidated entity has not recognised any allowance for expected credit loss in profit or loss since all the trade
receivable for the period ended 30 June 2020 are expected to be recovered in due course.
41
Notes to the Financial Statements continued
Note 8. Prepayment and other receivables
Prepayments
Other receivables
Note 9. Non‑current assets – property, plant and equipment
Buildings and improvements at Cost
Less: Accumulated depreciation
Computers – at Cost
Less: Accumulated depreciation
Furniture & Fixtures at Cost
Less: Accumulated depreciation
Low Value Asset Pool – at Cost
Less: Accumulated depreciation
Office Equipment – at Cost
Less: Accumulated depreciation
2020
$
49,028
78,327
127,355
2020
$
16,510
(4,175)
12,335
97,633
(45,304)
52,329
19,438
(3,796)
15,642
2,379
(1,497)
882
29,203
(720)
28,483
109,671
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are
set out below:
Buildings
and
improve
ments
$
Furniture
and
fixtures
$
Low value
asset pool
$
Office
equipment
$
Computers
$
Balance at 7 August 2019
–
–
–
–
–
Total
$
–
Additions through business
combinations (note 28)
3,565
55,693
14,863
1,073
95
75,289
Additions
10,158
7,787
Depreciation expense
(1,388)
(11,151)
1,706
(927)
42
Balance at 30 June 2020
12,335
52,329
15,642
–
28,713
48,364
(192)
881
(324)
(13,982)
28,484
109,671
Notes to the Financial Statements continued
Note 10. Non‑current assets – right‑of‑use assets
Buildings – right‑of‑use
Less: Accumulated depreciation
Additions to the right‑of‑use assets during the year were $579,259.
Note 11. Non‑current assets – deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee provisions
Blackhole expenses
Plant and equipment
Other deferred tax liabilities
Amounts recognised in equity:
Capital raising costs
Deferred tax asset
Note 12. Current liabilities – trade and other payables
Trade payables
Refer to note 21 for further information on financial instruments.
Note 13. Current liabilities – lease liabilities
Lease liability
Refer to note 21 for further information on financial instruments.
Note 14. Current liabilities – income tax
Provision for income tax
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2020
$
579,259
(160,904)
418,355
2020
$
199,029
12,034
(7,343)
(212)
203,508
160,741
364,249
2020
$
1,457,534
2020
$
101,531
2020
$
206,401
Notes to the Financial Statements continued
Note 15. Provisions
Long service leave
Annual leave
FBT
Long service leave
2020
$
74,210
380,910
18,616
473,736
The provision represents long service leave entitlements owing to current employees.
Annual leave
The provision represents annual leave entitlements owing to current employees.
FBT
The provision represents the fringe benefit tax payable within 12 months
Movements in provisions
Movements in each class of provision during the current financial year are set out below:
2020
Carrying amount at the start of the year
Long service
leave
$
–
Annual
leave
$
–
FBT
$
–
Additional provisions recognised
139,365
476,335
18,616
Amounts transferred from non‑current
Amounts used
Unused amounts reversed
–
–
(65,155)
(95,425)
–
–
–
–
–
Carrying amount at the end of the year
74,210
380,910
18,616
Note 16. Accrued and other liabilities
Accrued expenses
GST payable
Superannuation payable
Payroll tax payable
Prepaid revenue
Other liabilities
44
2020
$
551,882
327,258
268,620
137,317
87,367
117,942
1,490,386
Notes to the Financial Statements continued
Note 17. Non‑Current liabilities – lease liabilities
Lease liability
Refer to note 21 for further information on financial instruments.
Note 18. Deferred consideration
Deferred consideration – current liability
Deferred consideration – non‑current liability
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$
290,124
2020
$
3,704,619
2,795,381
6,500,000
The deferred consideration represents amount payable to the former shareholders of COSOL Australia Pty Limited.
This amount has to be paid within seven days after the Group releases its audited financial statements for the year
30 June 2020 and 30 June 2021. The amount of deferred consideration is capped at $6,500,000. Neither amount
has not been discounted to present value since the last payment is due in a period slightly exceeding twelve months.
The company at its sole election, can satisfy the Deferred Consideration by way of an issue of shares rather than a
cash payment. If the company elects to issue shares, the shares will be issued at the volume weighted average price
per share for the 30 days immediately prior to date the Group releases its audited financial statements for the year
30 June 2020 and 30 June 2021.
Note 19. Equity – issued capital
Ordinary shares – fully paid
Movements in ordinary share capital
Details
Balance
Issue of shares
Issue of shares
Issue of shares
Issue of shares
2020
$
127,500,000
$
–
500,000
1,750,000
Shares
Issue price
Date
30 June 2019
7 August 2019
4 October 2019
10,000,000
6 December 2019
34,999,999
1
0.05
0.05
0.05
16 January 2020
82,500,000
0.20
16,500,000
Share issue transaction costs, net of tax
16 January 2020
Balance
30 June 2020
127,500,000
(762,014)
17,987,986
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
45
Notes to the Financial Statements continued
Note 19. Equity – issued capital continued
Share buy‑back
There is no current on‑market share buy‑back.
Capital risk management
The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an
optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was
seen as value adding relative to the current company’s share price at the time of the investment.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority
in all capital risk management decisions. There have been no events of default on the financing arrangements
during the financial year.
Note 20. Equity – reserves
Share based payment reserve
2020
$
10,652
10,652
Note 21. Financial instruments
Financial risk management objectives
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on
the financial performance of the consolidated entity. The consolidated entity uses different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate,
foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment
portfolios to determine market risk.
Risk management is carried out by senior finance executives (‘finance’) under policies approved by the Board of
Directors (‘the Board’). These policies include identification and analysis of the risk exposure of the consolidated
entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks
within the consolidated entity’s operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
Price risk
46
The consolidated entity currently has no borrowings therefore no interest rate risk.
Notes to the Financial Statements continued
Note 21. Financial instruments continued
Interest rate risk
The consolidated entity currently has not borrowings therefore no interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where
appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial
assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement
of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this
include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make
contractual payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash
and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due
and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing
facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial
assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal
cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying
amount in the statement of financial position.
Weighted
average
interest rate
%
1 year or
less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
Consolidated
– 2020
Non‑derivatives
Non‑interest
bearing
Trade payables
0%
1,457,534
Other payables
Interest‑bearing
– fixed rate
Lease liability
Total
non‑derivatives
101,531
101,531
188,593
1,559,065
101,531
188,593
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
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Notes to the Financial Statements continued
Note 21. Financial instruments continued
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 22. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short‑term employee benefits
Post‑employment benefits
Long‑term benefits
Share‑based payments
2020
$
549,110
29,380
–
6,394
584,884
Note 23. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Elderton Pty Limited, the
auditor of the company, its network firms and unrelated firms:
Audit services
Audit or review of the financial statements
Other services
Independent Accountants Report
Audit of COSOL Australia Pty Ltd’s prior year financial statements for the initial public offering
2020
$
30,000
8,800
44,990
83,790
48
Notes to the Financial Statements continued
Note 24. Related party transactions
Parent entity
Cosol Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 27.
Key management personnel
Disclosures relating to key management personnel are set out in note 22 and the remuneration report included
in the directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
• Mr Pestell, a non‑executive Director, is Managing Director and part owner of, and has significant influence over,
MPH Lawyers, the consolidated entity’s Australian legal adviser. MPH Lawyers is not a material services supplier
to the consolidated entity and the consolidated entity is not a material client of MPH Lawyers. During the financial
year, the consolidated entity paid a total of $241,874 in legal fees in connection with the IPO and in the provision
of other legal services. These transactions occurred within a normal customer‑supplier relationship and on terms
and conditions no more favourable than those available to other parties on an arms‑length basis.
Payment for goods and services
2020
$
241,874
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Trade payables to MPH Lawyers
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
2020
$
3,850
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Notes to the Financial Statements continued
Note 25. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income/(loss)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share based payment reserve
Retained profits/(loss)
Total equity
Contingent liabilities
2020
$
(363,784)
(363,784)
2020
$
3,499,678
24,221,137
4,344,967
6,586,282
17,987,987
10,652
(363,784)
17,634,855
The parent entity had no contingent liabilities as at 30 June 2020.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed
in note 1, except for the following:
•
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
50
Notes to the Financial Statements continued
Note 26. Business combinations
On 15 January 2020, COSOL Limited acquired 100% of the ordinary shares of COSOL Australia Pty Limited for the
total consideration of $ 20,513,125. The amount is settled by COSOL Limited through issuance of shares amounting
to $ 4.5 million, cash consideration amounting to $ 9 million and assumed earn out consideration $6.5 million plus
working capital adjustment of $513,125.
The acquisition resulted in goodwill of $18,209,183 to be recognised in consolidated financial statement. The
acquired business contributed revenues of $11.68 million and profit after tax of $ 1.87 million to the consolidated
entity for the period from 16 January 2020 to 30 June 2020. Since COSOL Australia Pty Limited has history of
profitable operation therefore no impairment is expected to arise on goodwill recognised in the consolidated
financial statement.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Deferred tax asset
Prepayments and other receivables
Property, plant and equipment
Right of use assets
Deposits
Trade and other payables
Income tax
Provisions
Lease liability – current
Lease liability – non current
Accrued and other liabilities
Net assets acquired
Goodwill
Acquisition‑date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition‑date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: issuance of ordinary shares
Less: deferred consideration
Net cash used
Fair value
$
165,332
3,462,191
149,050
108,500
75,289
498,808
61,440
(302,772)
(248,973)
(349,532)
(101,532)
(370,109)
(843,750)
2,303,942
18,209,183
20,513,125
20,513,125
(165,332)
(4,500,00)
(6,500,00)
9,347,793
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Notes to the Financial Statements continued
Note 27. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly‑owned
subsidiaries in accordance with the accounting policy described in note 1:
Name
Principal place of business/
Country of incorporation
COSOL Australia Pty Limited
Australia
2020
%
100.00%
Note 28. Events after the reporting period
The impact of the Coronavirus (COVID‑19) pandemic is ongoing and while it has been financially positive for the
consolidated entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative,
after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the
Australian Government and other countries, such as maintaining social distancing requirements, quarantine,
travel restrictions and any economic stimulus that may be provided.
On 10 August 2020 COSOL issued 1,525,000 unquoted options to employees of the consolidated entity under
an employee incentive scheme.
The consolidated entity has secured $6,500,000 in funding from Bankwest. The funding is compromised of a term
debt facility of $3,000,000 and multi option facility for $3,250,000 and corporate credit cards for $250,000.
Note 29. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the period
Adjustments for:
Depreciation and amortisation
Share‑based payments
Change in operating assets and liabilities:
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in prepayments and other receivables
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provision for income tax
Increase in other provisions
Increase in other operating liabilities
Net cash from operating activities
Note 30. Earnings per share
Earnings per share for profit from continuing operations
Profit after income tax
Profit after income tax attributable to the owners of COSOL Limited
Basic earnings per share
2020
$
1,506,412
94,434
10,652
(559,223)
(80,766)
1,154,762
(42,572)
124,204
553,998
2,923,433
1,506,412
1,506,412
2.09
Weighted average number of ordinary shares used in calculating basic earnings per share
72,073,171
52
Notes to the Financial Statements continued
Note 31. Share‑based payments
On 24 April 2020, an offer to participate in the COSOL Limited employee option plan was offered to Mr McGowan.
The key items are summarised below.
Scott McGowan – unquoted options
Tranche 1
Tranche 2
Tranche 3
Grant Date
Expiry Date
Share Price at Grant Date
Exercise Price
Vesting Conditions
Number Granted
Total Fair Value
Remuneration Expense – 2020
Remuneration Expense – 2019
24 April 2020
24 April 2020
24 April 2020
15 October 2021
15 October 2022
15 October 2023
$0.30
$0.3625
See below
1,200,000
$20,264
$2,478
–
$0.30
$0.415
$0.30
$0.415
See below
See below
900,000
$28,812
$2,247
–
900,000
$25,500
$1,396
–
The key terms, including performance conditions, of the options granted to Mr McGowan are detailed below.
• Vesting:
Tranche 1: 1,2000,000 vest on 21/8/2021 (FY21), exercisable from 1/9/2021
Tranche 2: 900,000 vest on 21/82022 (FY22), exercisable from 1/9/2022
Tranche 3: 900,000 vest on 21/8/2023 (FY23), exercisable from 1/9/2023
Any options which do not vest will automatically lapse.
• Performance Milestones:
– 20% of each tranche based on total shareholder return indexed against the ASX Small Industrials Index
(50% vest if TSR equals the Index, and an additional 4% vest for each 1% by which TSR exceeds the Index)
– 40% each of each tranche based on achieving strategic initiatives as defined by the board (including
non‑financial measures) (4% vest for each percentile achieved above the 75th percentile)
– 40% each of each tranche based on achieving budgeted EBIT and ROC for COSOL Australia Pty Ltd
(4% vest for each percentile achieved above the 75th percentile)
• Claw‑back:
The Board reserves the right to ‘claw‑back’ vested options in the event that material errors in satisfaction
of performance milestones are discovered.
The performance milestones applicable to the LTI options granted to KMP during the financial year were
chosen because they create an appropriate link between the KMP’s remuneration and the performance of the
consolidated entity, and deliver on an objective of encouraging continued and sustainable growth in the
consolidated entity’s business, financial and share price performance.
In respect of TSR, the ASX Small Industrials Index, as an external factor for determining satisfaction of a
performance milestone, was chosen as it is an index containing a number of peer companies in the IT sector
and companies of a size and financial performance that the consolidated entity is striving to achieve.
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Directors’ Declaration
1. In the opinion of the Directors of COSOL Limited:
(a) the financial statements and notes that are set out on pages 25 to 53 are in accordance with
the Corporations Act 2001, including:
(i) giving a true and fair view of the COSOL Limited’s financial position as at 30 June 2020 and
of its performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that COSOL Limited will be able to pay its debts as and when
they become due and payable.
2. The Directors draw attention to Note 1 to the financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from
those persons performing a chief executive function and a chief financial officer function for the financial year
ended 30 June 2020.
Signed in accordance with a resolution of the Board of Directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
Geoff Lewis
Chairman
25 August 2020
54
Independent Auditor’s Report
to the shareholders of COSOL Limited
AUDIT PTY LTD
Independent Auditor's Report to the members of COSOL Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of COSOL Limited (“the Company”) and its subsidiaries (“the Group”), which comprises
the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the
period ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial performance for the
period then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described as in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional
Accountants (the code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors
of the Group, 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.
T 08 6555 9500 E info@eldertongroup.com
F 08 6555 9555 W www.eldertongroup.com P PO Box 983 West Perth WA 6872
A Level 2, 267 St Georges Terrace, Perth WA 6000
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Independent Auditor’s Report continued
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter
described below to be key audit matters to be communicated in our report.
Revenue recognition
Refer to Total Revenue ($11,668,928), Note 3 (Revenue) to the financial report
Key Audit Matter
How our audit addressed the matter
Revenue relating to consulting and other related
services is a key audit matter due to significant
audit effort and judgement we have applied in
assessing
recognition and
measurement of revenue.
the Group’s
This was driven by the multiple revenue types
with different recognition criteria across different
products and services, increasing the possibility
identifying
of
performance
incorrectly
recognising revenue using AASB 15 Revenue
from Contracts with Customers (‘AASB 15’).
inappropriately
and
the Group
obligations
Our audit work included, but was not restricted to, the following:
• We completed a walkthrough test of the Group’s revenue
system and assessed related controls.
• We selected a systematic sample of revenue using different
sampling methods, and vouched each item selected to
invoices and other supporting documentation.
• We reviewed the major agreements with the customers to
understand the key terms and conditions. We clarified
elements of our understanding of the contracts through
inquiries with the Group management.
• We selected a systematic sample of
the revenue
recognised near to period end and subsequent to period
end and vouched each selected item to related invoices
and other supporting documents to ensure proper cut-off is
applied.
• We assessed the adequacy of the Group’s revenue
disclosures using our understanding obtained during the
testing against the requirements of AASB 15.
Business Combination
Refer to Note 26 (Business combinations) to the financial report
Key Audit Matter
How our audit addressed the matter
Business combination during the period is a key
audit matter due to the:
• Significant audit effort and judgement we
have applied in assessing the Group’s
recognition and measurement of investment
in subsidiary and goodwill; and
• The degree of estimation
involved
in
measurement of fair values of the net assets
of subsidiary as at the date of acquisition
and also due
to complex calculations
involved as at that date as per AASB 3
Business Combinations.
Our audit work included, but was not restricted to, the following:
• We have reviewed the share purchase agreement in order
to the understand the terms and conditions of the business
combination along with the consideration paid or to be paid.
• We reviewed the accounting treatment as at acquisition and
ensured the investment in subsidiary and related goodwill
is correctly calculated and recorded in the books.
• We selected on systematic basis the samples of revenue
and expenses as at acquisition date and tested the samples
to related customer’s invoices and other supporting
documents to ensure proper cut off has been applied in
calculating the net assets as at acquisition date.
• We have verified assets and liabilities of subsidiary at the
at acquisition date and ensured that these are accounted
accurately for calculation of net assets.
• We assessed the compliance and adequacy of the
disclosure in the financial report as per requirements of
AASB 3.
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Other Information
The directors are responsible for the other information. The other information obtained at the date of this auditor's report is
included in the Group’s annual report, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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 on the other information obtained prior to the date of this auditor's report, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of Directors 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 Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine
is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the 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 Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with 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 the financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
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• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the
financial report represents the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of
the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report of the directors’ report for the period ended 30 June 2020. The directors of the
COSOL Limited 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 in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of COSOL Limited for the period ended 30 June 2020 complies with section 300A
of the Corporations Act 2001.
Elderton Audit Pty Ltd
Nicholas Hollens
Managing Director
25 August 2020
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Shareholder and Other Information
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this Annual Report
is set out below. This information is current as at 31 July 2020.
Securities on Issue
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Shares
Options
Number
Holders
Number
Holders
25,561
405,924
598,859
6,138,571
120,331,085
37
154
75
169
79
5,000,000
127,500,000
514
5,000,000
2
2
Each fully paid ordinary share entitles the holder to one vote.
Options do not have any voting rights, and all options on issue were issued under an employee incentive scheme.
There are no shareholders holding less than a marketable parcel of ordinary shares.
A total of 67,500,000 ordinary shares are subject to voluntary escrow until 24 January 2021. There are no securities
on issue subject to ASX imposed escrow.
Substantial Holders
Shareholders which have lodged a substantial holding notice to declare a relevant interest in fully paid ordinary
shares of more than 5% are detailed below.
Holder
COSOL Limited1
Mr Geoffrey James Lewis and Mrs Anne Marie Lewis
Mr Stephen Edward Johnston and Mrs Sarah Johnston
Mr Bradley Ronald Skeggs
Microequities Asset Management Pty Ltd
Shares
67,500,000
24,250,000
24,250,000
8,975,000
8,500,000
%
52.94%
19.02%
19.02%
7.04%
6.67%
1 COSOL technically holds a relevant interest in itself because of the number of fully paid ordinary shares subject to voluntary
escrow exceeds 20% of the ordinary shares on issue.
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Shareholder and Other Information continued
Top 20 Holders
Holder
1
2
3
4
5
6
7
8
9
10
11
12
GEOFF LEWIS & ANNEMARIE LEWIS
STEVEN JOHNSTON & SARAH JOHNSTON
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BRADLEY SKEGGS
GREGORY ROBERT WOOD & JANETTE HELEN WOOD
ZERO NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
SNJ BUSINESS SOLUTIONS PTY LTD
GERALD PETER STRAUTINS
GRANT PESTELL
BRADLEY RONALD SKEGGS & TOM BRADLEY SKEGGS
13 WAIHEKE HOLDINGS PTY LTD
14 MARK DAMIAN COOPER
15
16
17
18
19
20
CASPANA PTY LTD
CITICORP NOMINEES PTY LIMITED
JOHNSTON CO PTY LTD
CHRISTINE SKEGGS
ICE COLD INVESTMENTS PTY LTD
IAN ALEXANDER WOOLSEY & CLAUDIA GONZALEZ
Shares
24,250,000
23,000,000
%
19.02
18.04
8,034,874
6,975,000
6,003,000
5,468,897
5,381,809
5,000,000
4,500,000
3,000,000
2,500,000
2,000,000
2,000,000
1,795,500
1,586,250
1,326,510
1,250,000
1,230,750
1,207,000
1,000,000
6.30
5.47
4.71
4.29
4.22
3.92
3.53
2.35
1.96
1.57
1.57
1.41
1.24
1.04
0.98
0.97
0.95
0.78
The twenty registered shareholders with the largest holdings of ordinary shares together held a total of 107,509,590
shares, comprising 84.32% of the fully paid ordinary shares on issue.
Other
There is no current on‑market buy‑back.
There are no issues of securities which have been approved for the purposes of item 7 section 611 of the
Corporations Act 2001.
No securities were purchased on‑market for the purposes of an employee incentive scheme during the reporting period.
Also see information contained in the Corporate Directory.
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Corporate Directory
Directors
Auditors
Geoffrey Lewis – Non‑Executive Chairman
Elderton Audit Pty Ltd
Stephen Johnston – Non‑Executive Director
Grant Pestell – Non‑Executive Director
Gerald Strautins – Non‑Executive Director
Company Secretary
Ben Secrett – Company Secretary
Key Management
Scott McGowan – Chief Executive Officer,
COSOL Australia Pty Ltd
Registered Office
C/– Murcia Pestell Hillard Lawyers
Suite 183, Level 6, Equus Complex
580 Hay Street
Perth WA 6000
Principal Place of Business
COSOL House
Level 3, 201 Leichhardt Street
Spring Hill QLD 4000
Telephone: +61 7 3129 3341
Email: info@COSOL.com.au
Website
www.COSOL.com.au
Level 2, 267 St George’s Terrace
Perth WA 6000
Solicitors*
Murcia Pestell Hillard Lawyers
Suite 183, Level 6, Equus Complex
580 Hay Street
Perth WA 6000
Share Registry*
Link Market Services Limited
QV1 Building
Level 12, 250 St George’s Terrace
Perth WA 6000
Post: Locked Bag A14,
Sydney South NSW 1235
Telephone: +61 1300 554 474
Facsimile: +61 2 9287 0303
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
Stock Exchange Listing
Australian Securities Exchange – ASX: COS
www.asx.com.au
Incorporation
Incorporated in Australia as a public company
limited by shares
ACN: 635 371 363
ABN: 66 635 371 363
* These entities are included for information
purposes only, and neither have been involved
in the preparation of this Annual Report.
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