18 August 2021
Appendix 4E
Summary Financial Report
Results for announcement to the market
For the financial year ended 30 June 2021
Consolidated Group
Year ended
30 June
2021
Year ended
30 June
2020
Variance to prior year
$’000
$’000
$’000
%
Revenues from ordinary activities
48,570
23,857
24,713
104%
Profit/(loss) after tax from ordinary
activities attributable to members
(12,497)
(18,236)
5,739
Net profit/(loss) attributable to members
(12,497)
(18,236)
5,739
31%
31%
Net tangible assets/(liabilities) per security
(cents)
1.7
2.5
The net tangibles asset backing per security of 1.7 cents presented above is inclusive of right-of-use assets and lease liabilities. The net tangible
asset per security, as at 30 June 2021, would reduce to 1.4 cents if right-of use assets were excluded.
Dividends and distributions
The company has not declared, and does not propose to pay, any dividends for year ended 30 June 2021.
Details of any dividend or distribution reinvestment plans in operation: N/A
Other
Revenues for the prior year ending 30 June 2020 include only 4 months of the EMS Bruel & Kjaer Holdings which was acquired on 28 February
2020.
Additional Appendix 4E disclosure requirements and commentary on significant features of the operating performance, results of segments,
business combination, trends in performance, foreign entities and other factors affecting the results for the period are contained in the 2021
Annual Report, including the Chairman’s Letter and CEO Report.
This document should be read in conjunction with the 2021 Annual Report, including Chairman’s Letter and CEO Report, and any public an-
nouncements made in the period by Envirosuite Limited in accordance with the continuous disclosure requirements of the Corporations Act 2001
(Cth) and the ASX Listing Rules.
This report is based on consolidated financial statements which have been audited by PKF Brisbane Audit.
1
Envirosuite LimitedSuite 1, Level 10, 157 Walker StNorth Sydney NSW 2060(ASX: EVS) ACN: 122 919 948www.envirosuite.comPhone: (02) 8484 5819 2021
Annual
Report
Harness the power of
environmental intelligence
for a sustainable future.
WHAT’S INSIDE
At a glance
Chairman’s Letter
CEO Report
Our Products & Technology
Our Strategy
Our Growth
Our Operations
Our People
Financial Statements
3
4
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 Key Metrics
$46.5m
Annual Recurring Revenue1
+ 8.1% YOY
373
Client sites
+ 13.4% YOY
$48.6m
Statutory revenue
+ 104% YOY2
42.4%
Gross profit %
+ 36.8% YOY
$(4.5m)
Adjusted EBITDA (loss)
+ 56% YOY
TOTAL SITES
89
329
340
373
Dec
2019
Jun
2020
Dec
2020
Jun
2021
GROSS PROFIT %
32.0%
25.6%
44.0%
40.6%
Envirosuite is a global leader in
environmental intelligence and is a
trusted partner to the world’s leading
industry operators in Aviation, Mining
& Industrial, Waste & Wastewater
and Water.
Envirosuite provides industry with Software as
with industry expertise to help businesses
a Service (SaaS) and Solution as a Service in
unlock value beyond compliance, allowing them
managing and mitigating their environmental
to engage with communities and to make real-
impacts on communities in relation to noise,
time decisions to minimise costs and optimise
vibration, odour, dust, air quality and water
operations.
quality.
Envirosuite’s proprietary software combines
intelligence, Envirosuite helps industries grow
leading-edge science and innovative technology
sustainably and communities to thrive.
By harnessing the power of environmental
H1FY20
H2FY20
H1FY21
H2FY21
WHAT IS ENVIRONMENTAL INTELLIGENCE?
ADJUSTED EBITDA POSITIVE IN Q4
FY21
Q1
-$2.3m
FY21
Q2
FY21
Q3
FY21
Q4
$43k
+ $2.3m
We take
environmental
input such as:
and harness
the power of:
so our customers
can receive:
Flight tracking
Machine learning
Noise
Water
Weather
Dust & Air Quality
Vibration
Decades of
experience
Proven data
algorithm
Scientific
excellence
Predictive
modelling
Automated
compliance
analysis
Real-time smart
alerting
Trusted quality
insights
to make informed
decisions that
enable:
Increased
production
Tangible cost
savings
Optimised
operations
Social license
to operate
5
1 Annual Recurring Revenue represents the monthly recurring revenue at the reporting date that the company expects to receive from customers based on sales orders received net of any churn.
2 Prior year includes only 4 months of revenue from the EMS Bruel & Kjaer business which was acquired on 28 February 2020
Envirosuite Annual Report 2021
6
Chairman’s Letter
Dear Fellow Shareholders,
At the outset, I would like to personally thank
all our employees. The impact globally brought
This is central for Envirosuite; a technology
platform that seeks to serve the productive
interests of all stakeholders.
about by the COVID-19 pandemic has been
This is Envirosuite’s time. We are in the sweet
relentless and our people have been tireless in
spot of the most critical and mainstream themes
their efforts in making sure our customers
in industry, government, community and capital
come first.
markets: Climate Change, Environmental Social
Our platform is utilised by many of the largest
value. He brings vast international technology
international brand names in each of our chosen
experience, knowledge and contacts in our key
industry sectors that now includes the world’s
geographic markets and is quickly developing
most recognised aeronautics technology leader
productive relationships with our commercial and
– NASA. Envirosuite joins a consortium to support
investor stakeholders.
NASA’s X-59 quiet supersonic flight community
response program.
I have never been more excited to be part of
Envirosuite. The historical macro tailwinds of
Governance (ESG) and digital transformation.
Going forward there is a determined commitment
environmental management being at the forefront
David Johnstone
Chairman
This month the Intergovernmental Panel on
Climate Change (IPCC) startled the world with
Envirosuite moves into the new financial
the accelerated warnings on the impacts of
year with a funded strategic plan to grow its
climate change and the UN has labelled it a ‘code
red for humanity’, saying that immediate actions
global business and it continues to expand its
technology platform that has launched into the
need to be taken to avert climate catastrophies.
water space to complement the strong position
We then saw public reactions around the world
that it already holds in air and noise.
targeting the perceived insufficient actions of
governments and industry.
During the latter months of the second half
year 2021, we achieved adjusted EBITDA
We see here another catalyst in the shift in
positivity. This was a key milestone for the
the global psyche towards acknowledging the
company demonstrating a backdrop of
increasingly unavoidable need for practical action
business sustainability. While acknowledging
by industry and government with intensifying
this milestone we are conscious that we will
by the Board and CEO to ensure that we keep
are with us once again, as the global challenges
the market well informed of the key value points
due to the COVID-19 pandemic of the last year
in the business including across our platform,
are abating. We are already seeing that climate
commercial relationships, industry sectors and
geographies.
change will resume its priority place with renewed
intensity that at the practical level, speaks
very directly to the adoption of Envirosuite’s
While the last twelve months have seen a great
deal of transformational progress across all
market offerings.
key parts of the business, the Board has heard
We have shown that we can execute on strategic
and acknowledges that much of this has been
M&A and we have set strong organic growth
challenging for our shareholders to follow and
targets with each new contract adding to our
appreciate based on the nature and frequency
compound growth story. We are achieving a
information is released by the Company.
critical mass commercially and operationally that
pressures descending from all sides of
be prioritising strategic investment in platform
We will be releasing through both the ASX
community, regulators, investors and customers.
development and market offerings, new sectors
platform and our online channels as appropriate
An awareness is setting in for government,
industry and community that climate change
and accelerating in key geographies to sustain
and I encourage all interested investors to
our first-mover advantage.
subscribe and follow our progress on many fronts.
issues must be practically addressed on the
Our annualised recurring revenues (ARR) are now
I take this opportunity to recognise the tenure
frontline. A critical element of this is that each
$46.5m, which is more than 8x from where they
and achievements of Peter White who has led
industry participant must do their part to sustain
were just 2 years ago when we reported $5.6m
the early formation and growth of the company
their business and brand.
The community also has a vested interest in the
actions that industry take both as a neighbour,
though also as a stakeholder on other levels such
as a customer, and a shareholder of industry. It
is the latter that provides a common objective
of ARR. As a testament to industry recognition
of our mature product solutions, we have seen
customers entering into longer term contracts
with Envirosuite with terms of 3 to 7 years
for many years, and I sincerely thank him for
all his efforts as well as working with the Board
on the recruitment and orderly transition to his
successor Jason Cooper. Jason is exceptionally
with the portfolio currently having an average
placed to take the company through its next
contractual life of 2.25 years.
levels of growth and in the few short months to
date has already started to put his positive stamp
on the business.
in ensuring that ‘productivity’, expressed in the
Our EVS Water solutions that have been
broadest sense, is maximised for all parties. This
commercialised in the last twelve months are
is increasingly allowing us to approach the higher
levels of corporate connections in our target
sectors. On this point I note the recent addition
of one of the world’s most senior resources
executives, Alberto Calderon, joining as a key
sector advisor on an all-incentive basis.
Thank you to all our shareholders for your
continued support that we look forward to
progressively rewarding as the company pursues
its strategic growth agenda.
includes the productivity of business, the natural
already seeing strong market acceptance and we
Jason is highly energised and determined to drive
environment and of the community.
are confident this will convert into new sales.
a strong and sustained uplifts in the Company’s
David Johnstone
Chairman
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Envirosuite Annual Report 2021Envirosuite Annual Report 2021 CEO Report
I would like to start by thanking our employees for
levels in an increasingly important, complex
their amazing efforts over the last year, working
and regulated environment. We have proven
its transformation to set up for a strong period of
growth and leverage its scale, with a foundation
through incredibly challenging conditions brought
that we have a stable business model as well
that we believe is now the global leader in
about by COVID-19. Across all of our offices
as the emerging importance of environmental
providing technology solutions for EI.
Gross profit % continues to improve with gross profit % of
42.4% compared with 31.0% in prior year
Jason Cooper
CEO
globally, our people have constantly adapted to
intelligence (EI) that has underpinned our growth
the changing situation and remained focused on
in all sectors. In these rapidly evolving times,
providing the best possible service to all of our
Envirosuite remained resilient and continued to
stakeholders.
grow.
In these extraordinary circumstances we
Since I moved into the role of CEO, we have
witnessed many global transformational trends
followed two simple principles to drive success
evolving, with the Environmental, Social and
Governance (ESG) agenda continuing to gain
- focus and discipline. I have been impressed
with how our people, also known as Environauts,
significant momentum, against a backdrop of
around the world have united and supported
accelerating focus on digital transformation
the vision of the company – to help industries
across all industries.
grow sustainably and communities thrive - and
It is testament to the value and solutions that
executed on the strategy.
we have created for our customers by enabling
This year we achieved some remarkable records
clients to operate their assets at optimum
that I look forward to exceeding in FY22. I am
Total revenue of $48.6m for FY21 of which 83% was recurring,
more than doubling the revenue reported in the prior year
$48.6m
$23.8m
proud of the exceptional results of our EVS Omnis
SaaS product that achieved 24% growth as well
as our EVS Aviation business that achieved a
2% growth in ARR in what was an incredibly
challenging environment for our customers
around the world.
I am particularly proud of some of the key
financial metrics that we were able to achieve this
year. We achieved an Adjusted EBITDA positive
result in Q4 in line with our guidance. Ending the
year at $46.5M ARR was a significant milestone
that shows that we have a strong revenue base
that we are determined to grow. We continue
to focus on improving the gross margin, which
increased to 42.4% in FY21, up from 31.0% in the
prior year.
The teams have evolved through the year and
we have added some incredible talent to our
organisation which has helped achieve these
results and positioned us well to grow in the
2020
2021
future.
The company has now completed its integration
of EMS Bruel & Kjaer (EMS) and has accelerated
ENVIRONMENTAL INTELLIGENCE
During this transition year, the leadership team
has evaluated what long term success looks
like for our business and set in place a 3-year
strategy that will ensure we deliver long term
value for our customers, our staff, and our
shareholders. As we accelerate our evolution as a
company, we are well positioned to leverage the
growing importance of environmental intelligence
and the appropriate solutions to support our
customers and communities.
Part of our evolution is the emergence of our
new brand. This renewed brand enables us to
42.4%
2021
We would like to thank all of our shareholders for
their continuing support.
more accurately reflect the relationships our
Our strategy is simple. To leverage the enormous
customers have with their boundaries and the
opportunity that is in front of us, we need three
people in those surroundings, while positioning
things: 1) we must continue to drive growth,
us as the leading technology provider in solving
2) we must accelerate our investment into
environmental issues through our EI offering. Our
product, and 3) we must continue to focus on
new brand provides a platform to communicate
our customer. The Board and the Envirosuite
who we are and what do more clearly than ever
leadership are driven to act now with a sense of
before. It captures the 3-dimensional geographic
urgency, with an unrelenting focus on our target
space that our customers operate within and our
segments and a discipline in our business to
direction as a company driving forward.
ensure we meet our high targets.
This reflects into our purpose, vision, and
mission. By having a strong mission statement,
we are all united behind one common theme that
ensures as a company we are moving as one. It is
with this focus we can continue to build a globally
significant technology company, driven by the
success of all our stakeholders.
In June, we completed a successful capital raise
where we raised $14M to support the investment
into the development team, the acceleration of
our EVS Water product suite and to support the
growth agenda that we see in North America.
GROWTH
Growth has remained a key focus in FY21, and we
have been able to leverage our global footprint
to accelerate our rate of customer acquisition.
We have focused on refining our target customer
segments and where we can drive the most value
in a highly scalable and repeatable manner. We
have ensured that our unique value proposition
drives customer value that will translate to a
strong revenue and profit growth trajectory for
many years to come.
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CEO report
This year we have upgraded to a more focused
a rate of almost 2% last year, in what was
cycles to identify, prioritise and implement these
sales and marketing strategy which is about
an extraordinarily challenging time for our
technology improvements.
maximising our reach in the region, through a
Airport customers. We were able to support
more targeted customer acquisition journey.
our customers through this period re-signing
We already have some of the most significant
contracts, launching new product features and
customers in our target sectors, however, we
focusing on innovative value creation.
We successfully completed the acquisition
of technology delivering innovative artificial
intelligence (AI) and deterministic modelling
approaches to the water sector. This technology
still have opportunity to maximise our enterprise
relationships and expand our installation base.
This year we launched a formal Land, Expand and
Scale program which is focused on creating a
higher level of customer penetration and usage.
Experience has shown us that when we win with
a customer, we can continue providing more
growth in the coming years.
While the launch of our EVS Water product suite
combined with the commercialisation of IP
did not have meaningful impact to our growth in
licenced from The University of Queensland’s
FY21 it importantly laid the foundation for a truly
Advanced Water Management Centre focussed
unique solution for our current and future water
on management of corrosion and odour within
customers. This new product suite has enormous
potential and is well positioned for considerable
Our growth agenda in the future is centred on
adding new customers to our software platform
to drive value creation and provide solutions for
sewer networks. These products comprise our
newest product segment: EVS Water. Early
wins for Envirosuite in this space included the
selection of EVS Water by Singapore PUB, the
country’s national water agency, in their Global
Innovation Challenge.
value to them year on year. Our EVS Omnis
platform is now used at over 200 sites around
the world and helps some of the most significant
Mining, Waste and Wastewater companies
drive their operations with the assistance of our
environmental solutions. Last year we added
38 sites to the platform which reflected a 22%
increase in platform expansion. This increase in
customer acquisition reflected in a 24% increase
in ARR to achieve a $14.6M ARR at year end.
Two significant market innovation
achievements this year was the successful
consortium engagements with NASA for
the research into the impact of supersonic
travel on communities, as well as the
selection for the Urban Air Mobility (UAM)
ecosystem in Paris.
We were incredibly pleased with the results
of our EVS Aviation business, growing at
our customers. We are focused on collecting and
In Aviation we launched several new products:
analysing EI data across multiple segments to
drive our success and innovation engine.
PRODUCT
As we transitioned to a Product-led, Sales
Focused organisation we introduced a new
structure and added new leadership roles into
the Product group. This has resulted in a closer
relationship with our product and development
teams, and this is now driving a clear strategic
roadmap and ensuring we hit specific product
related milestones that achieve better client
outcomes.
Innovation is a core part of our DNA, and we are
driving innovative thinking at all levels of our
organisation. Additionally, we have developed
a closer link into our customer and ideation
development. We also have in place a number
of arrangements with world class universities
around world. It is through these engagements
that we are listening to our market opportunities,
the macros trends and geographic investment
ANOMS X and Carbon Emissions, the latter
helping Airports to assess and communicate
about Aviation carbon footprint. Furthermore,
we invested into Amazon Web Services (AWS) to
drive functionality improvement, strengthen our
security posture, reduce complexity, and improve
time to deploy and support.
Two significant market innovation achievements
this year were the successful consortium
engagements with NASA for the research into
the impact of supersonic travel on communities,
as well as the selection for the Urban Air Mobility
(UAM) ecosystem in Paris that will research
the environmental impact of air mobility on
local communities. It’s these achievements that
demonstrate the breadth of the EVS Aviation
solutions beyond Airports and into innovation
projects to measure the impact on communities
and inform the future of travel.
In EVS Omnis we have been working intensely to
include Noise and Vibration technology from
the EMS acquisition into our EI platform. Our
scientific models were further enhanced, and we
have improved the accuracy of our predictive,
risk-based forecasts while efforts have been
made to upgrade our modelling technology
ultimately increasing our modelling performance.
As a technology leader, we have continued to
drive the importance of product differentiation
and innovation. Following the capital raise
completed in June, we have increased the
amount of investment into product development
to ensure that we are able to continue to deliver
a strong road map that supports our customers
current and future needs. Our teams around
the world are actively engaged in building our
products that align with our vision and mission –
thus continuing to create value and solutions for
our customers and communities that we serve.
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Envirosuite Annual Report 2021Envirosuite Annual Report 2021 CEO report
global process and support function that actively
intelligence will be one of the most significant
We will continue to work with strategic
reduced the number of tickets raised and
areas of value creation for our customers,
partners that will support our focus segments,
reduced the time to respond to customer needs.
helping to keep their business running, many
geographic coverage, accelerate deployment
We also introduced a customer success program
that was focused on ensuring our customers
were maximising the software platforms
which are crucial for society to function, such
and complement our technology to ensure we
as Airports, Mines, Industrial facilities, and
are able to accelerate the adoption of EI for
Wastewater Treatment plants.
industries and communities around the world.
capabilities in delivering value and solutions. This
As a company we are prepared for the continued
We are optimistic about the prospects for FY22
resulted in an increase in usage of the products
challenges and volatility by creating greater
due to the strong tailwinds in the environmental
and the level of satisfaction and benefits that we
flexibility and adaptability in our business. Our
intelligence market, our world leading
were able to create for our customers.
key priority has been our commitment to the
technology position, the breadth of our global
health and safety of our people and customers
coverage and our proven ability to rapidly evolve
through the pandemic, and we will continue this
with market needs.
PEOPLE
It is a huge privilege in being chosen to lead
Envirosuite. Envirosuite has an immensely
talented and diverse group of people around
the world. We will continue to invest in our
focus.
OUTLOOK
Our focus in 2022 will be centred on value
people to further increase our capability as we
creation for our customers. Providing actionable
accelerate our growth in the coming years. This
insights from our world leading EI platforms for
year we have made some critical hires in our
our existing customers and our new customers
Product and Sales and Marketing teams. These
that we will be engaging with this year. As we
appointments are already providing a significant
build out the capabilities of the sales team
positive influence on our business. We have
around the world, we will remain focused on
been delighted with the quality of the people we
customer acquisition and rapidly building our
are now attracting to join Envirosuite and look
capability in our environmental platforms. The
forward to the benefits of their energy, creativity,
pace of EI innovation and use case acceleration
and passions.
will further support our technological leadership.
CUSTOMER
In FY21 we focused heavily on our customer
engagement and retention. Knowing that many
of our airport customers were experiencing
significant challenges, we turned this into our
strategic focus and supported them through the
use of our technology to further support Airport
A key addition to the Envirosuite team this year
Our product and technology differentiation are
optimisation.
was the appointment of Alberto Calderon as my
at the core of our future growth strategy. The
Our churn rate of approximately 2% for the
year across EVS Aviation and EVS Omnis was
remarkably low, demonstrating that customers
who select Envirosuite typically stay with our
solutions. This low churn was a fundamental
pillar in our focus on customer engagement and
retention strategy.
By consolidating the regions from five into three:
APAC, EMEA and Americas, we attained cost
reductions, and introduced a support structure
that allowed our customers to engage with a
regional business model in the right time zone,
the right language and with intimate knowledge
of the customers assets and their unique
requirements. This was supported through a
advisor. Alberto has been a significant support
growing capability, scalability and security of
for me as I became the CEO this year and has
worked tirelessly with the broader team around
our platform will position us for further value
creation within our rapidly growing customer
the importance of extracting value for the
base. This will improve our speed, efficiency, and
customer and being able to communicate this. His
quality of our customer deployments. We will
wealth of knowledge within the Mining sector has
continue the excellent work that we have started
assisted us with rapidly developing our Mining
offering and we are already starting to see the
in FY22 in transforming the operating model and
aggressively improving the gross margin to our
benefits from increased customer engagement,
target of above 50% as we move into FY23.
a pipeline that has grown and ideation into the
future of the product.
We are highly encouraged by the early market
interest in EVS Water products and are expecting
There is a significant opportunity for Envirosuite,
to deliver reference sales in each product area
an Australian technology company, to set the
global standard for environmental intelligence
and continue to add world class innovative
products for our customer base. Environmental
and geographical region, deliver a meaningful
contribution to new ARR, and consolidating a
new important area of growth for Envirosuite.
We look forward to the coming year and the
challenges and opportunities that it presents.
This will be another year of focus and
discipline where we are delivering significant
growth through new customer acquisition
and expanding existing customers use of our
platform on current and additional sites.
On behalf of the entire senior leadership team,
I would like to take this opportunity to thank
everyone in the Envirosuite team for their
ongoing support and commitment. I would like
to thank the Board and executive team for their
continued support, stewardship, and governance
over the past year.
Lastly, I would like to thank our valued customers
and shareholders for being a key part of the
success and growth of this amazing business.
Signature
Jason Cooper
CEO
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Envirosuite Annual Report 2021Envirosuite Annual Report 2021
A global leader in
Environmental Intelligence
Over the last 12 months we have created one of
be Product-led by driving extensive collaboration
the implementation of platform user analytics
to help industries to unlock value beyond
the most exciting environmental intelligence (EI)
around our customers, their problems, and our
to inform strategies based on user behavior
compliance and optimise their operations.
technology portfolios in the world. The products
opportunities to innovate and address them most
and trends, and regular product strategy and
offer us a unique capability to deliver our mission
effectively today, tomorrow and into the future.
roadmap feedback sessions bringing customer
statement to our customers – we harness the
power of environmental intelligence, so industries
grow sustainably, and communities thrive. Our
product investment and focus continue to grow –
as we look to ensure we create products that are
going to be unique, drive innovation and deliver
long-term value for our customers.
The Product-led strategy provides a platform
for significantly improved focus on delivering
valuable, science-based and market-leading
products. This strategy enables newfound
stories together.
After significant multi-year development,
leveraging a combination of our decades of
industry leadership and modern design thinking,
Our customer problems continue to evolve at
we launched our new EVS Aviation platform
an accelerating pace; our Aviation customers
ANOMS X - our comprehensive next generation
are burdened by compliance while experiencing
web-based platform. ANOMS X will be the
collaboration between Product Strategy, Product
expert staff loss and cost pressures, our
consolidated platform for our aviation products
Marketing, Marketing, Sales, and Technology to
Industrial customers are being held to a
and seeks to be the go-to portal for all our
efficiently bring products to market. Stronger
higher than ever standard of environmental
Aviation customers for noise, airfield operations,
As we shifted the momentum to become a
patterns across the organisation are already
consciousness and operational pressures,
community engagement and modules like Carbon
Product-led organisation, we have organised our
emerging: new opportunities for collaboration
respect for the communities neighboring
Emissions and Airport Metrics.
critical teams in Engineering, Research, DevOps,
between our Product Managers and our
and Product Management under a united product
strategy group. We accelerated the transition to
customers, earlier and more in-depth inclusion
of Product Marketing in the ideation phase,
operations continues to make headlines around
the world. These pressures are driving the
urgency for environmental intelligence solutions
evs
omnis
evs
water
Market: Aviation
evs
aviation
163 Sites
evs
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engage
evs
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Market: Mining & Industrial,
Waste & Wastewater
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207 Sites
evs
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Market: Water
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engage
Launched November 2020
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evs
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engage
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evs
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Envirosuite Annual Report 2021Envirosuite Annual Report 2021
A global leader in Environmental
Intelligence Cont.
EVS Technology
Product-led growth
Focus on product as the main vehicle to
acquire, activate, and retain customers
Power of Machine Learning
Embedded in our software to provide
customers actionable insights
Technology creates value
Turning data into EI to help reduce
risk, optimise operations and create a
sustainable future
Science built-in
Highly complex scientific modelling
across our technology
Results-driven workflows
Operational processes are embedded
and automated enabling operational
efficiencies
Innovation through expertise
In-house domain experts help drive
innovation with real world EI experience
ANOMS X seeks to deliver insights and analytics
In EVS Omnis, our science-based forecast
in an efficient and accessible way never
accuracy grew with considerable progress
experienced before in the sector. Designed to be
made to correctly model the impacts of cloud
powerful enough for expert users to inform their
cover and cloud heights, improving confidence
stakeholders through to casual users to derive
in decisions that can be made from our forecast
insights. This coincides with the changing of our
information.
user base off the back of COVID-19, which sees a
reduced number of experts retained at airports.
ANOMS X is already in use by over 30 customers
including Heathrow airport. ANOMS X will be the
future of Aviation environmental intelligence.
We have partnered with the Cranfield
Universities Digital Aviation Research &
We continue to make ambitious bets on new
technology across Envirosuite to evolve our
products. FY21 saw the initiation of one of
the biggest digital transformation initiatives
seen in our company’s history - our Aviation
cloud transformation project. An initiative
which will see the migration of a vast majority
Technology Centre (DARTeC) in their Unmanned
of our customers from individually managed
Aerial Vehicle (UAV, e.g., Drones) noise study,
informing future regulatory considerations for
the future of unmanned flight.
In our Industrial space we have combined the
EVS and EMS products into one suite named
EVS Omnis. Overlapping technology solutions
were consolidated to realise cost savings. To
support and improve the growing adoption of the
platform globally, new platform scaling solutions
were developed. Work on the new EVS Omnis
platform is ongoing and seeks to leverage the
unique capabilities of EVS, both technically
and scientifically across noise, vibration, air
quality, meteorology, hyper-localised modelling
and predictive capabilities. EVS Omnis delivers
an operational overlay informing industries
and communities alike to derive operational
efficiencies and respect the surrounding
communities and environment.
In combination with the EVS Omnis platform, we
launched the next generation eNose Ambient
odour and air quality IoT device. The eNose
Ambient allows customers to quickly identify
and respond to potential emission concerns
immediately. The low-cost nature of the device
also allows the facility to deploy a network
of devices to work with their surrounding
community quickly and effectively to pin-point
areas of concern.
systems to a consolidated set of centrally
managed Amazon Web Services (AWS) clusters.
This transformation will put our customers
on world-leading infrastructure, allowing
EVS to rapidly deploy new capabilities to all
customers, improve product quality and do so
with much more scalable tools. This will provide
Our product strategy and delivery capability
improvements to not only to our customers, but
has never been more experienced, structured,
also quality and efficiency across numerous
aligned, focused, or funded to deliver
EVS departments including engineering
exceptional products. As we continue to
and operations, enabling gross margin
entrench advanced Product-Led techniques
improvements. Furthermore, it provides exciting
across our teams, 2022 will see greater
future technology opportunities leveraging the
understanding our of customers, their value
vast array of contemporary tools AWS provide,
drivers – and allow us to translate them into even
from artificial intelligence (AI), machine learning
more exciting products and solutions.
(ML), deployment tools, database technologies,
security tools and other platform tools.
As we look forward to 2022, we will continue
to build a world-leading, outcome driven, and
With the acquisition of AqMB digital twin
customer focused product organisation. Our
technology and licensing of SeweX, we created
main strategies for FY22 are:
the EVS Water portfolio. The portfolio targets the
dynamic global water processing and treatment
market. The market is faced with higher
regulation, increasing chemical and power
costs, whilst being significantly asset restrained,
resulting in the need for expensive capital
projects to meet the aforementioned issues. The
initial focus of EVS Water has been to extend
the product foundations, working closely with
the first customers to model implementation
1. Grow our R&D investment across Research,
Product, and Engineering to deliver deeper
science-based innovation to win in our
chosen market sectors.
2.
Implement best practices to intimately
understand our customers and users
challenges to directly inform our product
plans.
processes and system scalability, whilst actively
3. Drive a culture of innovation and scientific
growing the repeatability of the combined
deterministic and ML led solvers.
excellence across our business to grow our
capabilities and value for our customers.
17
18
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 evs
omnis
evs
water
evs
aviation
evs
IoT
evs
engage
VALUE PROPOSITION
Key Stats
163 client sites
EVS Aviation products make up the world’s
leading comprehensive airport environmental
management solution. Deep analytics on top
~$194m SAM (ARR)
$31.8m ARR
1.4% Churn
evs
omnis
evs
omnis
evs
water
evs
water
evs
aviation
VALUE PROPOSITION
Key Stats
EVS Omnis is a cloud-based platform designed
to be used by specialists and non-specialists
alike to easily interpret complex environmental
207 client sites
~$1.2b SAM (ARR)
$14.6m ARR
4.2% Churn
evs
engage
of rich data sets deliver insights to reduce
environmental impact and demonstrate
evs
aviation
operational efficiency.
compliance to key stakeholders, while improving
evs
IoT
PROGRESS
ANOMS X platform launched to deliver aviation
insights and analytics in an efficient and
accessible way never experienced before in
the sector
Carbon Emissions launched on ANOMS X
platform
Cloud transformation initiative underway
Partnership with Cranfield Universities Digital
Aviation Research & Technology Centre
(DARTeC) in their Unmanned Aerial Vehicle
evs
IoT
$195,092 ARPS
$5,798k CLTV
evs
IoT
evs
Marquee
engage
Customers
Port Authority of New York and New Jersey
Los Angeles World Airports
Aena
Airservices
Heathrow Airport
Amsterdam Airport Schipol
evs
engage
$70,531 ARPS
$716k CLTV
evs
water
Anglo American
Marquee
Customers
evs
aviation
Thames Water
Fortescue Metals Group
Vale
Veolia
BHP
research project
data. The platform provides easily understood
information to help operators address
environmental challenges and build trust with
stakeholders and surrounding communities.
evs
omnis
PROGRESS
Improved forecasting accuracy with new
computation of cloud cover and height
impacts
System and operational scalability to support
accelerated platform adoption
Next generation eNose Ambient IoT device
launched and over 100 devices shipped,
allowing customers to deploy a network of
sensors to respond rapidly and accurately to
potential emission concerns
Technology consolidation for EMS and EVS to
realise cost savings
New EVS Omnis platform under development
seeking to leverage the unique capabilities
of the EVS and EMS organisations, both
technically and scientifically across noise,
vibration, air quality, meteorology, hyper-
localised modelling, and predictive capabilities
19
Envirosuite Annual Report 2021
evs
omnis
evs
water
evs
aviation
evs
IoT
evs
engage
VALUE PROPOSITION
Key Stats
Launched November 2020
EVS Water is a cloud-based engineering solution
which interprets complex process model
information, providing predictive and real-time
2.8b SAM (ARR)
$0.1m ARR
$21,800 ARPS
evs
omnis
advice to design new infrastructure, avoid
water quality incidents, reduce operating costs
and achieve regulatory targets with pinpoint
evs
water
accuracy.
Customers
& Innovation
Partners
GHD
evs
aviation
WaterWorks Engineers
Universidad Metropolitana
evs
IoT
evs
engage
Queensland University of Technology
UNSW Sydney
PROGRESS
Acquired AqMB and created “EVS Water”
portfolio
Developed product foundations including
security, automated deployment tools,
monitoring platform, user account
management
Recruited additional scientific modelling
expertise
Developed functional SeweX solver system
Modeled implementation processes and
system scalability with initial customers
Grew the repeatability of the combined
scientific deterministic and Machine Learning
led solvers
21
22
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 Our aim is to make a
positive contribution with
everything that we do.
Creating a sustainable future is one of today’s
greatest challenges. As a leading environmental
intelligence company, we want to positively
contribute to society and industry, and be part of
the solution.
We believe EI will have the greatest impact when
everyone can benefit from it.
OUR PURPOSE
OUR VISION
OUR MISSION
We believe
environmental
We harness
the power of
We are driven to
create world-leading,
intelligence is the
environmental
science-based
key to improving the
intelligence, so
wellbeing of people
industries grow
technology to help
our customers act
and the planet.
sustainably, and
faster, perform
communities thrive.
better, and realise
their full potential
with environmental
intelligence.
OUR VALUES
OUR DIFFERENCE
We know that to achieve our long-term goals,
We are the only environmental intelligence
we need to build a culture of high performance.
technology provider that solves complex
One where all Environauts are committed
to our purpose, work collaboratively as a
environmental challenges across air, water, noise
and vibration with our suite of software products
team, while focusing on innovation to deliver
and IoT.
value to our customers. To drive unity and
action, we refreshed our company values
from accountability, innovation and customer
centricity. As Environauts, we rise to the
challenge because:
We’re driven by purpose
We move as one
We believe customers are the reason
We earn the trust
We challenge the now
OUR BUSINESS ADVANTAGES
First mover – a global first mover in
environmental intelligence software and IoT
Commitment to customers – we have long-
lasting relationships with sector-leading
customers
Global presence – established operations
and high performing teams across key growth
markets
Digital transformation – deeply embedded into
customer operations and their digital ecosystems
Importance of problem statement – growing
focus on environmental impact due to ESG, SDG
and social licence to operate
23
24
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 OUR GROWTH DRIVERS
We recognise that there is
a growing interdependence
between society and the natural
environment. We believe that
building technology that supports
ESG criteria and advances the
SDG agenda serves the interest
of all stakeholders, including our
shareholders.
GLOBAL TRENDS SUPPORT OUR
BUSINESS FOCUS
Global trends such as urbanisation, digitalisation
and the growing environmental concerns benefit
Envirosuite’s choice of segments and support
the focus on products and solutions for better
sustainability.
Over the last decade, there has been an
accelerated focus towards solving global
environmental challenges.
Environmental risks are peaking
3 out of the top 5 global risks are led
by extreme weather (1)
Coexistence is the new norm
By 2025, there will be 33 mega cities
and 21 mega regions globally (2)
Global water infrastructure is
critical
USD $1.9 Trillion required to address
shortages by 2030 (3)
Air pollution kills ~7 million per
year
9 out of 10 people breathe air that
contains high levels of pollutants (4)
1 World Economic Forum, The Global Risks Report 2021
2 Frost & Sullivan 2020 report, Environmental Intelligence:
Driving growth in a changing climate
3 World Economic Forum, The Global Risks Report 2019
4 World Health Organisation, Air Pollution
5 Deloitte, Value Beyond Compliance in Australia
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (ESG)
Envirosuite operates in market segments
where there is potential to achieve favourable
and leading positions due to the accelerating
pressures for industries to align to ESG. As the
intersection of society and industry grows,
so does the importance of environmental
adaptation.
ESG is becoming business imperative and
placing greater expectation on organisations
and leaders to reframe their role in society. This
shift is creating urgency for industries to adopt
technologies such as environmental intelligence –
turning it from a nice to have to a must have.
ENVIRONMENTAL
This includes energy consumption, waste discharge, resources,
carbon emissions, climate change and a company’s affect on the
environment and its surroundings.
SOCIAL
Addresses the relationships a company has and the reputation
it fosters with people, institutions and the communities where it
does business, plus employee relations, diversity and inclusion.
GOVERNANCE
The internal system of practices, controls, and procedures
a company adopts in order to govern itself, make effective
decisions, comply with the law, and meet the needs of external
stakeholders.
SUSTAINABLE DEVELOPMENT
GOALS (SDG)
The SDGs are designed to be a
those doing business who want to
“blueprint to achieve a better and
minimise emissions and impact.
more sustainable future for all”.
SDGs are helping to set the global
This is central to Envirosuite’s
agenda and commitment to the
purpose. We are focused on
environment, people and the planet.
delivering practical solutions to
Envirosuite supports the following
improve the environment and for
SDGs:
SOCIAL LICENCE TO OPERATE
(SLO)
According to Deloitte5, this is the
number one concern for Mining
profitability. SLO is focused on
community acceptance being
operators for the second year in
addressed alongside commercial
a row. Social licence to operate
considerations. SLO is not only
refers to the ongoing acceptance
impacting Mines but also Airports
and approval of a facility by the
and other facilities that create
neighbouring community and other
an impact on the community it
stakeholders that can affect its
operates within.
operations and ultimately their
25
26
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 OUR OPERATIONS
In 2020, the global
pandemic presented us with
unprecedented challenges. It
was a year of change, for the
world and Envirosuite.
Americas
A$15.2m ARR
150 Sites
EMEA
A$14.9m ARR
118 Sites
Asia Pacific
A$16.4m ARR
105 Sites
These changes presented us with the opportunity
OUR ORGANISATION
GEOGRAPHIC CONSOLIDATION
to redefine our strategy which was underpinned
by two words - focus and discipline. Changes
were made across the company to create
sustainable growth, improve performance and
build scalable practices for profitability.
Focus and discipline were crucial factors behind
From Australia to the world. We combine global resources with local
our earnings resilience in FY21. Implementing
a clear direction with a reorganisation at the
executive level to support our strategic pillars
of growth, product, customer and continuous
improvement. Driving meaningful change is core
to our leadership. Our team brings experience
from global organisations and management
practices, agility and scale from building billion-
dollar tech companies and a desire to grow
Envirosuite into the number one Environmental
Intelligence company.
presence to provide greater value to our customers through a more
consistent approach to sales and operations. In FY21, we refined our regional
approach from five to three regions: Americas, APAC and EMEA.. This has
resulted in reduced structural costs and increased efficiency. Continuous
efforts to improve geographic balance, optimise the portfolio, improve
structures and strive for excellence will help yield consistent and positive
results.
LAND, EXPAND AND SCALE
An example of this is our relationship with Teck Resources (Mining).
Q4, FY20
FY21
FY22
Won 1st site in
2nd site added and
Exploring global
Canada
currently proposing
opportunities
additional sites in
Canada
To develop robust profitability, our sustainable
long term growth strategy is to Land, Expand
and Scale. Envirosuite is focused on developing
long term customer relationships, growing from
single site to multi-site, expanding our value with
customers, and ultimately shifting to enterprise
agreements.
This strategy will reduce our cost of
acquisition and focus the team on creating and
communicating long term value to our customers.
In addition to this customer-oriented business
strategy, our long-standing commitment to
putting the customer first has ensured that we
have remarkably low churn rates and are well
placed to capitalise on upsell and cross-sell
opportunities across all sectors.
27
28
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 Reimagining the brand and
employee experience to see us
through our next phase of growth.
OUR PEOPLE
Our global team is made up of talented and
passionate people. Our team are driven by
our collective purpose to bring environmental
intelligence and Envirosuite to the world – to help
people and the planet.
Supporting our people through COVID-19
With the ongoing COVID-19 uncertainties and rolling
lock downs across the globe, we initiated programs
to engage our teams, to keep them connected and
support their mental health and wellbeing during
these challenging times. We will continue to focus
on our Environauts wellbeing and listen to their
Our people are our greatest asset and have shown
needs to enhance the support we provide.
remarkable resilience, passion and determination
over the past year. COVID-19 prompted us to reflect
on our culture and the opportunity to adapt to the
changing environment.
We have seen our people at their best - committed
and purposeful.
Strength in our talent
We strive to retain our best talent through internal
promotions and training opportunities, while
attracting new talent and promoting diversity
through initiatives such as our pilot internship
program. We believe that a diverse pool of talents
creates added value for our business.
Cultivating a strong culture
The past year taught us the value of a strong,
renewed and engaged culture.
We focused on building an environment where
everyone can feel safe, valued, included and where
every person can offer their unique contribution - no
matter where they are in the world.
In our first employee engagement survey, we gave
every Environaut an opportunity to be heard and
to help us build a better employee experience. As
a result of the survey, we introduced a variety of
activities and programs to improve engagement
with our teams including fireside chats, social
communication channels and virtual events.
OUR BRAND
Over the years Envirosuite has evolved from
serving Mining, Industrial, Waste and Wastewater,
to the inclusion of Aviation and now Water.
With a strong focus on the future, our purpose
and our customers, it was time for us to take the
natural step forward with our brand to reflect
the company that we’ve become and to set the
foundations for the next chapter for Envirosuite.
Our new logo and brand were inspired by our
customers. It reflects the intersection between
industry and the boundaries in which they
operate, and the forward movement of change.
The fresh colour palette evokes the natural
elements of the different environments.
Over time you will see more of the brand come
to life with our new corporate website launching
in late 2021. In the meantime, our brand story is
best told on our micro site at
www.envirosuite.com/brand
29
30
Envirosuite Annual Report 2021Envirosuite Annual Report 2021 DIRECTORS’ REPORT
Your directors present their report, together with the financial
statements of the consolidated entity (referred to hereafter as the
Group) consisting of Envirosuite Limited (ABN: 42 122 919 948)
(referred to hereafter as the Company) and its controlled entities,
for the financial year ended 30 June 2021.
Directors
The following persons were directors of the Company at any time during, or since the end of, the financial year up to the
date of this report:
David Johnstone (Non-executive Chairman)
Peter White (Non-executive Director)
Hugh Robertson (Non-executive Director)
Adam Gallagher (Director and Company Secretary) – Resigned 31 July 2020
Zhigang Zhang (Non-executive Director) – Resigned 27 November 2020
Sue Klose (Non-executive Director) - Appointed 1 December 2020
Peter White was CEO and Executive Director of the Group through to 1 March 2021 and Managing Director from 12
October to 1 March 2021 at which time he retired as CEO and Managing Director and became a Non-executive Director.
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Particulars of each director’s experience and qualifications are set out later in this report.
Principal activities and significant changes in nature of activities
During the year the principal activities of the Group consisted of the development and sale of environmental intelligence
technology solutions. On 17 August 2020, the Group completed its acquisition of AqMB Pty Ltd, a water modelling R&D
technology software company that assists in the design stage of wastewater treatment plants and allows the plant to
optimise chemicals and electricity usage while maintaining compliance with strict local regulations around water quality
and discharge.
In November 2020, EVS Water was launched, which combines the AqMB technology acquired with EVS’s exclusive license
over SeweX algorithms to monitor and prolong the operational life of water collection and distribution infrastructure. The
offering aims to significantly improve the economics and environmental outcomes for water asset operators. In December
2020, EVS Water was selected to the final 2 grant nominees of 104 applicants in Singapore Public Utility Board’s (PUB)
Global Innovation Challenge, in the category ‘Seamless Coagulation Control’. As a global leader in the space, Singapore
PUB is focused on the constant pursuit of innovation to transform into a Smart Utility of the Future. The Directors strongly
believe that EVS Water presents the Group with an additional path to material revenue growth through a pure Software as
a Solution offering that provides a meaningful return on investment to its customers.
In May 2021, EVS announced that it was consolidating its products into three product suites, being EVS Aviation, EVS
Omnis and EVS Water. EVS also announced that it was consolidating its regional management structure from 5 regions
into 3 regions being Asia Pacific, Americas, and EMEA. China was consolidated into Asia Pacific while North and South
America were merged to form the Americas region. As part of this restructure, management have reduced the level
of investment and industry focus in China to ensure that the business focuses on customers and contracts that utilise
Envirosuite solutions through its recurring revenue model.
In June 2021, EVS raised $14,025k of equity ($13,096k net of transaction costs) through an institutional placement and
Accelerated Non-renounceable Entitlement Offer with the funds broadly to be used to accelerate growth in EVS Water and
the North American market, as well as to fund transformation initiatives and strengthen the balance sheet.
31
Envirosuite Annual Report 2021 Movement $
Movement %
Operating results and review of operations for the year
Operating Results
A$000
Recurring revenue
Non-recurring revenue
Other revenue
Total revenue
Cost of revenue
Gross profit
Operating expenses1
Other income/(expense)
Operating deficit
Net Loss after tax
FY21
40,391
8,154
25
48,570
(27,980)
20,590
(31,955)
(377)
(11,742)
(12,497)
FY20
17,915
5,418
524
23,857
(16,463)
7,394
(25,616)
(155)
(18,377)
(18,236)
22,476
2,736
(499)
24,713
(11,517)
13,196
(6,339)
(222)
6,635
5,739
Adjusted EBITDA
(4,492)
(10,220)2
5,728
Other Key Metrics3
# Sites
ARR $
Churn %
Recurring revenue %
Gross profit %
373
46,472
2.2%
83.2%
42.4%
329
42,990
2.1%
75.1%
31.0%
44
3,482
0.1%
8.1%
11.4%
125%
50%
(95%)
104%
(70%)
179%
25%
(143%)
36%
32%
56%
13.4%
8.1%
3.6%
10.7%
36.8%
1 Includes transaction and integration costs connected with the EMS acquisition of $0.6m (FY20: $2.3m) and share-based payments of $0.9m (FY20: $3.2m)
2 Amount has been restated for revised definition of Adjusted EBITDA to include R&D capitalisation. See page 35 for further discussion and reconciliation to net loss after tax.
3 Key Metrics provided as at 30 June 2021 and 2020 other than Recurring revenue % and gross profit % which are for the year ending 30 June 2021 and 2020.
Key Highlights
• Total revenue of $48.6m for FY21 of which 83% was recurring, more than doubling the revenue reported in the prior year
• Gross margin continues to improve with gross margin of 42.4% compared with 31.0% in prior year
• Operating expenses increased 25% over prior year but represented 66% of revenue compared with 107% in prior year
• Adjusted EBITDA loss of $4.5m with the Group generating a positive Adjusted EBITDA in the 4th quarter,
The following pages provide further commentary around the result and includes Annual Recurring Revenue (ARR), and
Revenue on a Constant Currency Basis. ARR is the recurring revenue of the Group based on existing contracts, including
new sales orders where services may not yet be turned on. Revenue on a Constant Currency Basis is provided in this
report to facilitate comparability of Envirosuite’s revenue between reporting periods excluding the impacts of foreign
currency fluctuations and to demonstrate the impact that fluctuations in exchange rates have had on the reported revenue
of the Group. Revenue on a Constant Currency Basis has been calculated by translating the results for the year ended
30 June 2021 at the average effective exchange rates for the year ending 30 June 2020. Details on the calculation of
Adjusted EBITDA are provided below. ARR and Revenue on a Constant Currency Basis, as well as Adjusted EBITDA, are
non-GAAP measures that are key financial measures used by management to assess the performance of the underlying
business.
32
Envirosuite Annual Report 2021 Directors’ report
Revenue
A$000
Recurring revenue
Non-recurring revenue
Other revenue
Total Operating revenue
Revenue on a Constant
Currency Basis
FY21
40,391
8,154
25
48,570
FY20
17,915
5,418
524
23,857
Movement $
Movement %
22,476
2,736
(499)
24,713
125%
50%
(95%)
104%
51,033
23,857
27,176
114%
Revenue was materially higher in FY21 than the prior year, which was primarily attributable to FY21 being the first
reporting period with a full 12 months of the EMS Bruel & Kjaer (EMS) business which was acquired in February
2020. While materially up as a result of the acquisition, revenue was negatively impacted by the appreciating AUD on
Envirosuite’s foreign currency income as well as discounts offered to some of its airport customers who were impacted by
COVID-19 restrictions on air travel.
It is estimated that the appreciation of the AUD had a negative impact of $1.9m on the recurring revenue reported and
$0.6m on non-recurring revenue. This is shown by presenting Revenue on a Constant Currency Basis, which is the
revenue for the period ending 30 June 2021 translated using the average exchange rate for the financial year ending 30
June 2020.
Revenue by Region
A$000
FY21
FY20
Movement $
Movement %
Recurring revenue
Asia Pacific
Americas
EMEA
Total Recurring revenue
Non-Recurring revenue
Asia Pacific
Americas
EMEA
Total Non-Recurring revenue
Total Trading revenue
Asia Pacific
Americas
EMEA
Total Trading revenue
Other revenue
Total operating revenue
14,980
12,565
12,846
40,391
2,593
3,588
1,973
8,154
17,573
16,152
14,820
48,545
25
48,570
6,470
5,904
5,541
17,915
3,725
1,261
432
5,418
10,195
7,165
5,973
23,333
524
23,857
8,510
6,661
7,305
22,476
(1,132)
2,327
1,541
2,736
7,378
8,987
8,847
25,212
(499)
24,713
132%
113%
132%
126%
(30%)
185%
356%
51%
72%
125%
148%
108%
(95%)
104%
Regional revenue was up across all three regions with the exception of non-recurring revenue in Asia Pacific which was
down 30% on FY20 as the prior year result included $3.4m of large one-off projects in China that were not repeated in
FY21. The projects in China were primarily sold at single digit margins and, therefore, the impact on the operating result
was immaterial.
33
Envirosuite Annual Report 2021 EVS Aviation
The EVS Aviation product suite includes the market-leading ANOMS environmental monitoring software that allows
Envirosuite’s Airport customers to monitor and manage compliance with noise regulations, engage with community
members and provide deep insights into carbon emissions and tarmac management. ANOMS is the #1 noise monitoring
software used in the Airport sector4.
A$000
FY21
FY20
Movement $
Movement %
EVS Aviation
Recurring revenue
Non-Recurring revenue
Total Trading revenue
Other Key Metrics
# Sites
ARR $
Churn %
Recurring revenue %
29,050
3,017
32,067
163
31,770
1.4%
90.5%
10,723
759
11,482
160
31,202
1.5%
93.4%
18,327
2,258
20,585
3
568
0.2%
(2.8%)
171%
298%
179%
1.9%
1.8%
n/a
-3%
The Aviation business continued to be impacted by COVID restrictions on travel as well as the appreciating AUD. Despite
these factors, the business was still able to grow with ARR increasing 1.8% over the prior year.
EVS Omnis
The EVS Omnis product family includes the market-leading Envirosuite environmental monitoring software that provides
customers with real-time actionable insights around managing the environmental impacts on communities in relation to
dust, odour, air quality, water quality as well as noise. The Omnis solution works across a wide range of industries with
the Group currently focusing on the Waste & Wastewater and Mining industries while also supporting customers in the
Construction industry as well as Ports and cities around the world.
A$000
EVS Omnis
Recurring revenue
Non-Recurring revenue
Total Trading revenue
Other Key Metrics
# Sites
ARR $
Churn %
Recurring revenue %
FY21
FY20
Movement $
Movement %
11,298
5,134
16,432
207
14,637
4.2%
68.8%
7,191
4,660
11,851
169
11,788
3.8%
60.7%
4,107
474
4,581
38
2,848
0.4%
8.1%
57.1%
10.2%
38.7%
22.5%
24.2%
n/a
13.3%
While the increase in revenue in the prior year is partially attributed to FY21 being the first reporting period with 12
months of the EMS business, EVS Omnis was able to grow ARR by 24.2% during FY21 and increase recurring revenue as a
percentage of total revenue from 60.7% to 68.8%.
4 Based on market share of airports with passenger volumes greater than 2m per year
34
Envirosuite Annual Report 2021 Directors’ report
EVS Water
The EVS Water product family includes the pure SaaS Plant Designer and Plant Optimiser products. Plant Designer is sold
on a per user basis primarily to engineering services businesses that operate in the Water sector, while Plant Optimiser is
sold on a per-site basis to water utilities or operators of water and wastewater treatment plants. Plant Designer has been
estimated to reduce the time to design a water treatment facility by up to 70% while desktop studies have shown that
Plant Optimiser can reduce operating costs (primarily electricity and chemical usage) by 20-30%.
A$000
EVS Water
Recurring revenue
Non-Recurring revenue
Total Trading revenue
Other Key Metrics
# Sites
ARR $
Churn %
FY21
FY20
Movement $
Movement %
43
3
46
3
65
0%
-
-
-
-
-
-
-
n/a
n/a
n/a
3
65
n/a
n/a
n/a
n/a
n/a
n/a
-
n/a
n/a
Recurring revenue %
93.4%
EVS Water was launched in November 2020 and has so far signed up 3 customers. As part of the recent capital raise
completed in June 2021, the Group is looking to accelerate its sales focus on EVS Water.
Earnings before interest, tax, depreciation and amortisation (EBITDA)
EBITDA is calculated by adding back depreciation, amortisation and interest from net loss before tax. Adjusted EBITDA
also adds back share-based compensation expense, foreign currency gains and losses, and transaction and integration
costs connected with acquisitions which are seen as non-recurring. Adjusted EBITDA excludes the impacts of adopting
AASB 16 as the application of the standard results in operating expenses being excluded from EBITDA. In the FY20
Annual Report, Adjusted EBITDA also added back capitalised internally developed software costs. This adjustment has
been removed in the current reporting period to align Envirosuite’s reporting of EBITDA and Adjusted EBITDA to industry
standard. Prior year comparatives have been restated to align with the current year presentation. EBITDA and Adjusted
EBITDA are non-GAAP measures that are key financial measures used by management to assess the performance of the
underlying business.
A$000
Net loss after tax
Add back: Tax expense / (benefit)
Add back: Net finance expense / (income)
Add back: Depreciation and amortisation
EBITDA
Less: AASB 16 Depreciation & interest
Add back: Share-based payments
Add back: Foreign currency losses/(gains)
Add back: Transaction and integration costs
FY21
FY20
Movement $
(12,497)
(18,236)
468
287
6,996
(4,746)
(1,578)
946
293
593
(230)
89
3,241
(15,136)
(656)
3,154
155
2,263
5,739
698
198
3,755
10,390
(922)
(2,208)
138
(1,670)
5,728
Adjusted EBITDA
(4,492)
(10,220)
Adjusted EBITDA materially improved in FY21 partially as a result of revenue growth, gross margin improvement, and the
impacts of cost reductions that were implemented during the year.
35
Envirosuite Annual Report 2021 k
$
A
1,000
-
(1,000)
(2,000)
(3,000)
(4,000)
(5,000)
(6,000)
(7,000)
(8,000)
Adjusted EBITDA
The Group continued to reduce the Adjusted EBITDA loss in
the 2nd half of FY21 to a loss of less than $1m and was able to
deliver a positive Adjusted EBITDA result in the 4th quarter.
Envirosuite raised capital in June 2021 in order to accelerate
its product development, growth in EVS Water and in the North
American market, as well as fund transformation projects.
Off the back of this capital raise, the Group expects to invest
into product development as well as sales and marketing to
assist with this accelerated growth of product and revenue
FY20 H1
FY20 H2
FY21 H1
FY21 H2
during FY22.
Financial Position
The net tangible assets of the consolidated Group increased from $15.8m at 30 June 2020 to $17.5m as at 30 June 2021.
A$000
Cash and cash equivalents
Current assets
Current liabilities
Net current assets
Total tangible assets
Net tangible assets
Net cash from / (used in) operating activities
FY21
17,640
33,665
(16,082)
17,583
40,034
17,491
(8,510)
FY20
24,385
39,412
(23,791)
15,621
46,881
15,796
(10,699)
Movement $
(6,745)
(5,747)
7,709
1,962
(6,847)
1,695
2,189
In June 2021, the Company raised $14m of additional equity ($13m net of transaction costs). However, overall cash and
cash equivalents decreased by $6.7m as a result of the following:
•
$8.5m of cash used in operating activities (FY20: $10.7m), which included $3.5m of cash payments made to
redundant staff as part of the integration of the EMS business;
•
$3.1m (FY20: $2.4m) cash used in acquisition of intangible assets which includes $2.4m (FY20: $1.9m) of capitalised
•
•
•
product development costs;
$0.7m cash used in acquisition of property, plant and equipment;
$1.5m on repayment of lease liabilities; and
$5.6m cash used in acquisition of businesses (including the final $4.3m paid for EMS Bruel & Kjaer Holdings and
$1.2m paid for AqMB)
Total cash used in operating activities when adding capitalised
development costs (included in cash flows from investing activities)
and repayment of lease liabilities (included in cash flows from
financing activities), and excluding integration cash flows connected
with the acquisition of EMS Bruel & Kjaer (“Adjusted Operating Cash
Flow”) was an outflow $8,946k (FY20: $12,538k). The Directors note
that the Adjusted Operating Cash Flow for 2H FY21 was an outflow of
$3,882k compared with an outflow of $5,064k in H1 FY21 and $7,697k
k
$
A
in H2 FY20, showing the improving operating position of the Group.
Noting the additional cash raised during the financial period, the lack
of debt on the balance sheet other than lease liabilities, combined
with the continuing improvement of the Adjusted EBITDA and Adjusted
Operating Cash Flow, the Directors are of the view that the Group will
continue to be able to pay its debts as and when they fall due and have
prepared the financial report on a going concern basis.
1,000
-
(1,000)
(2,000)
(3,000)
(4,000)
(5,000)
(6,000)
(7,000)
(8,000)
(9,000)
Adjusted Operating Cash Flow
FY20 H1
FY20 H2
FY21 H1
FY21 H2
36
Envirosuite Annual Report 2021 Directors’ report
Significant changes in the state of affairs
On 17 August 2020, the group completed the acquisition of AqMB Pty Ltd, a water modelling R&D technology software
company. The acquisition is part of the Group’s strategy to expand into the market for Environmental Intelligence within
the Water industry with the technology from AqMB, along with Envirosuite’s exclusive license over SeweX algorithms,
used in Envirosuite’s EVS Water product which was launched in November 2020.
Dividends paid or recommended
No dividends were paid by the Company to members during the financial year. No dividends were recommended or
declared for payment, but not paid, to members during the financial year.
Events after the reporting period
No other matters or circumstances other than those disclosed in this report have arisen since the end of the financial year
that significantly affected, or could significantly affect, the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial years.
Likely developments and expected results of operations
There are no likely developments in the operations of the Group that were not finalised at the date of this report.
Additional comments on expected results of certain operations of the Group are included in this annual report under the
Chairman’s Letter and CEO’s Report.
Environmental regulation
The Group is not subject to any significant environmental regulation under a law of the Commonwealth or of a State or
Territory, in which the group operates.
Information on Directors
David Johnstone, Chairman (Appointed 10 February 2014)
David is an experienced executive and chairman who has been actively involved in business for more than 35 years,
successfully starting, owning and operating a vast range of businesses. David has experience gained nationally and
internationally in tech start-ups, selling, licensing, merging and acquiring businesses, having also arranged funding
for management buy outs along with the successful placement/ listing of companies on the London Stock Exchange
and the Australian Stock Exchange. David is a keen investor, chairman and advisor to various technology companies
in the communications, finance, insurance, risk management and sporting sectors, which are investing and advancing
technology to the forefront of their respective industries. David joined the Board as a non-executive Director in February
2014 and was appointed Chairman in September 2016.
Member of the Audit and Risk Management Committee, Chairman of the Audit and Risk Management Committee (from 1
August 2020), Chairman of the Remuneration and Nomination Committee.
Peter White, Director (Appointed 10 July 2017)
Mr White was the CEO of Envirosuite from April 2012 to May 2016 and returned to be CEO again in July 2017 and was
appointed Managing Director in October 2020. Mr White retired from being CEO and Managing Director in February
2021 and became a Non-executive director of Envirosuite. During his time at Envirosuite, Mr White led the successful
development and transition to a cloud-based SaaS offering of the Envirosuite platform that has become the core part of
the Omnis product family the Company has today. Mr White also led the acquisition of EMS Bruel & Kjaer Holdings and
AqMB and secured the exclusive license to SeweX.
Over the past 32 years, Mr White has held executive and sales management positions in global technology companies
including Hewlett Packard, Motorola, Siemens and Tandem Computers. He has extensive global experience gained
through international business development roles in Asia, Europe and the USA.
Peter has a particular skillset and experience in selling innovative and large, technology deals. This has included individual
deals worth hundreds of millions of dollars, as well as application software deals to several governments, as well as some
of the world’s biggest banks and telecommunication carriers.
37
Envirosuite Annual Report 2021 Hugh Roberston, Director (Appointed 1 November 2018)
Hugh Robertson has over 30 years experience in the financial services sector and equity markets. Hugh is an experienced
company director across a broad range of businesses with a concentration on small cap industrial stocks.
His more recent directorships include AMA Group Limited (ASX:AMA), Centrepoint Alliance Limited (ASX:CAF),TasFoods
Limited (ASX:TFL), Hub24 Limited (ASX:HUB) and is currently on the board of Maggie Beer Holdings Ltd (ASX: MBH).
Committee Member of the Audit and Risk Management Committee (effective 1 August 2020 through 1 December 2020)
Zhigang Zhang, Director (Appointed 6 December 2019 / Resigned 27 November 2020)
Mr Zhang has worked in the water remediation and the environmental protection industry in China and overseas for
over 30 years. Since 2014, Mr Zhang has held the role of General Manager of Beijing BHZQ Environmental Engineering
Technologies Co., Ltd. Prior to his current role, he held Senior Management positions at a number of environmental
protection companies including: Standard Waters Co. Ltd where he was an Executive Director and the CEO; China
Water Holdings Limited (Singapore) where he held the position of Chairman and General Manager; Beijing Herocan
Environmental Engineering Technology Co., Ltd where he was the Chairman and General Manager; and Beijing Bi-Leaf
Environmental Engineering Co., Ltd where he was the Chief Engineer and General Manager.
Adam Gallagher, Director and Company Secretary (Appointed 18 October 2012 / Resigned 31 July 2020)
Adam has strong technology sector knowledge and experience across corporate transactions, sales management, finance
and capital market operations through nearly 20 years of commercial, IT and investment experience. Adam is a strategist
who is known for his corporate problem solving acumen, to both resolve impediments to, and optimise opportunities for,
true shareholder value creation. His particular passion for technology arises from a career interest in the convergence
of applied creative, commercial and scientific efforts that bring about positive change. Adam has worked in corporate
banking, private equity, early stage technologies, stock exchanges, digital media, communications and listed companies.
For the last ten years he has predominantly worked with expansion stage technology businesses both listed and unlisted
as an officeholder, advisor and investor. In addition to his roles with Envirosuite Limited, Adam was also an Executive
Director of Constellation Technologies Limited (ASX:CT1).
Adam holds a Bachelor of Economics, Masters in Commerce, Graduate Diploma in Information Systems and a Graduate
Diploma in Applied Corporate Governance.
Chairman of the Audit and Risk Management Committee (through 31 July 2020), Member of the Audit and Risk
Management Committee (from 1 August 2020 to 31 December 2020), Member of the Remuneration and Nomination
Committee (through 31 December 2020)
Sue Klose, Director (Appointed 1 December 2020)
Sue Klose is an experienced non-executive director and executive, with a diverse background in digital business growth
and operations, corporate development, strategy and marketing. She is currently a non-executive director of Nearmap
(ASX: NEA), a provider of aerial imagery and location intelligence; Pureprofile (ASX: PPL), a digital consumer data and
research firm; Stride, one of Australia’s largest mental health care providers; and Honan Insurance Group, an insurance,
risk and financial solutions provider.
Previously the Head of Digital and Chief Marketing Officer (CMO) of GraysOnline, Ms Klose was responsible for digital
product strategy, brandy strategy and marketing operations. In prior roles in digital and media companies including
12WBT and News Ltd, Ms Klose led strategic planning and development. As Director of Digital Corporate Development
for News Ltd, Ms Klose screened hundreds of potential investments, leading multiple acquisitions, establishing the
CareerOne and Carsguide joint ventures, and held multiple board roles in high-growth digital and SaaS businesses.
Ms Klose has an MBA in Finance, Strategy and Marketing from the JL Kellogg School of Management at Northwestern
University, and a Bachelor of Science in Economics from the Wharton School of the University of Pennsylvania.
Member of the Audit and Risk Management Committee (from 1 December 2020)
38
Envirosuite Annual Report 2021 Directors’ report
Directors equity participation and other relevant interests
As of the date of this report, Directors have relevant interests in ordinary shares, as well as options and performance
rights to subscribe for ordinary shares in Envirosuite Limited, as outlined in the following table. Each option entitles the
holder to subscribe for one ordinary share of Envirosuite Limited subject to the holder paying the exercise price. Each
performance right entitles the holder to receive one ordinary share upon certain vesting conditions being met.
Executive Directors
David Johnstone
Peter White
Hugh Robertson
Sue Klose
Meetings of directors
Ordinary Shares
7,033,106
9,237,681
19,269,933
500,000
Options
5,000,000
5,000,000
5,000,000
2,000,000
The numbers of meetings of the Company’s Board of directors and committees of the Board held during the year ended
30 June 2021, and the numbers of meetings attended by each director were as follows:
2021 Meetings
David Johnstone
Peter White
Hugh Robertson
Zhigang Zhang
Sue Klose
Adam Gallagher
Full Meetings
of Directors
Audit and Risk
Management Committee (*)
Remuneration and
Nomination Committee (*)
A
12
12
11
3
7
2
B
12
12
12
5
7
2
A
4
-
1
-
2
2
B
4
-
2
-
2
2
A
3
-
-
-
-
3
B
3
-
-
-
-
3
A - Number of meetings attended. B - Number of meetings held during the time the director held office or was a member of the committee during the year (number eligible to attend).
* - The committee charters provides for 2 meetings to be held each year per committee. In addition to formal meetings the members meet informally on a regular basis and discuss matters within the
charter. Each committee Chair provides a report to the board at each monthly board meeting.
Shares under option
Unissued ordinary shares of Envirosuite Limited under option at the date of this report are as follows:
Grant date
23-Oct-18
25-Oct-18
25-Nov-19
25-Nov-19
28-Feb-20
28-Feb-20
19-Mar-20
21-Dec-20
29-Apr-21
Total
Expiry date
Exercise price ($)
Number under option
11-May-22
30-Oct-22
5-Dec-21
31-Mar-22
28-Feb-23
28-Feb-23
1-Apr-23
21-Dec-22
29-Apr-25
0.10
0.16
0.40
0.15
0.20
0.25
0.40
0.40
0.20
2,000,000
750,000
22,500,000
26,250,000
75,000,000
20,000,000
1,000,000
2,000,000
10,000,000
159,500,000
In December 2020, the Company issued 2,000,000 options to Ms Sue Klose in connection with her appointment to the
Board of Directors. In April 2021, the Company issued 10,000,000 options to Mr Alberto Calderon in connection with his
appointment as advisor to the CEO of Envirosuite.
39
Envirosuite Annual Report 2021 No option holder has any right under the options to participate in any other share issue of the Company or any other
related entity.
During the financial year, options for 333,333 of shares lapsed without being exercised. An additional 500,000 options
were issued and exercised during the reporting period. No options have lapsed post balance date.
Indemnification and insurance of officers or auditor
During the year, the Group paid insurance premiums for a Directors and Officers Liability Insurance Policy. This policy
covers Directors and Officers of the Group. In accordance with normal commercial practices under the terms of the
insurance contracts, the disclosure of the nature of the liabilities insured against and the amount of the premiums are
prohibited by the policy.
No indemnities have been given or insurance premiums paid, during or since the end of the financial year for the auditor of
the Group.
Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of
the Corporations Act 2001.
Non audit services
No fees were paid or payable to PKF Brisbane Audit, being the auditor the Group, for non-audit and other assurance work
during the year ending 30 June 2021 (2020: $112,724). Amounts paid or payable to PKF and its related practices for non-
audit and other assurance work totaled $4,504 (2020: $198,207).
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 5 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 5 to the financial
statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the
following reasons:
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
•
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, 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 risks and rewards
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 49.
Rounding of amounts
The Company is an entity to which Legislative Instrument 2016/191 applies and accordingly amounts in the financial
statements and directors’ report have been rounded to the nearest thousand dollars, unless otherwise stated.
40
Envirosuite Annual Report 2021 REMUNERATION REPORT
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations
Act 2001.
The report is structured as follows:
A.
B.
C.
D.
E.
F.
G.
A.
Key management personnel covered in this report
Principles used to determine the nature and amount of remuneration and link to performance
Share-based compensation
Details of remuneration
Shareholdings of key management personnel
Loans to key management personnel
Other transactions with key management personnel
Key management personnel covered in this report
The remuneration disclosures in this report cover the following persons who were classified as Key Management
Personnel (KMP) of the Group during the 2021 financial year. KMP (as defined in AASB 124 Related Party Disclosures) are
those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling major
activities of the Group.
Executives
Position
Term
Chief Executive Officer and Managing Director
Retired 28 Feb 2021
Peter White
Jason Cooper
Jason Cooper
Chief Executive Officer
Chief Operating Officer
Matthew Patterson
Chief Financial Officer
Effective 1 Mar 2021
1 Jul 2020 - 28 Feb 2021
Full Year
Adam Gallagher
Company Secretary and Director
Resigned 31 July 2020
Non-Executive Directors
David Johnstone
Independent Chair
Peter White
Non-Executive Director
Hugh Robertson
Non-Executive Director
Zhigang Zhang
Non-Executive Director
Sue Klose
Non-Executive Director
Full Year
Effective 1 March 2021
Full Year
Resigned 27 Nov 2020
Effective 1 Dec 2020
Mr White was Chief Executive Officer and Director of Envirosuite and was appointed as the Managing Director from
October 2020. On 28 February 2021, Mr White retired as Chief Executive Officer and Managing Director but remained on
the Board of Directors, becoming a Non-Executive Director from 1 March 2021. Remuneration disclosures in this report for
Mr White are split between his role as an Executive Director and his role as a Non-Executive Director.
Mr Gallagher resigned from the Board on 31 July 2020 at which point he ceased to be a KMP. He stepped down as
Company Secretary on 31 August 2020 and the Company agreed to retain his services for a monthly fee of $15,000 plus
GST from 1 August to 31 December 2020. From 1 August to 31 December 2020, Mr Gallagher continued to serve on the
Audit and Risk Management Committee and on the Remuneration and Nomination Committee as a non-Board member.
B.
(i)
Principles used to determine the nature and amount of remuneration
Executive pay
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework seeks to align executive reward with achievement of strategic
objectives and the creation of value for shareholders and conforms to market practice for delivery of reward.
41
Envirosuite Annual Report 2021 The Board seeks to ensure that executive reward satisfies the following key criteria for good governance practices:
•
•
•
•
•
competitiveness
shareholder alignment
performance
transparency and simplicity
capital management
The Group has structured an executive remuneration framework that it believes is market competitive and complementary
to the objectives of the organisation.
The executive pay and reward framework generally has three components:
Fixed remuneration
Base Pay
•
Executives are offered a competitive base pay that comprises the fixed component of
pay and rewards.
•
•
There are no guaranteed base pay increases included in any executives’ contracts.
Retirement benefits are delivered under the Australian superannuation legislation at
9.5% of base salary for the financial year ended 30 June 2021, up to the maximum
superannuation contribution base.
•
Base pay is structured as a total remuneration package which may be delivered
as a combination of cash and prescribed non-financial benefits at the executives’
discretion
Performance-based
remuneration
Short-term Incentives
•
STI is provided to Executive KMPs equivalent to 30% of their base pay, where
(STI)
payment is dependent upon satisfaction of certain performance conditions
•
The performance conditions are based on a combination of new ARR contracts
awarded (1/3), Adjusted EBITDA (1/3) and personal targets (1/3).
Long-term incentives
•
Executive KMP are awarded LTIs upon entering into an employment contract with
(LTI)
the Company where vesting conditions are split between remaining employed by the
Company and share price performance. Details of these awards to Executive KMP are
discussed further below.
•
Executive KMP may also be entitled to an LTI of 10% of their base pay after a period of
2 years from their commencement date.
Remuneration and other terms of employment for executive key management personnel are formalised in service or
employee agreements. The agreements provide for the provision of performance related cash bonuses, when eligible. All
service agreements are reviewed annually by the directors.
Overview of FY21 Remuneration
Fixed Remuneration
STI Entitlement
LTI Entitlement
Peter White
Jason Cooper
Matthew Patterson
Adam Gallagher
$300,000
$300,000
$280,000
$90,000
30%
30%
30%
n/a
4,000,000 Performance Rights
4,000,000 Performance Rights
2,000,000 Performance Rights
n/a
42
Envirosuite Annual Report 2021 Remuneration report
Mr Gallagher resigned from the Board effective 31 July 2020 at which point he ceased to be a KMP. The fixed
remuneration provided above represents the annual fee he was entitled to under his contract with the Company as
company secretary.
Mr White received the following Performance Rights as an LTI covering the period 1 July 2020 and expiring 30 June 2023:
•
1,000,000 fully paid ordinary shares, in the event that the Company’s share price as listed on the Australian
Securities Exchange (ASX) reaches $0.50 per share and remains at or above $0.50 per share for a continuous period
of 30 days thereafter;
•
1,000,000 fully paid ordinary shares if the Company’s share price as listed on the ASX reaches $0.75 per share and
remains at or above $0.75 per share for a continuous period of 30 days thereafter;
•
1,000,000 fully paid ordinary shares if the Company’s share price as listed on the ASX reaches $1.00 per share and
remains at or above $1.00 per share for a continuous period of 30 days thereafter;
•
500,000 fully paid ordinary shares upon the Executive remaining in the Company’s employment as at 30 June 2021,
and a further 500,000 fully paid ordinary shares upon the Executive remaining in the Company’s employment as at
30 June 2022.
A termination payment of six months applies in the event of change in control and a notice period of three months applies
on termination. As part of his retirement from the CEO position, Mr White forfeited his right to the LTI noted above and
instead received an entitlement to a cash payment of $100,000. On 1 July 2021, Envirosuite Operations Pty Ltd and
Equilateral Consulting Pty Limited, a company controlled by Mr Peter White, entered into a consulting agreement whereby
Envirosuite agrees to pay Equilateral Consulting Pty Limited a consulting fee of $21,666 per month for a period of 6
months. The contract can be terminated by either party providing 1 months notice.
Matthew Patterson was appointed the Chief Financial Officer (CFO) on 2 June 2020 and Jason Cooper was appointed the
Chief Operating Officer (COO) on 1 July 2020. The CFO and COO were each issued 2,000,000 Performance Rights that
vest and convert to fully paid ordinary shares as follows:
•
1,000,000 fully paid ordinary shares of which 50% vest on the first anniversary of their employment with the
Company and 50% vest on the second anniversary;
•
500,000 fully paid ordinary shares that vest in the event that the Company’s share price as listed on the Australian
Securities Exchange (ASX) reaches $0.25 per share and remains at or above $0.25 per share for a continuous period
of 30 days thereafter; and
•
500,000 fully paid ordinary shares that vest in the event that the Company’s share price as listed on the Australian
Securities Exchange (ASX) reaches $0.40 per share and remains at or above $0.40 per share for a continuous period
of 30 days thereafter.
On 1 March 2021, Mr Cooper and the Company entered into a new agreement as part of his appointment as Chief
Executive Officer of the Group under which Mr Cooper is entitled to the following additional Performance Rights as an LTI
covering the period 1 March 2021 and expiring 28 February 2024:
•
1,000,000 fully paid ordinary shares if the Company’s share price as listed on the ASX reaches $0.75 per share and
remains at or above $0.75 per share for a continuous period of 30 days thereafter;
•
1,000,000 fully paid ordinary shares if the Company’s share price as listed on the ASX reaches $1.00 per share and
remains at or above $1.00 per share for a continuous period of 30 days thereafter;
A termination payment of six months applies in the event of change in control and a notice period of three months applies
on termination.
(ii)
Non-executive directors
On appointment to the Board, all directors enter into a service agreement with the Company in the form of a letter of
appointment. The letter summarises the Board policies and terms, including compensation, relevant at the time of their
appointment to the office of director.
43
Envirosuite Annual Report 2021 Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the
directors. Non-executive directors’ fees and payments are reviewed annually by the Board.
Non-executive director’s fees are determined within an aggregate directors’ fee pool limit. The current pool limit is
$400,000 per annum which is unchanged from the prior year. The following fees apply:
Fees per Annum
Chair
Other Directors
Committee Chair
Committee Member
FY21
$90,000
$60,000
$10,000
nil
FY20
$90,000
$60,000
$10,000
nil
No fees as described above are paid to Directors who hold an employment contract with the Company.
C.
(i)
Share-based compensation
Options and Performance Rights
The Group issues options and Performance Rights to employees to provide long-term incentives for employees to deliver
value to shareholders by aligning interests and conserving cash. The Group also issues options to Directors to align the
personal interests with that of the shareholders.
Each option provides the right to acquire one ordinary share in Envirosuite Limited for a stated exercise price, subject to
the relevant vesting conditions being met. Each Performance Right provides the right to acquire one ordinary share in
Envirosuite Limited subject to the relevant vesting rights being met. Options and Performance Rights carry no voting rights
or entitlements to receive dividends.
Mr Johnstone, Mr White and Mr Robertson each hold options in the Company that were issued in prior financial years
following shareholder approval.
During the 2021 financial year:
•
•
2,000,000 options were issued on 1 December 2020 to Ms Sue Klose with an exercise price of $0.40 per share
2,000,000 performance rights were issued on 1 July 2020 to Mr Jason Cooper with an additional 2,000,000
performance rights granted on 1 March 2021 and subject to shareholder approval.
The options issued to employees in prior financial years were designed to provide long-term incentives for employees to
deliver value to shareholders by aligning interests and conserving cash reserves.
All options granted, once converted to ordinary shares, carry standard dividend and voting rights available to ordinary
shareholders.
Details of options and Performance Rights over ordinary shares in the Company provided as remuneration to each director
of Envirosuite Limited and each of the KMP of the Company and the Group are set out below. When exercisable, each
option is convertible into one ordinary share in Envirosuite Limited. Further information on the options is set out in Note 16
to the financial statements.
44
Envirosuite Annual Report 2021 Remuneration report
Options
Finan-
cial
Year
Balance at
Start of Year
Granted
Exercised
Forfeited /
Other
Balance at
End of Year
Vested and
Exercisable
Unvested
Executive Director
P. White
(retired 28 Feb 2021)
A. Gallagher
2021
5,000,000
-
-
(5,000,000)**
-
-
2020
2,000,000
5,000,000 (2,000,000)
-
5,000,000
5,000,000
2021
7,500,000
-
-
(7,500,000)*
-
-
(resigned 31 July 2020)
2020
4,000,000
7,500,000 (4,000,000)
C. Lander
2021
-
(departed 29 May 2020)
2020
2,000,000
Non-Executive Director
D. Johnstone
2021
5,000,000
-
-
-
-
-
-
2020
4,000,000
5,000,000 (4,000,000)
P. White
(From 1 March 2021)
2021
2020
-
-
H. Robertson
2021
5,000,000
-
-
-
(appointed 1 Nov 2018)
2020
-
5,000,000
Z. Zhang
2021
12,500,000
-
(appointed 6 Dec 2019),
resigned 28 Nov 2020
S.Klose
(appointed 1 Dec 2020)
2020
2021
2020
-
-
-
12,500,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
(2,000,000)*
7,500,000
7,500,000
--
-
-
-
-
-
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000**
5,000,000
5,000,000
-
-
-
-
-
5,000,000
5,000,000
5,000,000
5,000,000
(12,500,000)*
-
12,500,000
-
-
-
-
-
2,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,500,000
* - departed Envirosuite during the year, options not included as part of balance at end of year.
** - Mr White retired as CEO and Managing Director on 28th February 2021 at which point he was no longer an Executive Director and became a Non-Executive
Director. Details of options and performance rights has been split between the period of Mr White in his role of Executive Director and the period of his role as Non-
Executive Director.
Performance rights
Finan-
cial
Year
Balance at
Start of Year
Executives
J. Cooper
(appointed 1 Jul 2020)
2021
2020
-
-
M. Patterson
2021
2,000,000
(appointed 2 Jun 2020)
C. Lander
2020
2021
-
-
(departed 29 May 2020)
2020
2,049,180
Granted
Vested
Forfeited /
Other
Balance at
End of Year
Vested and
Exercisable
Unvested
4,000,000
-
-
2,000,000
-
-
-
-
-
-
-
(2,049,180)
-
-
-
-
-
-
4,000,000
-
-
-
4,000,000
-
2,000,000
500,000
1,500,000
2,000,000
2,000,000
-
-
(ii)
Shares
No shares were granted to key management personnel during the year.
45
Envirosuite Annual Report 2021 D.
Details of remuneration
The table below sets out Executive and Non-Executive KMP remuneration for the financial year ending 30 June 2021 and
the prior year comparative period in accordance with the requirements of the Accounting Standards and the Corporations
Act (Cth). The table reflects the accounting value of remuneration attributable to KMP, derived from the various
components of compensation. Refer to the accounting policies in the financial statements for details on how remuneration
has been measured, including the determination of fair value of options and Performance Rights granted.
Remuneration ($)
Financial
Year
Salary and fees
STI
Other Short
Term Benefits
Superannuation
Performance
rights
Options
Total
Short Term
Long Term
Share-Based Payments
Executive Director
P. White1
A. Gallagher2
J. Cooper3
M.Patterson4
C.Lander5
2021
200,000
25,830
121,161
2020
279,003
73,446
2021
12,500
2020
160,000
-
-
2021
286,667
42,291
2020
-
-
2021
280,000
41,307
2020
2021
22,256
-
-
-
-
-
-
-
-
-
-
-
21,694
21,003
-
-
-
-
-
-
-
368,685
371,210
744,662
-
12,500
556,815
716,815
21,694
106,707
-
-
21,694
97,240
2,114
9,001
-
-
-
-
-
-
-
457,359
-
440,242
33,372
-
2020
275,133
24,762
41,538
20,977
47,445
5,794
415,648
Non-Executive Director
D. Johnstone
P.White1
H.Robertson
Z.Zhang6
S.Klose7
2021
109,167
2020
100,000
2021
2020
2021
2020
2021
2020
2021
2020
20,000
-
60,000
60,000
25,000
35,000
41,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
109,167
371,210
471,210
-
-
-
20,000
-
60,000
371,210
431,210
(526,881)
(501,881)
526,881
561,881
123,000
164,500
-
-
1 Mr White was CEO for all of FY2020 and was CEO and Managing Director from 2 August 2020 to 28 February 2021 when we retired from CEO and Managing Director and became a Non-Executive
Director. Payments that were paid or payable to Mr White as part of his retirement are disclosed in ‘Other’. Mr White was entitled to Performance Rights during FY21 but forfeited those rights upon
his retirement. Amounts paid or payable to Mr White in his role as Non-Executive Director are presented separate to those in his role as an Executive.
2 Mr Gallagher ceased to be a KMP on the 31st July 2020 when he resigned from the Board of Directors. His remuneration includes fees charged for his role as Company Secretary as well as
Director fees up to this date.
3 Mr Cooper was appointed COO on 1st July 2020 at which point he became a KMP. Mr Cooper was appointed the CEO effective 1st March 2021.
4 Mr Patterson was appointed CFO on 2 June 2020
5 Mr Lander was CFO until his departure date of 29th May 2020
6 Mr Zhang was appointed as a Non-executive Director on 6th December 2019 and resigned on 28th November 2020. The options issued to Mr Zhang in FY20 only vest on $10,000,000 in revenue
(audited in accordance with international financial reporting standards) being received into the wholly owned China subsidiaries of Envirosuite Limited by 31 December 2021. The probability of this
occurring was assessed to 0% as at 30 June 2021 which resulted in the reversal of the option expense recognised in the prior year.
7 Ms Klose was appointed as a Non-executive Director on 1st December 2020.
46
Envirosuite Annual Report 2021 Remuneration report
E.
Shareholdings of key management personnel
The numbers of shares in the Company held during the financial year by each director of Envirosuite Limited and other
KMP of the Group, including their personally related parties, are set out below. Where an individual is no longer deemed
KMP the Group during the year, their shareholdings are removed through the ‘other changes during the year’ column.
Options
Financial Year
Balance at Start
of Year
Granted as
compensation
Exercise of
options
granted as
compensation
Other changes
during the year
Balance at end
of the year
Executive Director
P. White
(retired 28 Feb 2021)
A. Gallagher
(resigned 31 Jul 2020)
M. Patterson
(appointed 2 Jun 2020)
C. Lander
(departed 29 May 2020)
Non-Executive Director
D. Johnstone
P. White
(from 1 Mar 2021)
H. Robertson
Z. Zhang
(appointed 6 Dec 2019,
resgined 28 Nov 2020)
S.Klose
(appointed 1 Dec 2020)
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
9,237,681
7,091,340
4,639,526
602,941
-
-
-
-
-
-
-
-
-
-
650,000
2,049,180
6,815,459
3,339,118
-
-
18,935,279
9,157,620
25,292,682
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9,237,681)**
-
2,000,000
2,146,341
9,237,681
-
(4,639,526)*
-
4,000,000
36,585
4,639,526
-
-
-
-
-
847,253
847,253
-
-
(2,699,180)*
-
-
-
217,647
7,033,106
(4,000,000)
(523,659)
6,815,459
-
-
-
-
-
-
-
-
9,237,681**
9,237,681
-
-
1,485,939
20,421,209
9,777,659
18,935,279
(25,292,682)*
25,292,682
-
-
500,000
500,000
-
-
* - departed Envirosuite during the year, shares not included as part of balance at end of year.
** - Mr White retired as CEO and Managing Director on 28th February 2021 at which point he was no longer an Executive Director and became a Non-Executive
Director. Details of options and performance rights has been split between the period of Mr White in his role of Executive Director and the period of his role as Non-
Executive Director.
F.
Loans to key management personnel
There were no loans to key management personnel during the reporting period
47
Envirosuite Annual Report 2021 G.
Other transactions with key management personnel
Mr David Johnstone is a Director and Chairman of the Company. His fees were paid to DOAK Pty Ltd, a related party.
Mr Adam Gallagher was a Director and the Company Secretary of the Company. His fees were paid to Famile Pty Ltd, a
related party. Mr Gallagher resigned as a Director on 31 July 2020 and resigned as Company Secretary effective from 31
August 2020. The Company entered into a consulting arrangement with Famile Pty Ltd to 31 December 2020.
There were no transactions with key management personnel of Envirosuite Limited, other than those disclosed above,
during this reporting period.
*END OF REMUNERATION REPORT*
This Director’s report, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of
Directors.
David Johnstone
Chairman
17 August 2021
48
Envirosuite Annual Report 2021 AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF ENVIROSUITE LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2021, there have
been no contraventions of:
(a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
PKF BRISBANE AUDIT
SHAUN LINDEMANN
PARTNER
BRISBANE
17 AUGUST 2021
49
CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated Group
Trading revenue
Other revenue
Total operating revenue
Cost of revenue
Gross profit
Operating expenses
Sales and marketing
Product development
General and administrative
Total operating expenses
Other income and expense
Operating deficit
Net finance income / (expense)
Net loss before tax
Income tax (expense) / benefit
Net loss after tax
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Notes
4
5
2021
$’000
48.545
25
48,570
2020
$’000
23,333
524
23,857
(27,980)
(16,463)
20,590
7,394
(12,143)
(5,679)
(14,133)
5
(31,955)
(377)
(8,078)
(3,235)
(14,303)
(25,616)
(155)
(11,742)
(18,377)
(287)
(89)
(12,029)
(18,466)
(468)
230
(12,497)
(18,236)
(278)
(278)
(464)
(464)
Total comprehensive income/(loss) for the year
(12,775)
(18,700)
Net (loss)/profit attributed to:
Equity holders of Envirosuite Limited
Total comprehensive (loss)/income attributable to:
Equity holders of Envirosuite Limited
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
The accompanying notes form part of these financial statements.
(12,497)
(18,236)
(12,775)
(18,700)
23
23
Cents
(1.22)
(1.22)
Cents
(2.94)
(2.94)
Envirosuite Annual Report 2021
50
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Consolidated Group
Notes
2021
$’000
2020
$’000
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Inventories
Total current assets
Non-current Assets
Property, plant and equipment
Right of use assets
Deferred tax assets
Intangible assets
Other assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Revenue in advance
Employee benefit provisions
Lease liabilities and other borrowings
Total current liabilities
Non-current Liabilities
Employee benefit provisions
Lease liabilities and other borrowings
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
51
7
8
10
9
11
12
6
13
10
14
15
12
15
12
6
16
17
17
17,640
11,555
1,996
2,474
24,385
10,730
1,195
3,102
33,665
39,412
3,047
3,253
878
3,304
3,743
1,250
108,931
108,939
69
422
116,178
117,658
149,843
157,070
7,973
2,686
3,894
1,530
16,083
141
2,472
3,847
6,460
13,010
3,230
6,203
1,348
23,791
230
3,059
4,005
7,294
22,543
31,085
127,300
125,985
169,520
11,928
(54,148)
127,300
155,908
11,740
(41,663)
125,985
Envirosuite Annual Report 2021 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
At 1 July 2019
Comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Transactions with owners, in their capacity as owners, and
other transfers
Issue of shares
Transaction costs of capital raising (inc. tax effect)
Shares issued / to be issued to employees
Employee share options - value of employee services
Share options issued – EMS acquisition
Shares options expired
At 30 June 2020
At 1 July 2020
Comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Transactions with owners, in their capacity as owners, and
other transfers
Issue of shares
Transaction costs of capital raising (inc. tax effect)
Options and Performance Rights issued - value of services
Shares issued / to be issued to employees
Shares options expired
Ordinary shares
$’000
Reserves
$’000
Retained losses
$’000
Total Equity
$’000
36,060
132
(23,863)
12,329
-
-
-
121,617
(2,992)
1,223
-
-
-
-
-
-
14,026
(930)
55
461
-
-
(18,236)
(18,236)
(464)
(464)
-
-
(427)
3,202
9,313
(16)
-
(464)
(18,236)
(18,700)
-
-
420
-
-
16
436
121,617
(2,992)
1,216
3,202
9,313
-
132,356
-
(12,497)
(12,497)
(278)
(278)
-
-
939
(461)
(12)
466
-
(278)
(12,497)
(12,775)
-
-
-
-
12
12
14,026
(930)
994
-
-
14,090
Total transactions with owners and other transfers
119,848
12,072
155,908
11,740
(41,663)
125,985
155,908
11,740
(41,663)
125,985
Total transactions with owners and other transfers
13,612
At 30 June 2021
169,520
11,928
(54,148)
127,300
The accompanying notes form part of these financial statements.
52
Envirosuite Annual Report 2021 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Consolidated Group
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other revenue
Taxes paid
Interest received
Interest paid
Notes
June 2021
$’000
June 2020
$’000
48,482
29,043
(56,674)
(40,076)
(8,192)
(11,033)
180
(482)
1
(17)
504
(197)
110
(83)
Net cash (used in) operating activities
21
(8,510)
(10,699)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for acquisition of business
Payments for intangible assets
Net cash (used in) / provided by investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from issue of shares
Share issue transaction costs
Repayment of lease liabilities
Net cash provided by financing activities
Net (decrease) / increase in cash and cash equivalents
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the period
(741)
(176)
(5,599)
(65,394)
(3,116)
(2,398)
(9,456)
(67,968)
(58)
14,025
(929)
(1,521)
11,517
(6,449)
(296)
24,385
17,640
(3)
98,001
(2,149)
(560)
95,289
16,622
199
7,564
24,385
The accompanying notes form part of these financial statements.
53
Envirosuite Annual Report 2021 NOTES TO FINANCIAL STATEMENTS
55 (1.) Summary of significant accounting policies
74
(14.) Trade and other payables
64 (2.) Financial risk management
74
(15.) Employee provisions
65 (3.) Segment information
75
(16.) Issued capital
66 (4.) Revenue
67
(5.) Expenses
68 (6.) Tax
76
(17.) Reserves and retained losses
76
(18.) Commitments and contingencies
77
(19) Related party disclosures
69 (7.) Cash and cash equivalents
78
(20.) Business combinations
70 (8.) Trade and other receivables
78
(21.) Cash flow statement reconciliation
70 (9.) Inventories
70 (10.) Other assets
79
(22.) Share based payments
80 (23.) Earnings per share
71
(11.) Property, plant and equipment
80 (24.) Subsequent events
72
(12.) Right of use assets and lease liabilities
80 (25.) Parent entity financial information
73
(13.) Intangible assets
54
Envirosuite Annual Report 2021 NOTES TO FINANCIAL STATEMENTS
Notes to Financial Statements
For the Financial Year Ended 30 June 2021
For the Financial Year Ended 30 June 2021
These consolidated financial statements and notes represent those of Envirosuite Limited and controlled entities (the
“Consolidated Group” or “Group”).
The separate financial statements of the parent entity, Envirosuite Limited, have not been presented within this financial report as
permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 17 August 2021 by the directors of the company.
1.
(a)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and the Corporations Act 2001.
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would
result in financial statements containing relevant and reliable information about transactions, events and conditions. Material
accounting policies adopted in the preparation of these financial statements are presented below and have been consistently
applied unless stated otherwise.
Compliance with IFRSs as issued by the IASB
Compliance with Australian Accounting Standards ensures that this Financial Report complies with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Consequently, this Financial Report
is compliant with IFRS.
Basis of Measurement
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical
costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
Comparative Periods
Comparative periods presented in these financial statements have been restated to align with current year presentation.
Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current trends
and economic data, obtained both externally and within the Group. The following are:
•
•
•
•
Measurement of ECL allowance for trade receivables - The measurement of the ECL allowance for trade receivables relies
on estimates of expected credit losses to be incurred for trade receivables taking into account historical losses and the
financial condition of the customer. Refer to Note 1(j) for further discussion.
Impairment of goodwill and other intangible assets – the Group tests goodwill and other intangible assets, including
capitalised software development costs, for impairment in accordance with the accounting policy stated in note 1(g).
These calculations require the use of assumptions regarding the future profitability of the cash generating units to which
the goodwill and intangibles have been allocated, as well as future cash flows related to the intangible asset. Refer to
Note 13 for details of the assumptions used in determining the recoverable amount of goodwill and other intangible assets.
Valuation of options – the Group has issued share options in connection with the acquisition of EMS Bruel & Kjaer Holdings
as well as to employees and Directors as compensation for services. The valuation of these options is based on using a
Black-Scholes valuation model that relies on various assumptions. Refer to note 22 for details of these assumptions.
Recovery of deferred tax assets - Deferred tax assets are recognised for deductible temporary differences if management
considers that it is probable that future taxable profits will be available to utilise those temporary differences. Sufficient
management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon
the likely timing and the level of future taxable profits over the next two years together with future tax planning strategies.
Refer to note 6 for details for the unused tax losses.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of preparation (continued)
1.
(a)
•
COVID-19 Pandemic – Judgement has been exercised in considering the impacts of the COVID-19 Pandemic has or may
have on the Group. This consideration extends to the nature of services offered, customers, supply chains, staffing and
geographical regions in which the group operates. Other than addressed above or in specific notes, there does not appear
either any significant impact upon the financial statements or any significant uncertainties with respect to events or
conditions which may impact the Group unfavorably as a reporting date or subsequently as a result of the COVID-19
Pandemic. The board continues to actively monitor the situation.
•
Inventory provisions - Judgement has been exercised in calculating the net realisable value of inventory to determine
whether a provision for inventory obsolescence should be recognised. based on an assessment of technological and
market developments and on an analysis of historical and projected usage with regard to quantities on hand.
(b)
Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Envirosuite Limited) and
all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. A list of subsidiaries is contained in note 19 to the financial statements.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date
on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between entities in the Consolidated Group
are eliminated in full on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure consistency with the policies adopted by the Group.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Envirosuite Limited.
(c)
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses. The acquisition method of
accounting is used to account for all business combinations, unless it is a combination involving entities or businesses under
common control. The business combination will be accounted for from the date that control is attained, at which point the fair
value of identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited
exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or
liability is remeasured in each reporting period to fair value, with changes in fair value recognised in profit or loss, unless the
change in fair value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial
instrument, are recognised as expenses in the profit and loss when incurred. The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain purchase.
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
•
•
•
the consideration transferred;
any non-controlling interests; and
assets acquired.
the acquisition date fair value of any previously held equity interest; over the acquisition date fair value of net identifiable
Adjustments may be made to fair value of net identifiable assets acquired and to goodwill after the acquisition date if additional
information is obtained about facts and circumstances related to the acquired business that existed at the acquisition date.
However, no further adjustments are made to the acquisition balance sheet and initial goodwill recognised beyond one year from
the acquisition date. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised. Instead,
goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which the
goodwill arose.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions
and do not affect the carrying amount of goodwill.
55
Envirosuite Annual Report 2021
1.
(a)
•
•
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of preparation (continued)
COVID-19 Pandemic – Judgement has been exercised in considering the impacts of the COVID-19 Pandemic has or may
have on the Group. This consideration extends to the nature of services offered, customers, supply chains, staffing and
geographical regions in which the group operates. Other than addressed above or in specific notes, there does not appear
either any significant impact upon the financial statements or any significant uncertainties with respect to events or
conditions which may impact the Group unfavorably as a reporting date or subsequently as a result of the COVID-19
Pandemic. The board continues to actively monitor the situation.
Inventory provisions - Judgement has been exercised in calculating the net realisable value of inventory to determine
whether a provision for inventory obsolescence should be recognised. based on an assessment of technological and
market developments and on an analysis of historical and projected usage with regard to quantities on hand.
(b)
Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Envirosuite Limited) and
all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. A list of subsidiaries is contained in note 19 to the financial statements.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date
on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between entities in the Consolidated Group
are eliminated in full on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure consistency with the policies adopted by the Group.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Envirosuite Limited.
(c)
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses. The acquisition method of
accounting is used to account for all business combinations, unless it is a combination involving entities or businesses under
common control. The business combination will be accounted for from the date that control is attained, at which point the fair
value of identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited
exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or
liability is remeasured in each reporting period to fair value, with changes in fair value recognised in profit or loss, unless the
change in fair value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial
instrument, are recognised as expenses in the profit and loss when incurred. The acquisition of a business may result in the
recognition of goodwill or a gain from a bargain purchase.
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
•
•
•
the consideration transferred;
any non-controlling interests; and
the acquisition date fair value of any previously held equity interest; over the acquisition date fair value of net identifiable
assets acquired.
Adjustments may be made to fair value of net identifiable assets acquired and to goodwill after the acquisition date if additional
information is obtained about facts and circumstances related to the acquired business that existed at the acquisition date.
However, no further adjustments are made to the acquisition balance sheet and initial goodwill recognised beyond one year from
the acquisition date. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised. Instead,
goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which the
goodwill arose.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions
and do not affect the carrying amount of goodwill.
56
Envirosuite Annual Report 2021
1.
(d)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign currency translation
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s
functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation
currency, are translated as follows:
•
•
•
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial
position. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is
disposed of.
(e)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer and the board of directors. Refer Note 3 for segment information,
which also describes the change in segments during the year.
Geographical segmentation is the primary basis of segmentation used by the Group.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 Operating Segments are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements.
(f)
Revenue recognition
The following is a summary of the revenue recognition for each revenue stream:
Recurring revenue
Includes software platform subscription revenues and maintenance and support services related to monitoring equipment
provided by the Group. These revenues are recognised over time being over the term of the contracts, based on the effort incurred
by the Group being as the services are provided.
Non recurring revenue
Includes revenue from projects for the installation of environmental monitoring solutions and upgrades, and sales of environmental
monitoring units.
Project revenue is recognised over time based on a percentage of completion method, as this is the performance obligation. The
stage or completion for determining the amount of revenue to recognise is assessed based on the cost-to-cost method whereby
the percentage of completion is estimated based on the costs incurred to date as a percentage of the total expected costs to
deliver the project. The estimate of the total costs to deliver the project is an estimate that requires judgement of management
and is based on quotes from third parties, the cost of the equipment held in inventory, and estimated cost of internal labour based
on number of labour hours required.
Sales of environmental monitoring units are recognised when risk has transferred to the buyer.
57
Envirosuite Annual Report 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(d)
Foreign currency translation
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s
functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Group companies
currency, are translated as follows:
The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation
•
•
•
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
position. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is
disposed of.
(e)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer and the board of directors. Refer Note 3 for segment information,
which also describes the change in segments during the year.
Geographical segmentation is the primary basis of segmentation used by the Group.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 Operating Segments are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements.
(f)
Revenue recognition
The following is a summary of the revenue recognition for each revenue stream:
Recurring revenue
Non recurring revenue
monitoring units.
Includes software platform subscription revenues and maintenance and support services related to monitoring equipment
provided by the Group. These revenues are recognised over time being over the term of the contracts, based on the effort incurred
by the Group being as the services are provided.
Includes revenue from projects for the installation of environmental monitoring solutions and upgrades, and sales of environmental
Project revenue is recognised over time based on a percentage of completion method, as this is the performance obligation. The
stage or completion for determining the amount of revenue to recognise is assessed based on the cost-to-cost method whereby
the percentage of completion is estimated based on the costs incurred to date as a percentage of the total expected costs to
deliver the project. The estimate of the total costs to deliver the project is an estimate that requires judgement of management
and is based on quotes from third parties, the cost of the equipment held in inventory, and estimated cost of internal labour based
on number of labour hours required.
Sales of environmental monitoring units are recognised when risk has transferred to the buyer.
1.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue recognition (continued)
Government grants and rebates
Grants and rebates from the government are recognised at their fair value where there is a reasonable assurance that the grant
or rebate will be received and the Group will comply with all the attached conditions. Government grants and rebates relating to
costs are deferred and recognised as income over the period necessary to match them with the costs that they are intended to
compensate. Government grants and rebates relating to the purchase of property, plant and equipment and the development of
IT and software capital costs are included in non-current liabilities as deferred income and are credited to income on a straight
line basis over the expected lives of the related assets.
Contract assets and liabilities
Where the Group provides services to customers and the consideration
is unconditional, a receivable is recognised as
accrued income and included within Trade and other receivables. Where the customer pays upfront for services that have not
yet been provided, a contract liability is recognised, which is disclosed on the face of the balance sheet as Revenue in Advance.
(ii)
Employee benefits
Employee benefits includes wages and salaries, bonuses, annual leave and long service leave. Certain employees are awarded
share based payments in the form of options and/or performance rights, which entitle the employee to shares in Envirosuite
Limited upon certain vesting conditions being met.
A liability is recognised for employee benefits in the period that the service is performed where the Group has a present legal or
constructive obligation to pay the amount as a result of past service provided by the employee, and the obligation can be
estimated reliably.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after
the end of the period in which the employees render the related service are recognised in respect of employees' services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability
for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are
presented as payables.
Long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the
period in which the employees render the related service is recognised in the provision for employee benefits and measured as
the present value of expected future payments to be made in respect of services provided by employees up to the end of the
reporting period. 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 end of the reporting period on Australian
Corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Share based payments
Share based compensation benefits are provided to employees and directors via the Envirosuite Limited Employee Share Option
Plan, the Envirosuite Performance Rights Plan, the Envirosuite Limited Employee Share Plan. Information relating to these schemes
is set out in note 22.
The fair value of options granted under the Envirosuite Limited Employee Share Option Plan and Performance Rights granted
under the Envirosuite Performance Rights Plan is recognised as an employee benefit expense with a corresponding increase in
equity. The total amount to be expensed is determined by reference to the fair value of the options and Performance Rights
granted, which includes any market performance conditions but excludes the impact of any service and non-market performance
vesting conditions and the impact of any non-vesting conditions. Fair value of options at grant date are determined using a Black
& Scholes 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. Fair value of Performance Rights granted is based on the share price at grant date and the risk free
interest rate for the term of the vesting period of the Performance Right.
Non-market vesting conditions are included in assumptions about the number of options and Performance Rights that are
expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options and
Performance Rights that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
58
Envirosuite Annual Report 2021
1.
(g)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Employee benefits (continued)
Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably
committed to either terminating the employment of current employees according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due
more than 12 months after reporting date are discounted to present value.
(h)
Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a
business combination, or items recognised directly in other comprehensive income or otherwise directly in equity. Income tax on
items recognised directly in Other Comprehensive Income or otherwise directly in equity is also recognised in other
comprehensive income or directly in equity, respectively. Deferred tax is recognised for assets and liabilities initially recognised
as a result of a business combination, other than goodwill, where the accounting basis is different to the tax basis.
Current Tax
Current tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities/(assets) are measured
at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred Tax
Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as
unused tax losses.
Deferred tax is provided in full, using the Asset-Liability Method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not recognised for:
•
•
•
temporary differences on the initial recognition of an asset or liability in a transaction that is not business combination
and that neither affects accounting nor taxable profit nor loss;
temporary differences related to investments in subsidiaries, associates, and joint arrangements to the extent that the
Company is able to control the timing of reversal of the temporary differences and it is probable that they will not reverse
in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and
are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
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.
Deferred tax assets and liabilities are offset when a legally enforceable right of set-off exists and when the deferred tax balances
relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Envirosuite Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in
the consolidated financial statements. In addition to its own current and deferred tax amounts, Envirosuite Limited also recognises
the current tax liabilities and the deferred tax amounts arising from unused tax losses and unused tax credits assumed from
controlled entities in the Tax Consolidated Group.
Goods and Service Tax
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to the taxation authority, are presented as operating cash flows included in receipts from
customers or payments to suppliers.
Envirosuite Limited and its wholly owned Australian controlled entities except Envirosuite Holdings Pty Ltd are grouped for GST.
59
Envirosuite Annual Report 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.
(g)
Employee benefits (continued)
Termination benefits
1.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and cash equivalents
The Group classifies petty cash, cash balances and term deposits with financial institutions that have a term of 90 days or less as
cash and cash equivalents.
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably
(j)
Trade and other receivables
committed to either terminating the employment of current employees according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due
more than 12 months after reporting date are discounted to present value.
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a
business combination, or items recognised directly in other comprehensive income or otherwise directly in equity. Income tax on
items recognised directly in Other Comprehensive Income or otherwise directly in equity is also recognised in other
comprehensive income or directly in equity, respectively. Deferred tax is recognised for assets and liabilities initially recognised
as a result of a business combination, other than goodwill, where the accounting basis is different to the tax basis.
Current tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities/(assets) are measured
at the amounts expected to be paid to/(recovered from) the relevant taxation authority.
Deferred tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as
The Group has a single business model for its financial assets whose objective is hold the assets to collect contractual cash flows
that are solely payments of principal and interest. Financial assets include trade receivables which are initially recognised when
they are originated. Trade receivables are typically due within 30 to 90 days of the invoice being issued and are initially measured
at the transaction price.
Impairment
The Group recognises loss allowance for expected credit loss (ECLs) on trade receivables and contract assets. The Company
measures loss allowances using the simplified approach under AASB 9 Financial Instruments, which is an amount equal to lifetime
ECLs. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a trade receivable has increased significantly since initial recognition and when
estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost
or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and
informed credit assessment and including forward-looking information. In assessing credit risk, customers were disaggregated
based on various industry groups, location and customer size.
The Group assumes that the credit risk on a trade receivable has increased significantly if it is more than 90 days past due. The
Group considers a financial asset to be in default when:
Deferred tax is provided in full, using the Asset-Liability Method, on temporary differences arising between the tax bases of assets
• significant financial difficulty of the customer;
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not recognised for:
• a breach of contract such as a default or being more than 90 days past due; or
temporary differences on the initial recognition of an asset or liability in a transaction that is not business combination
• it is probable that the customer will enter bankruptcy or other financial reorganisation.
and that neither affects accounting nor taxable profit nor loss;
Measurement of ECLs
temporary differences related to investments in subsidiaries, associates, and joint arrangements to the extent that the
Company is able to control the timing of reversal of the temporary differences and it is probable that they will not reverse
in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and
are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group
expects to receive). ECLs are discounted at the effective interest rate of the financial asset.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. The
gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial
asset in its entirety or a portion thereof.
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.
(k)
Inventories
(h)
Income tax
Current Tax
Deferred Tax
unused tax losses.
•
•
•
Deferred tax assets and liabilities are offset when a legally enforceable right of set-off exists and when the deferred tax balances
relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Envirosuite Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in
the consolidated financial statements. In addition to its own current and deferred tax amounts, Envirosuite Limited also recognises
the current tax liabilities and the deferred tax amounts arising from unused tax losses and unused tax credits assumed from
controlled entities in the Tax Consolidated Group.
Goods and Service Tax
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to the taxation authority, are presented as operating cash flows included in receipts from
customers or payments to suppliers.
Envirosuite Limited and its wholly owned Australian controlled entities except Envirosuite Holdings Pty Ltd are grouped for GST.
The Group acquires and manufactures environmental monitoring instruments and accessories, which are initially accounted for
as inventory. Inventories are measured at the lower of cost and net realisable value. The cost of environmental monitor inventories
is based on the specific identification of their individual costs while the cost of consumables and other smaller inventory items is
based on a weighted average cost formula. Provisions are made to write down slow-moving, excess and obsolete items to net
realisable value, based on an assessment of technological and market developments and on an analysis of historical and projected
usage with regard to quantities on hand.
Where instruments are used for demonstration purposes or when customers enter into a contract to use instruments where the
Group retains ownership, the instrument is transferred from Inventories to Property, plant and equipment and is depreciated on a
straight-line basis over its useful life. If the instrument is returned at the end of the contract, it is not transferred back to Inventories
but is retained in Property, plant and equipment. The cost to install the instrument at the customer’s site is expensed as incurred.
(l)
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure
will flow to the Group. If significant parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment. Any gain and loss on disposal of an item of property,
plant and equipment is recognised in profit or loss.
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Envirosuite Annual Report 2021
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(m)
Property, plant and equipment (continued)
Depreciation
Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values using the
straight-line basis over their estimated useful lives, and is generally recognised in profit or loss. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the
end of the lease term. Land is not depreciated. The estimated useful lives of property, plant and equipment for the current period
is as follows:
•
•
•
•
•
Computer equipment
4 years
Furniture and fixtures
5 - 10 years
Leasehold improvements
Remaining life of the lease (3 - 5 years)
Monitors and sensors
5 years
Right-of-use assets
lower of economic or lease life
(n)
Right of use assets
Right of use assets are measured at cost and comprise the amount that is recognised for the lease liability on initial recognition
(refer to Note 1(q)) less any lease incentives received, and including direct costs and restoration-related costs. Right of use
assets include leased buildings and data centers and are depreciated over the life of the lease which is 5 – 7 years. The Group
does not recognise a right of use asset for short term or low value leases, instead the expense is recognised over the lease term
as appropriate as part of operating expenses in the income statement.
(o)
Intangible assets
Intangible assets include acquired intangible assets as part of asset acquisitions and business combinations, as well as internally
developed software costs. The estimated useful lives of intangible assets for the current period is as follows:
•
•
•
•
Internally developed software
5-7 years
Acquired software
Customer relationships
Brand value
5 years
5 years
5 years
Research and development
The Company develops software which it uses for sale to its customers through monthly license revenue. The Company also
develops environmental monitoring equipment that it either sells or leases to its customers as part of providing them with
environmental monitoring solutions.
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design
and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after
considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be
measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services and
direct labour Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised
development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight
line basis over its useful life.
Impairment
At the end of each reporting period, the Group assess whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources. If such an indication exists, an impairment test is carried
out on the asset by comparing the assets carrying value to its recoverable amount being the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash generating units).
Goodwill and 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.
61
Envirosuite Annual Report 2021
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(m)
Property, plant and equipment (continued)
Depreciation
Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values using the
straight-line basis over their estimated useful lives, and is generally recognised in profit or loss. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the
end of the lease term. Land is not depreciated. The estimated useful lives of property, plant and equipment for the current period
is as follows:
•
•
•
•
•
Computer equipment
4 years
Furniture and fixtures
5 - 10 years
Leasehold improvements
Remaining life of the lease (3 - 5 years)
Monitors and sensors
5 years
Right-of-use assets
lower of economic or lease life
(n)
Right of use assets
Right of use assets are measured at cost and comprise the amount that is recognised for the lease liability on initial recognition
(refer to Note 1(q)) less any lease incentives received, and including direct costs and restoration-related costs. Right of use
assets include leased buildings and data centers and are depreciated over the life of the lease which is 5 – 7 years. The Group
does not recognise a right of use asset for short term or low value leases, instead the expense is recognised over the lease term
as appropriate as part of operating expenses in the income statement.
(o)
Intangible assets
Intangible assets include acquired intangible assets as part of asset acquisitions and business combinations, as well as internally
developed software costs. The estimated useful lives of intangible assets for the current period is as follows:
•
•
•
•
Internally developed software
5-7 years
Acquired software
Customer relationships
Brand value
5 years
5 years
5 years
1.
(p)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 30 to 90 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially
at their fair value and subsequently measured at amortised cost using the effective interest method.
(q)
Lease liabilities
Lease liabilities are initially measured at the present value of the future lease payments at the commencement date of the lease,
discounted using the interest rate implicit in the lease (or if that rate cannot be readily determined, the lessee’s incremental
borrowing rate). Lease payments are allocated between interest principal and interest with the interest component recognised in
the income statement as part of finance expense. Any variable lease payments not included in the measurement of the lease
liability are recognised in the income statement within operating expenses in the period in which the event or condition that
triggers those payments occurs.
Lease liabilities are remeasured when there is a change in future lease payments arising from a change in lease term, an
assessment of an option to purchase the underlying asset, or a change in the estimated amounts payable under the lease. When
the lease liability is remeasured, a corresponding adjustment is made to the carrying value of the Right of use asset, or in the
income statement if the carrying value of the Right of use asset has been fully written down.
(r)
Provisions
Provisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present
obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of
the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised
as interest expense.
(s)
Contributed equity
Ordinary shares are classified as equity.
Research and development
The Company develops software which it uses for sale to its customers through monthly license revenue. The Company also
develops environmental monitoring equipment that it either sells or leases to its customers as part of providing them with
environmental monitoring solutions.
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design
and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after
considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be
measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services and
direct labour Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised
development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight
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. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are
not included in the cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a share buyback, those instruments are deducted
from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid
including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
(t)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the financial year but not distributed at balance date.
line basis over its useful life.
Impairment
At the end of each reporting period, the Group assess whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources. If such an indication exists, an impairment test is carried
out on the asset by comparing the assets carrying value to its recoverable amount being the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash generating units).
Goodwill and 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.
62
Envirosuite Annual Report 2021
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(u)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary
shares and
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
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 additional ordinary shares that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.
(v)
Rounding of amounts
The Company is of a kind referred to in legislative instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded
off in accordance with that instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
63
Envirosuite Annual Report 2021
(u)
Earnings per share
Basic earnings per share
shares and
ordinary shares issued during the year.
Diluted earnings per share
•
•
•
•
all dilutive potential ordinary shares.
(v)
Rounding of amounts
the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
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 additional ordinary shares that would have been outstanding assuming the conversion of
The Company is of a kind referred to in legislative instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded
off in accordance with that instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.
FINANCIAL RISK MANAGEMENT
Basic earnings per share is calculated by dividing:
(a)
Credit risk
The Group is exposed to a variety of financial risks, principally related to credit, liquidity, and foreign currency risk. The Chief
Executive Officer (CEO) and Chief Financial Officer (CFO) are responsible for managing financial risk exposures of the Group. The
board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange
risk, credit risk, and investment of excess liquidity.
The Group is exposed to the risk of a financial loss if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. Credit risk arises principally from the Group’s receivables from customers. The Group’s maximum exposure
to credit risk at the balance date is the carrying amount of financial assets, net of any provisions for impairment and excluding the
value of any other collateral or other security.
The gross trade and other receivables balance at 30 June 2021 was $13,641k (2020: $12,813k) and the aging analysis of trade
receivables is provided in Note 8. The Group exposure to credit risk is affected by the regions and industries the Group’s
customers operate in. The majority of the Group’s customers are airports and water and waste operators around the world with a
growing exposure to customers within the mining industry.
Trade receivables are managed on an ongoing basis. The Group does not have any material credit risk exposure to any single
debtor. Aging analysis and ongoing collectability reviews are performed and, when appropriate, an expected credit risk loss
provision is raised. Historically, the Group has not had any significant write-offs in its trade receivables, which includes the
historical period during which the EMS businesses operated prior to the acquisition in February 2020.
(b)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. As at 30 June
2021, the Group had cash and cash equivalents of $17,640k (2020: $24,385k).
Total cash used in operating activities when adding capitalised development costs (included in cash flows from investing
activities) and repayment of lease liabilities (included in cash flows from financing activities) (“Adjusted Operating Cash
Flow”) was an outflow $8,946k (FY20: $12,538k). However, the Adjusted Operating Cash Flow for 2H FY21 was an outflow
of $3,882k compared with an outflow of $5,064k in H1 FY21.
In June 2021, the raised additional equity of $14,025k ($13,096k net of transaction costs). Noting the additional cash raised
during the financial period, the lack of debt on the balance sheet (other than lease liabilities recognised under AASB 16),
combined with the continuing improvement of the Adjusted Operating Cash Flow, the Directors are of the view that the
Group will continue to be able to pay its debts as and when they fall due and have prepared the financial report on a going
concern basis.
(c)
Foreign currency risk
Foreign currency risk is the risk that the future cash flows of a financial instrument or forecasted transaction will fluctuate because
of changes in foreign exchange rates. The Group operates internationally and as such has exposure to foreign currency
movements. Approximately 69% of the Group’s revenue for the period ended 30 June 2021 was earned in foreign currency (2020:
67%). The Group primarily has exposure to Euro (“EUR”), US dollars (“USD”), Canadian dollars (“CAD”), British pound (“GBP”), and
Chinese renminbi (“RMB”) from cash balances and trade receivables which are partially offset by trade and other payables,
employee provisions and borrowings in those currencies. The table below shows the impact to comprehensive income before tax
from a 10% increase and 10% decrease in the foreign currency exchange rate against the Australian dollar (“AUD”).
$’000
CAD
EUR
GBP
RMB
USD
Other
Total
2021
2020
Expoure
(in AUDe)
-10%
+10%
Expoure
(in AUDe)
-10%
+10%
117
1,962
659
1,043
3,367
2,344
13
218
73
116
374
260
(11)
(178)
(60)
(95)
(306)
(213)
580
(220)
576
1,914
957
1,927
9,492
1,055
(863)
5,734
64
(24)
64
213
106
214
637
(53)
20
(52)
(174)
(87)
(175)
(521)
64
Envirosuite Annual Report 2021
3.
SEGMENT INFORMATION
In May 2021, the Group announced that it was consolidating its products into three product families, being EVS Aviation, EVS
Omnis and EVS Water. EVS also announced that it was consolidating its regional management structure from 5 regions into 3
regions being Asia Pacific, Americas, and EMEA. China was consolidated into Asia Pacific while North and South America were
merged to form the Americas region. As part of this restructure, management have reduced the level of investment and industry
focus in China to ensure that the business focuses on customers and contracts that utilise Envirosuite solutions through its
recurring revenue model.
As a result of consolidation of the regional management structure, the Group has updated its operating segments into the 3
geographic operating segments: Asia-Pacific, America’s & EMEA (Europe, Middle-East and Africa) plus a central Corporate
segment which contains costs that are managed centrally that are not allocated to the geographic segments. These operating
segments are based on the internal reports that are reviewed and used by the CEO and Board of Directors, (who are identified as
the Chief Operating Decision Makers) in assessing performance and in determining the allocation of resources.
Segment assets and liabilities are not presented as they are not regularly provided to the chief operating decision makers.
Asia Pacific
14,980
2,593
3
17,576
EMEA
12,846
1,973
10
14,829
(11,950)
4,626
(7,625)
7,204
(3,693)
(56)
877
(31)
846
(2,821)
(64)
4,319
(6)
4,313
America
12,565
3,588
-
16,153
(7,405)
8,748
(3,390)
(257)
5,101
(45)
5,056
Corporate
-
-
12
12
-
12
(22,051)
-
(22,039)
(205)
(22,244)
Total
40,391
8,154
25
48,570
(27,980)
20,590
(31,955)
(377)
(11,742)
(287)
(12,029)
Asia Pacific
6,470
3,725
9
10,204
EMEA
5,540
433
-
5,973
America
5,904
1,261
-
7,165
Corporate
-
-
516
516
Total
17,914
5,419
525
23,858
(7,438)
2,765
(2,962)
3,011
(4,626)
2,539
(1,437)
(921)
(16,463)
7,395
(3,448)
-
(683)
(22)
(705)
(1,136)
-
1,875
-
1,875
(1,810)
-
729
(1)
728
(19,222)
(155)
(20,298)
(66)
(20,364)
(25,616)
(155)
(18,377)
(89)
(18,466)
Regional
2021
$‘000
Recurring revenue
Non recurring revenue
Other revenue
Total operating revenue
Cost of revenue
Gross profit
Operating expenses
Other income/(expense)
Operating deficit before tax
Net finance income/(expense)
Net loss before tax
2020
$‘000
Recurring revenue
Non recurring revenue
Other revenue
Total operating revenue
Cost of revenue
Gross profit
Operating expenses
Other income/(expense)
Operating deficit before tax
Net finance income/(expense)
Net loss before tax
65
Envirosuite Annual Report 2021
In May 2021, the Group announced that it was consolidating its products into three product families, being EVS Aviation, EVS
Omnis and EVS Water. EVS also announced that it was consolidating its regional management structure from 5 regions into 3
regions being Asia Pacific, Americas, and EMEA. China was consolidated into Asia Pacific while North and South America were
merged to form the Americas region. As part of this restructure, management have reduced the level of investment and industry
focus in China to ensure that the business focuses on customers and contracts that utilise Envirosuite solutions through its
recurring revenue model.
As a result of consolidation of the regional management structure, the Group has updated its operating segments into the 3
geographic operating segments: Asia-Pacific, America’s & EMEA (Europe, Middle-East and Africa) plus a central Corporate
segment which contains costs that are managed centrally that are not allocated to the geographic segments. These operating
segments are based on the internal reports that are reviewed and used by the CEO and Board of Directors, (who are identified as
the Chief Operating Decision Makers) in assessing performance and in determining the allocation of resources.
Segment assets and liabilities are not presented as they are not regularly provided to the chief operating decision makers.
Regional
2021
$‘000
Recurring revenue
Non recurring revenue
Other revenue
Total operating revenue
Cost of revenue
Gross profit
Operating expenses
Other income/(expense)
Operating deficit before tax
Net finance income/(expense)
Net loss before tax
2020
$‘000
Recurring revenue
Non recurring revenue
Other revenue
Total operating revenue
Cost of revenue
Gross profit
Operating expenses
Other income/(expense)
Operating deficit before tax
Net finance income/(expense)
Net loss before tax
Asia Pacific
America
Corporate
14,980
2,593
3
EMEA
12,846
1,973
10
12,565
3,588
-
17,576
14,829
16,153
(11,950)
4,626
(7,625)
7,204
(7,405)
8,748
Total
40,391
8,154
25
48,570
(27,980)
20,590
-
-
12
12
-
12
(3,693)
(2,821)
(3,390)
(22,051)
(31,955)
(56)
877
(31)
846
(64)
4,319
(6)
4,313
(257)
5,101
(45)
-
(377)
(22,039)
(11,742)
(205)
(287)
5,056
(22,244)
(12,029)
Asia Pacific
America
Corporate
6,470
3,725
9
EMEA
5,540
433
-
10,204
5,973
5,904
1,261
-
7,165
-
-
516
516
Total
17,914
5,419
525
23,858
(7,438)
2,765
(2,962)
3,011
(4,626)
2,539
(1,437)
(921)
(16,463)
7,395
(3,448)
(1,136)
(1,810)
(19,222)
(25,616)
-
(683)
(22)
(705)
-
-
1,875
1,875
-
729
(1)
728
(155)
(155)
(20,298)
(18,377)
(66)
(89)
(20,364)
(18,466)
3.
SEGMENT INFORMATION
3.
SEGMENT INFORMATION (continued)
For FY21, the Group also has adopted a secondary operating segment which is each Product family, being Aviation, Omnis and
EVS Water. Chief operating decision makers are provided with reporting on the recurring and non-recurring revenue for these
secondary operating segments.
Product family
2021
$‘000
Recurring revenue
Non recurring revenue
Other revenue
Total operating revenue
2020
$‘000
Recurring revenue
Non recurring revenue
Other revenue
Total operating revenue
4.
REVENUE
Aviation
29,050
3,017
-
32,067
Omnis
11,298
5,134
-
16,432
EVS Water
43
3
-
46
Corporate
-
-
25
25
Total
40,391
8,154
25
48,570
Aviation
10,723
759
-
11,482
Omnis
7,191
4,660
-
11,851
EVS Water
-
-
-
-
Corporate
-
-
525
525
Total
17,914
5,419
525
23,858
Recurring revenue
Non recurring revenue
Trading revenue
Research and development tax incentives
Other revenue
Profit on sale of fixed assets
Other revenue
2021
$’000
40,391
8,154
48,545
6
19
-
25
2020
$’000
17,915
5,418
23,333
357
159
9
525
Total revenue
48,570
23,857
The Group generated 66% of its revenues for the current reporting period from customers in the Airport industry (FY20: 49%). In
addition, the Group generated 20% of its total income and 23% of its recurring income from the Australian government and
companies controlled by the Australian government (FY20: 15% and 19%).
66
Envirosuite Annual Report 2021
5.
EXPENSES
The Group categorises expenses within the Consolidated Income Statement based on the function of the expense. The table
below discloses expenses based on the nature of the expense.
Cost of revenue and operating expenses
Cost of revenue
Total operating expenses
Total cost of revenue and operating expenses
Total cost of revenue and operating expenses is comprised of:
Employment costs
Share based compensation
Consultants and contractors
Professional fees
Computer expenses
Equipment costs
Building costs
Director’s fees
Audit and audit related fees
Depreciation and amortisation (excl intangible asset – software
amortisation)
Other operating expenses
Sub-total
Software development cost - capitalised
Intangible asset – software amortisation
R&D costs capitalised, net
2021
$’000
2020
$’000
(27,980)
(31,955)
(59,935)
(33,358)
(946)
(1,886)
(2,479)
(2,352)
(3,546)
(957)
(277)
(299)
(5,515)
(9,142)
(60,757)
2,301
(1,479)
822
(16,463)
(25,616)
(42,079)
(20,618)
(3,154)
(2,613)
(2,060)
(2,453)
(4,682)
(567)
(265)
(216)
(2,154)
(4,003)
(42,865)
1,873
(1,087)
786
Total cost of revenue and operating expenses
(59,935)
(42,079)
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Audit and review of financial reports
Other assurance services
Other non-audit services
Total remuneration of auditors
2021
$’000
299
-
5
304
2020
$’000
216
113
85
414
67
Envirosuite Annual Report 2021
Cost of revenue and operating expenses
Cost of revenue
Total operating expenses
Total cost of revenue and operating expenses
Total cost of revenue and operating expenses is comprised of:
Employment costs
Share based compensation
Consultants and contractors
Professional fees
Computer expenses
Equipment costs
Building costs
Director’s fees
Audit and audit related fees
amortisation)
Other operating expenses
Sub-total
Software development cost - capitalised
Intangible asset – software amortisation
R&D costs capitalised, net
Depreciation and amortisation (excl intangible asset – software
(27,980)
(31,955)
(59,935)
(33,358)
(946)
(1,886)
(2,479)
(2,352)
(3,546)
(957)
(277)
(299)
(5,515)
(9,142)
(60,757)
2,301
(1,479)
822
(16,463)
(25,616)
(42,079)
(20,618)
(3,154)
(2,613)
(2,060)
(2,453)
(4,682)
(567)
(265)
(216)
(2,154)
(4,003)
(42,865)
1,873
(1,087)
786
Total cost of revenue and operating expenses
(59,935)
(42,079)
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Audit and review of financial reports
Other assurance services
Other non-audit services
Total remuneration of auditors
2021
$’000
299
-
5
304
2020
$’000
216
113
85
414
5.
EXPENSES
6.
TAX
The Group categorises expenses within the Consolidated Income Statement based on the function of the expense. The table
below discloses expenses based on the nature of the expense.
2021
$’000
2020
$’000
(a)
Income tax expense / (benefit)
Current tax expense / (benefit)
Deferred tax expense / (benefit)
Total income tax expense / (benefit)
2021
$’000
243
225
468
2020
$’000
770
(1,000)
(230)
Reconciliation of income tax expense to prima facie tax payable
(b)
Prima facie tax expense on operating profit at 26.0% (2020: 27.5%)
(3,128)
(5,078)
Tax effects of items which are non-deductible / (non-assessable) in
calculating taxable income:
Non-allowable items (including R&D expenditure)
Non-assessable R&D income
Share options expensed during the year
Difference in offshore tax rates
Add / (less):
Under/(over) provision for income tax in prior year
Equity raising costs
Revaluation of Deferred tax balances due to change in tax rate
Deferred tax valuation allowance increase
Total income tax expense / (benefit)
(c) Deferred income tax
(25)
246
169
(640)
(174)
4,020
468
516
(98)
867
131
-
(95)
-
3,527
(230)
2021
Trade and other receivables
Inventory
Property, plant and equipment
Right of use asset and Lease
liability
Intangible asset
Trade and other payables
Revenue in advance
Employee provisions
Issued capital
Net DTA / (DTL)
Tax losses
Valuation allowance
Balance as 30 June 2021
Opening
Balance
$’000
120
92
(42)
184
(5,692)
94
166
1,384
564
-
6,138
(5,763)
(2,755)
Acquired in
business
combination
$’000
-
-
Recognised in
profit or loss
$’000
361
537
Charged
directly to
Equity
$’000
-
-
Effect of
foreign
exchange
$’000
-
-
Deferred
Tax Asset
$’000
481
629
Deferred
Tax Liability
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
25
13
(137)
(94)
8
(577)
-
-
3,660
(4,020)
(223)
-
-
-
-
-
-
14
-
-
-
14
-
-
-
-
-
-
-
-
-
(3)
(3)
-
197
-
-
174
807
578
(17)
-
(5,829)
-
-
-
-
(1,999)
1,999
9,798
(9,787)
-
-
878
(3,847)
68
Envirosuite Annual Report 2021
6.
TAX (Continued)
2020
Trade and other receivables
Inventory
Property, plant and equipment
Right of use asset and Lease
liability
Intangible asset
Trade and other payables
Revenue in advance
Employee provisions
Issued capital
Net DTA / (DTL)
Opening
Balance
$’000
-
-
-
-
-
(24)
-
325
152
-
Acquired in
business
combination
$’000
(22)
-
-
-
142
92
(42)
184
(4,188)
(1,503)
-
-
-
-
-
116
166
1,059
-
-
Tax losses
Valuation allowance
Balance as 30 June 2020
1,251
(1,251)
453
854
(854)
(4,210)
4,034
(3,660)
588
Recognised in
profit or loss
$’000
Charged
directly to
Equity
$’000
Effect of
foreign
exchange
$’000
Deferred
Tax Asset
$’000
Deferred
Tax Liability
$’000
-
-
-
-
-
-
-
-
412
-
-
-
412
-
-
-
-
-
2
-
-
-
-
-
-
-
120
92
-
184
-
94
166
1,384
564
-
-
(42)
-
(5,692)
-
-
-
-
(1,729)
1,729
6,138
(5,763)
1,250
-
-
(4,005)
The Group has unused tax losses of $34,266,606 (2020: $22,105,394) and R&D tax offsets of $1,058,808 for which a valuation
allowance has been placed against the related deferred tax asset of $9,797,582 (2020: $6,138,000) and has not been recognised.
7.
CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits
Cash and cash equivalents
2021
$’000
17,488
152
17,640
2020
$’000
20,266
4,119
24,385
Term deposits are with financial institutions with an investment grade rating and are for a term of 90 days or less. While the Group
is exposed to interest rate risk on cash and term deposits, the impact of fluctuations in market interest rates is not material to the
Group’s performance.
69
Envirosuite Annual Report 2021
6.
TAX (Continued)
8.
TRADE AND OTHER RECEIVABLES
Acquired in
Charged
Effect of
foreign
Opening
Balance
$’000
business
Recognised in
directly to
Deferred
Deferred
combination
profit or loss
Equity
$’000
exchange
Tax Asset
Tax Liability
$’000
$’000
$’000
2020
Inventory
Trade and other receivables
Property, plant and equipment
Right of use asset and Lease
liability
Intangible asset
Trade and other payables
Revenue in advance
Employee provisions
Issued capital
Net DTA / (DTL)
-
-
-
-
-
-
(24)
325
152
-
$’000
(22)
-
-
-
-
-
-
-
-
$’000
142
92
(42)
184
116
166
1,059
-
-
(4,188)
(1,503)
Tax losses
Valuation allowance
Balance as 30 June 2020
1,251
(1,251)
453
854
(854)
(4,210)
4,034
(3,660)
588
-
-
-
-
-
-
-
-
-
-
-
412
412
-
-
-
-
-
2
-
-
-
-
-
-
-
120
92
-
184
-
94
166
1,384
564
(42)
(5,692)
-
-
-
-
-
-
-
-
-
(1,729)
1,729
6,138
(5,763)
1,250
(4,005)
The Group has unused tax losses of $34,266,606 (2020: $22,105,394) and R&D tax offsets of $1,058,808 for which a valuation
allowance has been placed against the related deferred tax asset of $9,797,582 (2020: $6,138,000) and has not been recognised.
Trade receivables
Provision for impairment
Trade receivables, net
Contract assets
Other debtors
Trade and other receivables
Trade receivables, net aging analysis
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due more than 91 days
Total
Fair value and credit risk
2021
$’000
10,079
(2,086)
7,993
3,552
10
11,555
5,383
740
435
418
1,017
7,993
2020
$’000
9,550
(2,082)
7,468
1,992
1,270
10,730
4,154
1,077
983
577
677
7,468
Due to the short term nature of these receivables, the carrying amount is assumed to approximate their fair value. The maximum
exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. The fair value
of securities held for certain trade receivables is insignificant as is the fair value of any collateral sold or re-pledged. Refer to note
2 for more information on the risk management policy of the Group and the credit quality of the Group's trade receivables.
Management have considered the impact of COVID-19 on trade and other receivables and do not anticipate a significant
deterioration of recoverability beyond the level of current provisioning.
7.
CASH AND CASH EQUIVALENTS
9.
INVENTORIES
Cash at bank
Term deposits
Cash and cash equivalents
2021
$’000
17,488
152
17,640
2020
$’000
20,266
4,119
24,385
Work in progress
Finished goods
Inventories
Term deposits are with financial institutions with an investment grade rating and are for a term of 90 days or less. While the Group
is exposed to interest rate risk on cash and term deposits, the impact of fluctuations in market interest rates is not material to the
Group’s performance.
Inventories are carried at the lower of cost or net realisable value.
10.
OTHER ASSETS
Prepayments
Finance lease receivables
Deposits
Other current assets
Prepayments
Finance lease receivables
Deposits
Other non-current assets
2021
$’000
371
2,103
2,474
2021
$’000
960
65
971
1,996
51
18
-
69
2020
$’000
982
2,120
3,102
2020
$’000
924
-
271
1,195
-
-
422
422
Prepayments represent prepaid insurance, prepaid software licenses, and other prepaid expenses. Deposits include deposits for
building leases as well as cash backed bid and performance bond deposits. These deposits are pledged as security against non-
performance of the Group, including non-payment of rent, inability to deliver based on the bid submitted, or inability to deliver
based on a contract entered into with a customer.
70
Envirosuite Annual Report 2021
11.
PROPERTY, PLANT AND EQUIPMENT
Reconciliations of the carrying amounts of the various components of property, plant and equipment at the beginning and end of
the current year and prior year are presented in the table below. Refer to Note 20 for further details on the acquired balances as
part of the acquisition of AqMB Group in FY21.
2021
$’000
Cost value
Balance as at 1 June 2020
Additions
Transfer from inventories
Disposals
Asset write-off
Effect of foreign exchange
Balance as at 30 June 2021
Accumulated depreciation
Balance as at 1 June 2020
Depreciation for the period
Disposals
Asset write-off
Effect of foreign exchange
Balance as at 30 June 2021
Net book value
2020
$’000
Cost value
Balance as at 1 June 2019
Acquired in business combination
Additions
Transfer from inventories
Disposals
Effect of foreign exchange
Balance as at 30 June 2020
Accumulated depreciation
Balance as at 1 June 2019
Acquired in business combination
Depreciation for the period
Disposals
Effect of foreign exchange
Balance as at 30 June 2020
Net book value
Furniture and
fixtures
Computer
equipment
Monitors and
sensors
Leasehold
improvements
1,106
71
-
-
(661)
(28)
488
(894)
(85)
-
663
22
(294)
194
2,704
419
-
(15)
(1,442)
(120)
1,546
(2,133)
(276)
-
1,441
115
(853)
693
8,783
96
433
(12)
(2,649)
(226)
6,425
(6,499)
(744)
12
2,637
50
(4,543)
1,881
360
149
-
-
-
(2)
507
(123)
(105)
-
-
-
(228)
279
Furniture and
fixtures
Computer
equipment
Monitors and
sensors
Leasehold
improvements
110
1,035
14
-
(29)
(24)
1,106
(39)
(829)
(70)
28
15
(894)
212
82
2,559
95
-
(2)
(30)
2,704
(25)
(2,030)
(104)
-
23
(2,133)
571
-
8,617
-
449
(95)
(188)
8,783
-
(6,295)
(439)
95
140
(6,499)
2,284
194
96
68
-
-
2
360
(46)
(12)
(64)
-
(1)
(123)
237
Total
12,953
735
433
(27)
(4,752)
(376)
8,966
(9,649)
(1,210)
12
4,741
188
(5,919)
3,047
Total
386
12,307
177
449
(126)
(240)
12,953
(110)
(9,166)
(677)
123
178
(9,649)
3,304
71
Envirosuite Annual Report 2021
11.
PROPERTY, PLANT AND EQUIPMENT
12.
RIGHT OF USE ASSETS AND LEASE LIABILITIES
Right of use assets
Buildings
Balance at 1 July
Additions
Terminations of leases
Derecognition of right of use asset
Acquired in business combination
Depreciation
Effect of foreign exchange
Balance at end of year
Data centres
Balance at 1 July
Acquired in business combination
Depreciation
Effect of foreign exchange
Balance at end of year
Total Right of use assets
2021
$’000
3,227
1,161
(212)
(62)
-
(1,043)
(55)
3,016
516
-
(239)
(40)
237
2020
$’000
209
849
-
-
2,662
(457)
(36)
3,227
-
629
(89)
(23)
516
3,253
3,743
Furniture and
fixtures
Computer
equipment
Monitors and
Leasehold
sensors
improvements
Total
Lease liabilities
Current
Non Current
Balance at end of year
2021
$’000
1,530
2,472
4,002
2020
$’000
1,348
3,059
4,407
Building leases for periods of less than 12 months and variable lease payments for recharge of overhead costs by the building
owner are included within Building costs as disclosed in Note 5.
Lease liabilities are included within lease liabilities and other borrowings on the Statement of Financial Position. Interest expense
on lease liabilities for FY21 was $296,066 (FY20: $158,000) and is included within finance costs on the Income Statement:
Reconciliations of the carrying amounts of the various components of property, plant and equipment at the beginning and end of
the current year and prior year are presented in the table below. Refer to Note 20 for further details on the acquired balances as
part of the acquisition of AqMB Group in FY21.
Furniture and
fixtures
Computer
equipment
Monitors and
Leasehold
sensors
improvements
Total
2021
$’000
Cost value
Additions
Balance as at 1 June 2020
Transfer from inventories
Disposals
Asset write-off
Effect of foreign exchange
Balance as at 30 June 2021
Accumulated depreciation
Balance as at 1 June 2020
Depreciation for the period
Disposals
Asset write-off
Effect of foreign exchange
Balance as at 30 June 2021
Net book value
2020
$’000
Cost value
Balance as at 1 June 2019
Acquired in business combination
Additions
Disposals
Transfer from inventories
Effect of foreign exchange
Balance as at 30 June 2020
Accumulated depreciation
Balance as at 1 June 2019
Acquired in business combination
Depreciation for the period
Disposals
Effect of foreign exchange
Balance as at 30 June 2020
Net book value
1,106
71
-
-
(661)
(28)
488
(894)
(85)
-
663
22
(294)
194
110
1,035
14
-
(29)
(24)
1,106
(39)
(829)
(70)
28
15
(894)
212
2,704
419
-
(15)
(1,442)
(120)
1,546
(2,133)
(276)
-
1,441
115
(853)
693
82
2,559
95
-
(2)
(30)
2,704
(25)
(2,030)
(104)
-
23
(2,133)
571
8,783
96
433
(12)
(2,649)
(226)
6,425
(6,499)
(744)
12
2,637
50
(4,543)
1,881
8,617
-
-
449
(95)
(188)
8,783
-
(6,295)
(439)
95
140
(6,499)
2,284
360
149
-
-
-
(2)
507
(123)
(105)
-
-
-
(228)
279
194
96
68
-
-
2
(46)
(12)
(64)
-
(1)
(123)
237
12,953
735
433
(27)
(4,752)
(376)
8,966
(9,649)
(1,210)
12
4,741
188
(5,919)
3,047
386
12,307
177
449
(126)
(240)
(110)
(9,166)
(677)
123
178
(9,649)
3,304
360
12,953
72
Envirosuite Annual Report 2021
13.
INTANGIBLE ASSETS
Reconciliations of the carrying amounts of the various components of intangible assets at the beginning and end of the current
year and prior year are presented in the table below. Other intangibles consist of customer relationships, brand value and
intellectual property. Refer to Note 20 for further details on the acquired balances as part of the acquisition of AqMB in FY21 and
EMS in FY20.
2021
$’000
Cost value
Balance as at 1 July 2020
Acquired in business combination
Additions
Effects of foreign exchange
Balance as at 30 June 2021
Accumulated amortisation
Balance as at 1 July 2020
Amortisation for the period
Balance as at 30 June 2021
Net book value
2020
$’000
Cost value
Balance as at 1 July 2019
Acquired in business combination
Additions
Balance as at 30 June 2020
Accumulated amortisation
Balance as at 1 July 2019
Amortisation for the period
Balance as at 30 June 2020
Net book value
Impairment tests
Goodwill
89,383
-
128
2
89,513
-
-
-
89,513
Goodwill
340
89,043
-
89,383
-
-
-
89,383
Internally
developed
software
Acquired
Software
Other
Intangibles
8,769
-
2,301
-
11,070
(2,784)
(1,479)
(4,263)
6,807
9,398
1,204
770
-
11,372
(616)
(2,077)
(2,693)
8,679
5,103
-
90
-
5,193
(315)
(946)
(1,261)
3,932
Internally
developed
software
Acquired
Software
Other
Intangibles
6,896
-
1,873
8,769
(1,697)
(1,087)
(2,784)
5,984
-
9,233
166
9,398
-
(616)
(616)
8,783
16
4,727
360
5,103
-
(315)
(315)
4,788
Total
112,653
1,204
3,289
2
117,148
(3,714)
(4,503)
(8,217)
108,931
Total
7,252
103,002
2,399
112,653
(1,697)
(2,017)
(3,714)
108,939
The Group has identified that there are three (3) regional Cash Generating Units (CGU) which are aligned with the operating
segments disclosed in Note 3 and against which goodwill and other intangible assets are allocated and tested. As noted in Note
3, the number of CGUs was consolidated during the year from five (5) in FY20 to three (3) in FY21 as part of a management
restructure that occurred in May 2021. Goodwill has been allocated to each CGU as follows:
Asia Pacific
Americas
EMEA
Total Goodwill allocated
2021
$’000
37,705
22,107
29,701
89,513
The Group performed an impairment test on each of the CGUs including the goodwill allocated to them as at 30 June 2021 due to
the decrease in the share price between 31 December 2020 and 30 June 2021 being identified as an indicator of impairment.
Based on this impairment test, the recoverable value of each CGU, based on their calculated fair value less cost to sell, was
identified as being greater than their carrying value and therefore, no impairment was recognised. The fair value was determined
based on applying Envirosuite Limited’s revenue multiple of 2.0x, as calculated by dividing the broker consensus forecast of the
next twelve months (NTM) revenue by the market capitalisation of Envirosuite, and applying this revenue multiple to internal
forecasts of NTM revenue for each CGU. The market capitali sation of Envirosuite based on the 30-day VWAP of Envirosuite
Limited’s closing share price as quoted on the Australian Stock Exchange (ASX).
73
Envirosuite Annual Report 2021
Goodwill
89,383
128
-
2
89,513
89,513
Goodwill
340
89,043
89,383
-
-
-
-
-
-
-
89,383
Internally
developed
software
Acquired
Software
Other
Intangibles
8,769
2,301
-
-
11,070
(2,784)
(1,479)
(4,263)
6,807
6,896
-
1,873
8,769
(1,697)
(1,087)
(2,784)
5,984
9,398
1,204
770
-
11,372
(616)
(2,077)
(2,693)
8,679
-
9,233
166
9,398
-
(616)
(616)
8,783
Total
1,204
3,289
2
90
-
-
5,193
117,148
(315)
(946)
(1,261)
3,932
(3,714)
(4,503)
(8,217)
108,931
Total
7,252
103,002
2,399
112,653
(1,697)
(2,017)
(3,714)
108,939
16
4,727
360
5,103
-
(315)
(315)
4,788
Internally
developed
software
Acquired
Software
Other
Intangibles
EMS in FY20.
2021
$’000
Cost value
Balance as at 1 July 2020
Acquired in business combination
Additions
Effects of foreign exchange
Balance as at 30 June 2021
Accumulated amortisation
Balance as at 1 July 2020
Amortisation for the period
Balance as at 30 June 2021
Net book value
2020
$’000
Cost value
Balance as at 1 July 2019
Acquired in business combination
Additions
Balance as at 30 June 2020
Accumulated amortisation
Balance as at 1 July 2019
Amortisation for the period
Balance as at 30 June 2020
Net book value
Impairment tests
Asia Pacific
Americas
EMEA
Total Goodwill allocated
13.
INTANGIBLE ASSETS
13.
INTANGIBLE ASSETS (continued)
Reconciliations of the carrying amounts of the various components of intangible assets at the beginning and end of the current
year and prior year are presented in the table below. Other intangibles consist of customer relationships, brand value and
intellectual property. Refer to Note 20 for further details on the acquired balances as part of the acquisition of AqMB in FY21 and
The recoverable amount of internally developed software is determined based on a relief-from-royalty method (value-in-use)
method, which is based on the theory that the intangible asset owner would be willing to pay a reasonable royalty to use the
intangible asset assuming that they did not already own the asset. These calculations use revenue projections based on financial
forecasts approved by management covering a five year period with a terminal value included. A royalty rate of 7% has been
applied against these revenue projections to calculate the assumed royalty which is then discounted using a weighted average
cost of capital of 9.1% (FY20: 9.1%). Based on this calculation, there was no impairment charge to be recorded against internally
developed software (FY20: nil).
5,103
112,653
14.
TRADE AND OTHER PAYABLES
Trade payables
GST / VAT payable
Accrued expenses
Payable for EMS acquisition
Other liabilities
Total trade and other payables
15.
EMPLOYEE PROVISIONS
Employee benefits
Current
Opening balance 1 July
Acquired in business combination
Additional provisions
Amounts used
Unused amounts reversed
Balance at 30 June
Non-current
Opening balance 1 July
Acquired in business combination
Additional provisions
Amounts used
Unused amounts reversed
Balance at 30 June
2021
$’000
3,480
233
683
-
3,577
7,973
2021
$’000
6,203
-
267
(2,576)
-
3,894
230
-
-
(89)
-
141
2020
$’000
3,478
544
671
4,181
4,136
13,010
2020
$’000
625
4,058
1,633
(113)
-
6,203
63
246
-
(79)
-
230
The Group has identified that there are three (3) regional Cash Generating Units (CGU) which are aligned with the operating
segments disclosed in Note 3 and against which goodwill and other intangible assets are allocated and tested. As noted in Note
3, the number of CGUs was consolidated during the year from five (5) in FY20 to three (3) in FY21 as part of a management
restructure that occurred in May 2021. Goodwill has been allocated to each CGU as follows:
The Group performed an impairment test on each of the CGUs including the goodwill allocated to them as at 30 June 2021 due to
the decrease in the share price between 31 December 2020 and 30 June 2021 being identified as an indicator of impairment.
Based on this impairment test, the recoverable value of each CGU, based on their calculated fair value less cost to sell, was
identified as being greater than their carrying value and therefore, no impairment was recognised. The fair value was determined
based on applying Envirosuite Limited’s revenue multiple of 2.0x, as calculated by dividing the broker consensus forecast of the
next twelve months (NTM) revenue by the market capitalisation of Envirosuite, and applying this revenue multiple to internal
forecasts of NTM revenue for each CGU. The market capitali sation of Envirosuite based on the 30-day VWAP of Envirosuite
Limited’s closing share price as quoted on the Australian Stock Exchange (ASX).
Amounts not expected to be settled within the next 12 months
The provision for long service leave includes an estimate of the entitlements for employees in Australia who are expected to have
completed seven to ten years of continuous employment depending on the state in which they reside. The entire amount of long
service leave for employees where there is an unconditional entitlement is presented as current, since the Group does not have
an unconditional right to defer settlement. Provision for long service leave where the entitlement only becomes unconditional in a
period beyond 12 months are presented as non-current.
2021
$’000
37,705
22,107
29,701
89,513
74
Envirosuite Annual Report 2021
16.
ISSUED CAPITAL
Movements in the number of ordinary shares on issue during the financial year is presented in the following table.
Movements in ordinary shares
Balance at 1 July
Issue of ordinary shares - exercising of employee and director share options
Issue of ordinary shares - employee performance rights
Issue of ordinary shares - institutional and share placement
Issue of ordinary shares - accelerated non-renounceable entitlement offer
Issue of ordinary shares - acquisition of EMS Bruel & Kjaer
Ordinary shares on issue at 30 June
2021
1,024,685,906
500,000
3,648,555
120,178,667
44,826,299
-
1,193,839,427
2020
370,202,780
10,700,000
4,252,861
504,530,265
-
135,000,000
1,024,685,906
Options
For the year ended 30 June 2021, the Company issued the following options:
•
•
•
2,000,000 (2020: 22,500,000) issued to Directors with an exercise price of $0.40 each that expire in December 2022.
10,000,000 (2020: 26,250,000) issued to investors with an exercise price of $0.20 each that expire in April 2025.
No options (2020: 1,000,000) issued to employees for the year ended 30 June 2021.
In addition, for the year ended 30 June 2020, a total of 95,000,000 options were issued in relation to acquisition of EMS.
Each option allows the holder to receive 1 ordinary share of Envirosuite Limited upon paying the exercise price prior to the
expiration date. Information relating to the options, including details of options issued, exercised and lapsed during the financial
year and options outstanding at the end of the financial year, is set out in note 22.
At the 2019 Annual General Meeting held on 25 November 2019, shareholders approved the grant of up to 15,000,000 options
under the China Employee ESOP. These options are yet to be granted to any named employees so remain a contingent liability.
The options are expected to be granted progressively and otherwise not later than 3 years from the date of approval. These
options will expire on 31 March 2022 and will only vest on $10,000,000 in revenue (audited in accordance with international
financial reporting standards) being received into the wholly owned China subsidiaries of Envirosuite Limited by 31 December
2021. During FY21, the probability of the options vesting was reassessed as nil, resulting in the reversal of option expense
recognised in the prior period.
Share based payments
Executive performance rights issued to employees for the year ended 30 June 2021 totaled 13,596,890 (30 June 2020:
5,405,266). Each Performance Right entitles the holder to receive 1 ordinary share of Envirosuite Limited upon certain vesting
conditions being met.
Other equity securities
The amount shown for other equity securities is the value of the conversion rights relating to historic convertible instruments.
Capital risk management
The Group's objectives when managing capital are 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 optimal capital structure to reduce the cost of
capital.
Consistent with others in the industry, the Group monitors capital on the basis of the quick ratio. This ratio is calculated as current
assets (excluding inventory) divided by current liabilities. The quick ratio as at 30 June 2021 was 1.94x (30 June 2020: 1.53x)
As at 30 June 2021, the Group had cash and cash equivalents of $17,640k and no borrowings other than lease liabilities recognised
under AASB 16. The Group also has standing credit facility arrangements with banks of $359k (2020: $479k) of which $237k was
available as at 30 June 2021 (2020: $181k). The Group generated an operating cash outflow of $8,510k for the year ending 30
June 2021 (2020: $11,259k). The Group focuses on rolling cash flow forecasts to ensure that it has sufficient funding available
from cash and cash equivalents to fund operations.
75
Envirosuite Annual Report 2021
16.
ISSUED CAPITAL
17.
RESERVES AND RETAINED LOSSES
Movements in the number of ordinary shares on issue during the financial year is presented in the following table.
Movements in ordinary shares
Balance at 1 July
Issue of ordinary shares - exercising of employee and director share options
Issue of ordinary shares - employee performance rights
Issue of ordinary shares - institutional and share placement
Issue of ordinary shares - accelerated non-renounceable entitlement offer
Issue of ordinary shares - acquisition of EMS Bruel & Kjaer
Ordinary shares on issue at 30 June
2021
2020
1,024,685,906
370,202,780
500,000
3,648,555
120,178,667
44,826,299
10,700,000
4,252,861
504,530,265
-
-
135,000,000
1,193,839,427
1,024,685,906
Options
•
•
•
For the year ended 30 June 2021, the Company issued the following options:
2,000,000 (2020: 22,500,000) issued to Directors with an exercise price of $0.40 each that expire in December 2022.
10,000,000 (2020: 26,250,000) issued to investors with an exercise price of $0.20 each that expire in April 2025.
No options (2020: 1,000,000) issued to employees for the year ended 30 June 2021.
In addition, for the year ended 30 June 2020, a total of 95,000,000 options were issued in relation to acquisition of EMS.
Each option allows the holder to receive 1 ordinary share of Envirosuite Limited upon paying the exercise price prior to the
expiration date. Information relating to the options, including details of options issued, exercised and lapsed during the financial
year and options outstanding at the end of the financial year, is set out in note 22.
At the 2019 Annual General Meeting held on 25 November 2019, shareholders approved the grant of up to 15,000,000 options
under the China Employee ESOP. These options are yet to be granted to any named employees so remain a contingent liability.
The options are expected to be granted progressively and otherwise not later than 3 years from the date of approval. These
options will expire on 31 March 2022 and will only vest on $10,000,000 in revenue (audited in accordance with international
financial reporting standards) being received into the wholly owned China subsidiaries of Envirosuite Limited by 31 December
2021. During FY21, the probability of the options vesting was reassessed as nil, resulting in the reversal of option expense
recognised in the prior period.
Executive performance rights issued to employees for the year ended 30 June 2021 totaled 13,596,890 (30 June 2020:
5,405,266). Each Performance Right entitles the holder to receive 1 ordinary share of Envirosuite Limited upon certain vesting
The amount shown for other equity securities is the value of the conversion rights relating to historic convertible instruments.
The Group's objectives when managing capital are 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 optimal capital structure to reduce the cost of
Share based payments
conditions being met.
Other equity securities
Capital risk management
capital.
Reserves
Foreign exchange translation reserve
Movements
Balance 1 July
Effects of foreign exchange translation
Foreign exchange translation reserve – balance 30 June
Share-based payments reserve
Movements
Balance 1 July
Option expense
Transfer to retained losses
Share based payment reserve – balance 30 June
Total Reserves
Retained Losses
Movements
Opening retained losses
Transfer from employee shares reserve
Net profit/(loss) for the year
Balance 30 June
Nature and purpose of reserves
2021
$’000
(647)
(278)
(925)
12,387
479
(12)
12,854
11,929
2021
$’000
(41,663)
12
(12,497)
(54,148)
2020
$’000
(183)
(464)
(647)
315
12,515
(443)
12,387
11,740
2020
$’000
(23,863)
436
(18,236)
(41,663)
Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income and
accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment
is disposed of.
Share based payments reserve
The share based payments reserve is used to recognise the accrued grant date fair value of options and Performance Rights
issued to employees and directors but not exercised and issued. The fair value of options and Performance Rights is accrued into
the share based payment reserve over the service period. When options and Performance Rights are exercised and issued, the
grant date fair value is transferred from the share based payment reserve to Ordinary shares. When options are vested but not
exercised by the expiry date, the grant date fair value is transferred from the share based payment reserve to Retained Losses.
Dividends
The Group has not paid or declared any dividends during the period (2020: nil). Franking credits available for subsequent
financial years based on a tax rate of 26.0% amount to $651,756 (2020: nil).
Consistent with others in the industry, the Group monitors capital on the basis of the quick ratio. This ratio is calculated as current
assets (excluding inventory) divided by current liabilities. The quick ratio as at 30 June 2021 was 1.94x (30 June 2020: 1.53x)
18.
COMMITMENTS AND CONTINGENCIES
As at 30 June 2021, the Group had cash and cash equivalents of $17,640k and no borrowings other than lease liabilities recognised
under AASB 16. The Group also has standing credit facility arrangements with banks of $359k (2020: $479k) of which $237k was
available as at 30 June 2021 (2020: $181k). The Group generated an operating cash outflow of $8,510k for the year ending 30
June 2021 (2020: $11,259k). The Group focuses on rolling cash flow forecasts to ensure that it has sufficient funding available
from cash and cash equivalents to fund operations.
Contingencies
The Group has potential exposure to guarantees it has issued to third parties in relation to the performance and obligation of
controlled entities with respect to property lease rentals and customer contractual obligations amounting to $1,423,305 (30 June
2020: $2,127,863).
76
Envirosuite Annual Report 2021
19.
RELATED PARTY DISCLOSURES
Key management personnel
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each
member of the Group’s key management personnel (KMP) for the year ended 30 June 2021.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
2021
$’000
1,266
65
-
(200)
1,131
2020
$’000
1,071
44
-
2,260
3,375
During FY21, the probability of options issued to KMP in the prior period vesting was reassessed as nil, resulting in the reversal of
option expense recognised in the prior period.
Parent entity
The parent entity within the Group is Envirosuite Limited
Subsidiaries
Entity Name
Envirosuite Operations Pty Ltd
Envirosuite Holdings Pty Ltd
Envirosuite Corp
Envirosuite Europe Sociedad Limitada
Envirosuite Canada Inc.
Envirosuite Chile SpA
Envirosuite Colombia S.A.S.(1)
Beijing Envirosuite Environmental Science & Technology(1)
Hengli Ruiyan Environmental Engineering Co. Ltd(1)
Envirosuite Brasil Comercializacao De Equioamentos Ltda(2).
AqMB Pty Ltd(3).
AqMB Holdings Pty Ltd(3).
Envirosuite Holdings No 2 Pty Ltd
Envirosuite Australia No 2 Pty Ltd
EMS Bruel & Kjaer Pty Ltd
EMS Bruel & Kjaer Inc
EMS Bruel & Kjaer Iberica S.A.
Envirosuite Denmark Aps
EMS Bruel & Kjaer BV
Envirosuite UK Ltd
EMS Bruel & Kjaer Korea Ltd
EMS Bruel & Kjaer Taiwan Ltd
EMS Bruel & Kjaer Environmental Monitoring (Beijing) Ltd(4)
Country of
Incorporation
30 June 2021
%
30 June 2020
%
Australia
Australia
USA
Spain
Canada
Chile
Colombia
China
China
Brazil
Australia
Australia
Australia
Australia
Australia
USA
Spain
Denmark
Netherlands
United Kingdom
South Korea
Taiwan
China
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
100
100
100
100
100
100
100
100
100
100
100
(1)
(2)
(3)
(4)
These subsidiaries have a financial year-end of 31 December as required by local regulations. The Group has received an
exemption from ASIC from aligning the financial year end of these subsidiaries with that of the Envirosuite Limited, being
30 June.
Envirosuite Brazil was established July 2020.
Acquired 100% of the issued capital of AqMB Pty Ltd and AqMB Holdings Pty Ltd in August 2020
EMS Bruel & Kjaer Environmental Monitoring (Beijing) Ltd is deregistered in December 2020
Transactions with other related parties
There were no other transactions with related parties during the financial year.
77
Envirosuite Annual Report 2021
19.
RELATED PARTY DISCLOSURES
Key management personnel
20.
BUSINESS COMBINATIONS
Acquisition of AqMB Group
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each
member of the Group’s key management personnel (KMP) for the year ended 30 June 2021.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
On 17 August 2020, the group acquired 100% of the issued capital of AqMB Pty Ltd, a water modelling R&D technology software
company. Through acquiring 100% of the issued capital of AqMB Pty Ltd, the Group has obtained control of the company, which
primarily represented the rights to the software developed. The acquisition is part of the Group’s strategy to expand into the
market for Environmental Intelligence within the Water industry with the technology from AqMB, along with Envirosuite’s exclusive
license over SeweX algorithms, used in Envirosuite’s EVS Water product which was launched in November 2020.
During FY21, the probability of options issued to KMP in the prior period vesting was reassessed as nil, resulting in the reversal of
option expense recognised in the prior period.
The parent entity within the Group is Envirosuite Limited
2021
$’000
1,266
65
-
(200)
1,131
2020
$’000
1,071
44
-
2,260
3,375
Acquisition Balance Sheet
Purchase consideration
Cash paid
Less: cash acquired
Purchase consideration, net
Fair value of identifiable net assets acquired
Acquired software
Trade and other receivables
Total fair value of identifiable net assets acquired
Residual representing goodwill
Acquisition of EMS Bruel & Kjaer Holdings
2021
$’000
1,205
-
1,205
1,204
1
1,205
-
Country of
30 June 2021
30 June 2020
Incorporation
On 28 February 2020, the group acquired all of the share capital of EMS Bruel & Kjaer Holdings Pty Ltd (“EMS”) with the details of
that acquisition disclosed in the 2020 Annual Report. During the year ending 30 June 2021, the final purchase consideration
payments were made totalling $4,394k, which was $213k greater than the amount provisioned as at 30 June 2020. The additional
purchase consideration amount of $213k was offset with additional provisions recognised in connection with the acquisition and
resulted in a net increase to the goodwill recognised for EMS of $128k during FY21.
21.
CASH FLOW STATEMENT RECONCILIATION
Reconciliation of net profit / (loss) after tax to net cash flow from operations
Profit/(loss) after tax
Add back: Depreciation and amortisation
Add back: Finance expense / (income)
Add back: Foreign exchange loss / (gain)
Add back: Non-cash share based payments
Sub-total
Changes in operating assets and liabilities
(Increase) / decrease in trade and other debtors
(Increase) / decrease in inventories
(Increase) / decrease in other assets
(Increase) / decrease in deferred tax
Increase / (decrease) in trade creditors
Increase / (decrease) in other liabilities
Increase / (decrease) in other provisions
Net cash inflow / (outflow) from operating activities
2021
$’000
(12,497)
6,994
-
377
946
(4,180)
(825)
628
(801)
214
(1,317)
169
(2,398)
(8,510)
2020
$’000
(18,236)
3,241
15
155
3,154
(11,671)
(1,986)
550
(26)
(125)
717
(158)
1,440
(11,259)
Cash flow from operating activities excludes cash paid to suppliers and employees that are capitalised as internally developed
software within intangible assets. These cash flows are included as cash paid for intangible assets.
Non-cash transactions
Refer to Note 20 for shares issued in the acquisition of AqMB during the financial year.
78
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Parent entity
Subsidiaries
Entity Name
Envirosuite Operations Pty Ltd
Envirosuite Holdings Pty Ltd
Envirosuite Corp
Envirosuite Europe Sociedad Limitada
Envirosuite Canada Inc.
Envirosuite Chile SpA
Envirosuite Colombia S.A.S.(1)
AqMB Pty Ltd(3).
AqMB Holdings Pty Ltd(3).
Envirosuite Holdings No 2 Pty Ltd
Envirosuite Australia No 2 Pty Ltd
EMS Bruel & Kjaer Pty Ltd
EMS Bruel & Kjaer Inc
EMS Bruel & Kjaer Iberica S.A.
Envirosuite Denmark Aps
EMS Bruel & Kjaer BV
Envirosuite UK Ltd
EMS Bruel & Kjaer Korea Ltd
EMS Bruel & Kjaer Taiwan Ltd
Beijing Envirosuite Environmental Science & Technology(1)
Hengli Ruiyan Environmental Engineering Co. Ltd(1)
Envirosuite Brasil Comercializacao De Equioamentos Ltda(2).
Australia
Australia
USA
Spain
Canada
Chile
Colombia
China
China
Brazil
Australia
Australia
Australia
Australia
Australia
USA
Spain
Denmark
Netherlands
United Kingdom
South Korea
Taiwan
China
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
%
100
100
100
100
100
100
100
100
100
-
-
-
100
100
100
100
100
100
100
100
100
100
100
EMS Bruel & Kjaer Environmental Monitoring (Beijing) Ltd(4)
(1)
These subsidiaries have a financial year-end of 31 December as required by local regulations. The Group has received an
exemption from ASIC from aligning the financial year end of these subsidiaries with that of the Envirosuite Limited, being
30 June.
Envirosuite Brazil was established July 2020.
(2)
(3)
(4)
Acquired 100% of the issued capital of AqMB Pty Ltd and AqMB Holdings Pty Ltd in August 2020
EMS Bruel & Kjaer Environmental Monitoring (Beijing) Ltd is deregistered in December 2020
Transactions with other related parties
There were no other transactions with related parties during the financial year.
Envirosuite Annual Report 2021
22.
SHARE BASED PAYMENTS
The Group issued options and Performance Rights to employees and Directors as compensation for services provided.
Employee share plan
Under the Envirosuite Limited Employee Share Plan, shares issued to employees for no cash consideration vest immediately on
grant date. On this date, the market value of the shares issued is recognised as an employee benefits expense with a
corresponding increase in equity.
Performance Rights
Under the Envirosuite Performance Rights Plan, the Company issues performance rights to employees that provide them with the
right to acquire shares for no consideration upon certain vesting conditions being met, including remaining employed with the
Company, and/or share price performance. There was 13,596,890 Performance Rights issued during the year (2020: 5,405,266).
Employee share option plan and scheme
The establishment of the Employee Share Option Plan was approved by the Board prior to the IPO of Envirosuite Limited (formerly:
Pacific Environment Limited). The plan is designed to provide long term incentives for employees and executive directors to deliver
long term shareholder returns. Participation in the plan is at the Board's discretion and no individual has a contractual right to
participate in the plan or to receive any guaranteed benefits.
The amount of options that will vest depends on the individual contracts agreed by Envirosuite Limited. Once vested, the options
remain exercisable for a period of up to seven years after the grant date. When exercisable, each option is convertible into one
ordinary share on the day of the next Board meeting or within 15 business days, whichever is earlier. The exercise price of options
is pre-determined in the individual option agreements.
Options were issued to employees under the Employee Share Option Plan. Under this scheme, options granted vest as specified
under the individual option. The options are not forfeitable but lapse on the date specified in the individual option agreement. If
an employee ceases employment the options vest immediately and the employee has seven days to exercise the option at the
current market price or the original exercise price, whichever is greater. If the employee does not exercise the options, the options
lapse.
Options were also granted to non-employees during the period that have similar terms to those under the Employee Share Option
Plan. Set out on the following pages are summaries of options granted.
Options outstanding as at 30 June 2019
Granted
Forfeited
Exercised
Expired
Options outstanding as at 30 June 2020
Granted
Forfeited
Exercised
Expired
Options outstanding as at 30 June 2021
Number of options
15,333,333
144,750,000
(750,000)
(10,700,000)
(800,000)
147,833,333
12,000,000
-
-
(333,333)
159,500,000
Weighted average
exercise price
0.11
0.23
0.11
0.11
0.09
0.23
0.23
-
-
0.16
0.23
As at 30 June 2021, there were 133,250,000 options (2020: 121,583,333) that were exerciseable at a weighted average price of
$0.24 per share (2020: $0.25 per share). The weighted average remaining life of the options outstanding is 1.46 years (2020:
2.30 years).
79
Envirosuite Annual Report 2021
22.
SHARE BASED PAYMENTS
23.
EARNINGS PER SHARE
The Group issued options and Performance Rights to employees and Directors as compensation for services provided.
In calculating earnings per share, there were no adjustments made to net loss after tax or comprehensive loss for the period.
Under the Envirosuite Limited Employee Share Plan, shares issued to employees for no cash consideration vest immediately on
grant date. On this date, the market value of the shares issued is recognised as an employee benefits expense with a
Employee share plan
corresponding increase in equity.
Performance Rights
Under the Envirosuite Performance Rights Plan, the Company issues performance rights to employees that provide them with the
right to acquire shares for no consideration upon certain vesting conditions being met, including remaining employed with the
Company, and/or share price performance. There was 13,596,890 Performance Rights issued during the year (2020: 5,405,266).
Employee share option plan and scheme
The establishment of the Employee Share Option Plan was approved by the Board prior to the IPO of Envirosuite Limited (formerly:
Pacific Environment Limited). The plan is designed to provide long term incentives for employees and executive directors to deliver
long term shareholder returns. Participation in the plan is at the Board's discretion and no individual has a contractual right to
participate in the plan or to receive any guaranteed benefits.
The amount of options that will vest depends on the individual contracts agreed by Envirosuite Limited. Once vested, the options
remain exercisable for a period of up to seven years after the grant date. When exercisable, each option is convertible into one
ordinary share on the day of the next Board meeting or within 15 business days, whichever is earlier. The exercise price of options
is pre-determined in the individual option agreements.
Options were issued to employees under the Employee Share Option Plan. Under this scheme, options granted vest as specified
under the individual option. The options are not forfeitable but lapse on the date specified in the individual option agreement. If
an employee ceases employment the options vest immediately and the employee has seven days to exercise the option at the
current market price or the original exercise price, whichever is greater. If the employee does not exercise the options, the options
Weighted average number of shares used in denominator
Basic earnings per share
Diluted earnings per share
2021
number
1,027,169,980
1,027,169,980
2020
number
619,896,792
619,896,792
There are 28,250,000 in share options issued and in-the-money, and 12,483,001 of performance rights that are not included in
diluted earnings per share as these would have an antidilutive effect on earnings per share. These potential ordinary shares are
antidilutive as their conversion to ordinary shares would decrease loss per share. If these share options were included in the
calculation of diluted earnings per share, the weighted average number of shares used in the denominator would be
1,060,320,277.
24.
SUBSEQUENT EVENTS
The Directors are not aware of any matters or circumstances have arisen since the end of the financial year that significantly
affected, or could significantly affect, the operations of the consolidated Group, the results of those operations, or the state of
affairs of the consolidated Group in future financial years.
25.
PARENT ENTITY FINANCIAL INFORMATION
Parent entity financial statements
The following information has been extracted from the books and records of the parent entity and has been prepared in
accordance with Australian Accounting Standards. Non-current assets includes investment in subsidiaries which are accounted
for at cost value less impairment.
lapse.
Granted
Forfeited
Exercised
Expired
Granted
Forfeited
Exercised
Expired
2.30 years).
Options outstanding as at 30 June 2019
Options outstanding as at 30 June 2020
Options outstanding as at 30 June 2021
Options were also granted to non-employees during the period that have similar terms to those under the Employee Share Option
Statement of Financial Position
Plan. Set out on the following pages are summaries of options granted.
Number of options
exercise price
Weighted average
15,333,333
144,750,000
(750,000)
(10,700,000)
(800,000)
147,833,333
12,000,000
-
-
(333,333)
159,500,000
0.11
0.23
0.11
0.11
0.09
0.23
0.23
-
-
0.16
0.23
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Equity
Issued capital
Reserves
Retained losses
Total Equity
As at 30 June 2021, there were 133,250,000 options (2020: 121,583,333) that were exerciseable at a weighted average price of
$0.24 per share (2020: $0.25 per share). The weighted average remaining life of the options outstanding is 1.46 years (2020:
Income Statement and Statement of Comprehensive Income
Profit / (loss) after tax
Total comprehensive profit / (loss)
2021
$’000
11,604
148,207
159,811
546
1,813
(2,359)
169,520
12,854
(24,922)
157,452
2021
$’000
(8,342)
(8,342)
2020
$’000
13,448
142,487
155,935
4,639
-
4,639
155,537
12,388
(16,629)
151,296
2020
$’000
(5,095)
(5,095)
80
Envirosuite Annual Report 2021
DIRECTORS DECLARATION
In accordance with a resolution of the directors of Envirosuite Limited, the directors of the Company declare that:
(a) The financial statements and notes set out on pages 50 to 87 are in accordance with the Corporations Act 2001 , and:
(i) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(ii) give a true and fair view of the financial position as at 30 June 2021 and of the
performance for the year ended on that date of the Consolidated Group; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
The directors have been given the declarations by the chief executive office and chief financial officer required by
section 295A of the Corporations Act 2001
David Johnstone, Chairman
17 August 2021
81
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ENVIROSUITE LIMITED Report on the Financial Report Opinion We have audited the accompanying financial report of Envirosuite Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated income statement and statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the company and the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. In our opinion the financial report of Envirosuite Limited is in accordance with the Corporations Act 2001, including: a) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the year ended on that date; and b) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the consolidated entity 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 (including Independence Standards) (the code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. 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. The matter was 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 the matter. For the matter below, our description of how our audit addressed the matter is provided in that context. Envirosuite Annual Report 2021
DIRECTORS DECLARATION
In accordance with a resolution of the directors of Envirosuite Limited, the directors of the Company declare that:
(a) The financial statements and notes set out on pages 50 to 87 are in accordance with the Corporations Act 2001 , and:
(i) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(ii) give a true and fair view of the financial position as at 30 June 2021 and of the
performance for the year ended on that date of the Consolidated Group; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
The directors have been given the declarations by the chief executive office and chief financial officer required by
section 295A of the Corporations Act 2001
David Johnstone, Chairman
17 August 2021
82
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ENVIROSUITE LIMITED Report on the Financial Report Opinion We have audited the accompanying financial report of Envirosuite Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated income statement and statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the company and the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. In our opinion the financial report of Envirosuite Limited is in accordance with the Corporations Act 2001, including: a) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the year ended on that date; and b) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the consolidated entity 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 (including Independence Standards) (the code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. 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. The matter was 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 the matter. For the matter below, our description of how our audit addressed the matter is provided in that context.
83
1. Carrying amount of intangible assets Why significant How our audit addressed the key audit matter As at 30 June 2021 the carrying value of intangible assets is $108,931,000 (2020: $108,939,000), as disclosed in Note 13. The consolidated entity’s accounting policy in respect of intangible assets is outlined in Note 1(o), and for goodwill in Note 1(c). The carrying amount of intangible assets is a key audit matter due to: the significance of the balance (being 72% of total assets); and the level of judgement applied in evaluating management’s assessment of impairment. As outlined in Notes 1 and 13, management assessed the carrying amount of intangible assets through impairment testing utilising a fair value less costs of disposal model in which significant judgements are applied in determining key assumptions. These assumptions include the assessment of the enterprise value or revenue multiple to be applied, forecasted revenue and estimated costs of disposal. The judgements made in determining the underlying assumptions in the model have a significant impact on the carrying amount of intangible assets, and accordingly the amount of any impairment charge, to be recorded in the current financial year. In assessing this key audit matter, we involved senior audit team members who understand the industry. Our audit procedures included, amongst others: evaluating management’s methodology for determining the carrying amount of intangible assets by comparing the fair value less costs of disposal model with generally accepted valuation methodology and accounting standard requirements; conducting sensitivity analysis on key assumptions such as the enterprise value or revenue multiple and forecasted revenue, within reasonable foreseeable ranges, and comparing the calculated recoverable amount to the carrying value of net assets of each cash-generating unit (‘CGU’); challenging the key assumptions used in management’s value in use model by: - assessing forecasted revenue set by management in comparison to historical results and future approved budgets - evaluating the enterprise value or revenue multiple set by management in comparison to market and industry information available - assessing the impact of the COVID-19 pandemic on all key assumptions assessing the appropriateness of any changes in key assumptions during the year and the change in CGU designation; and assessing the appropriateness of the related disclosures in Note 13. Other Information The Directors are responsible for the other information. The other information comprises the information included in the consolidated entity’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 we do not express any form of assurance conclusion thereon. Envirosuite Annual Report 2021 84
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Directors’ Responsibilities for the Financial Report The Directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the consolidated entity’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 consolidated entity 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 and 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, individual or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with 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 consolidated entity’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and other 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 consolidated entity’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 consolidated entity to cease to continue as a going concern. Envirosuite Annual Report 2021 85
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the consolidated entity to express an opinion on the group financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2021. The Directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Envirosuite Limited for the year ended 30 June 2021 complies with section 300A of the Corporations Act 2001. PKF BRISBANE AUDIT SHAUN LINDEMANN PARTNER BRISBANE 17 AUGUST 2021 Envirosuite Annual Report 2021 NOTES TO FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable at 12 August 2021
The shareholder information set out below was applicable as at 12 August 2021
1. SHAREHOLDING
Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Shares
91
559
663
2,136
1,114
4,563
Options
-
-
-
-
17
17
The number of shareholdings held in less than marketable parcels was 449 with total shares of 1,122,232
Substantial holders
Substantial holders in the Company are set out below:
Ordinary shares
National Nominees Limited
Macquarie Corporate Holdings
Voting Rights
The voting rights attaching to each class of equity securities are set out below
Number held
88,331,832
80,000,000
Percentage
7.49%
6.71%
Ordinary shares
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.
Options
Options carry the standard voting rights available to ordinary shareholders when converted to ordinary shares.
86
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Envirosuite Annual Report 2021
Number held
91,457,434
80,000,000
52,684,459
39,030,605
30,801,812
28,627,974
27,805,537
24,904,939
22,392,058
21,014,705
20,700,000
18,341,253
16,292,286
12,828,279
12,000,000
11,419,342
10,689,656
10,496,962
10,000,000
8,311,156
Percentage
7.64%
6.69%
4.40%
3.26%
3.27%
2.39%
2.32%
2.08%
1.89%
1.76%
1.73%
1.53%
1.36%
1.07%
1.00%
0.94%
0.89%
0.88%
0.84%
0.70%
549,598,457
49.93%
Number held
159,500,000
1. SHAREHOLDING (continued)
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
National Nominees Limited
Macquarie Corporate Holdings
UBS Nominees Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees
Rubi Holdings Pty Ltd
Mr Robin Omerod & Ms Kristin Zeise
Fifty Second Celebration Pty
The Adams McLean
Coalwell Pty Limited
Mr Zhigang Zhang
Thirty-Fifth Celebration Pty
Bungeeltap Pty Ltd
BSD Pty Ltd
Mr Robin Ormerod
Fordholm Consultants Pty Ltd
HSBC Custody Nominees
Spectris Group Holdings Ltd
The Elsie Cameron Foundation
Unquoted equity securities
Envirosuite Limited unlisted options
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Envirosuite Annual Report 2021
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88
Envirosuite Annual Report 2021 CORPORATE DIRECTORY
Envirosuite Limited
ABN: 42 122 919 948
Board of Directors
David Johnstone
Chairman
Hugh Robertson
Director
Peter White
Director
Sue Klose
Director
Company Secretary
Rachel Ormiston
Registered office and
principal place of business
Suite 1, Level 10, 157 Walker St
North Sydney NSW 2060
Phone: 02 8484 5819
Share Registry
Boardroom Pty Limited
Level 12, 225 George Street,
Sydney, New South Wales 2000
Phone: 02 9290 9600
Auditor
PKF Brisbane Audit
Level 6, 10 Eagle Street,
Brisbane, Queensland 4000
Phone: 07 3839 9733
Stock Exchange Listing
Envirosuite Limited shares are
listed on the Australian Securities
Exchange (Code EVS)
www.envirosuite.com