IDT AUSTRALIA LTD
ANNUAL REPORT 2020
COMPANY INFORMATION
CONTENTS
Page No.
Directors
Alan Fisher
BCom, FCA, MAICD
Chair
Hugh Burrill
BSc, MScSt, MBA, FAICD
Mary Sontrop
BAppSci, Grad Dip Quality Management, Grad Dip
Management (Health), MBA, FAICD
Michael Kotsanis
BSc, Grad Dip Business, MBus
Chief Executive Officer / Company Secretary
Dr David Sparling
BVSc (Hons), LLB (Hons), Grad Dip App Cor Gov
Letter from the Chair and Chief
Executive Officer
Report of the Directors
Auditors Independence Declaration
Statement of Profit or Loss and
Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to and forming part of
the Financial Statements
Directors’ Declaration
Independent Audit Report to
the Members
Chief Financial Officer / Company Secretary
Shareholder Information
Ancila Desai
B Com (Hons), CA, MBS, Executive MBA
2-3
4-12
13
14
15
16
17
18-31
32
33-36
37
Bankers
National Australia Bank Limited
NAB Health
Level 2, 151 Rathdowne Street
CARLTON, VICTORIA, 3053
NAB Health
Level 2, 151 Rathdowne Street
CARLTON, VICTORIA, 3053
Auditors
Deloitte Touche Tohmatsu
550 Bourke Street
MELBOURNE, VICTORIA, 3000
Share Register
Link Market Services Limited
Tower 4, 727 Collins Street
MELBOURNE, VICTORIA, 3008
Stock Exchange
Australian Stock Exchange Limited
530 Collins Street
MELBOURNE, VICTORIA, 3000
(ASX Code: IDT)
Registered Office and Principal Place of Business
45 Wadhurst Drive
BORONIA, VICTORIA, 3155
Telephone +61 3 9801 8888
Facsimile +61 3 9837 6445
Website Address
www.idtaus.com.au
1
LETTER FROM THE CHAIR AND CHIEF EXECUTIVE OFFICER
We are pleased to present the Annual Report for IDT Australia Limited (“IDT/the Company”) for the year ended 30 June
2020. Significant achievements during the year in review included a material year on year improvement in IDT’s financial
results as well as several important commercial and regulatory gains. These all support our stated goal of strengthening
and expanding IDT’s foundations for future growth.
Financial Highlights
IDT’s turnover for the year of $14.2 million represents a year on year revenue growth of 16.8% (which includes a $0.9
million previously capitalised milestone). Tighter control on expenses, coupled with stronger controls in procurement and
manufacturing, delivered an improvement in expenses of $0.6 million compared to 2019. The Company finished the
year with a strong cash balance of $6.9 million. In the financial year ended 30 June 2019, $1.5 million was returned to
shareholders through the on market share buy-back. The on market share buy-back was formally concluded in October
2019.
Lifting of FDA Warning Letter
Following-on from a successful re-inspection of the company’s manufacturing facilities in May 2019, IDT received formal
correspondence from the U.S. Food and Drug Administration (FDA) in September 2019 that it had lifted the company’s
Warning Letter. The Company’s facility status has been restored and it is now again free to develop and market
pharmaceutical products for the United States.
IDT Executing On Its Medicinal Cannabis Manufacturing Plan
During the year, IDT made good progress executing on its Medicinal Cannabis Manufacturing Plan. On 20 May 2019,
the Company secured its own Medicinal Cannabis Manufacturing Licence from the Department of Health - Office of Drug
Control. IDT was able to leverage its GMP licenses (active pharmaceutical ingredient and finished dosage form) with
the Therapeutic Goods Administration and its Poisons licenses (Schedule 8 and Schedule 9) to commence development
and commercial manufacture of GMP medicinal cannabis active pharmaceutical ingredients and finished dosage forms.
In January 2020, the company announced the completion of the first commercial scale batches of solvent extracted GMP
medicinal cannabis resin. In April 2020, IDT announced the manufacture of the first batches of GMP flower-in-bottle and
oil-in-bottle products.
The Company’s goal is to continue establishing its Boronia manufacturing campus as a centre of excellence for GMP
medicinal cannabis product manufacturing for a range of active pharmaceutical ingredients and finished dosage forms.
Board and Senior Executive Renewal
The year has also seen renewal in both the Board of Directors and IDT’s Senior Executive team. Having joined IDT as
a Director in 2013, Mr. Graeme Kaufman retired from the Board at the completion of the 2019 Annual General Meeting.
We thank Mr. Kaufman for his important and lasting contribution throughout his service as a Director. In March 2020,
Mr. Michael Kotsanis was appointed as an independent non-executive Director of the Board. Mr. Kotsanis brings to the
Board renewed strategic and operational experience in the global pharmaceutical industry.
IDT’s senior executive team also underwent renewal during the year. In June 2020, the Company appointed Ms. Ancila
Desai to the role of Chief Financial Officer and Joint Company Secretary. Ms. Desai brings a renewed energy to the role
with over 15 years of commercial experience, including senior finance roles at Metcash, Toll and Boost Juice.
COVID-19 and Australian Sovereign Pharmaceutical Manufacturing
In the early stages of the COVID-19 pandemic in April 2020, the Australian Government requested IDT to provide
assistance with certain COVID-19 response activities. Throughout the COVID-19 crisis, the company’s GMP
pharmaceutical manufacturing facilities and laboratories have remained fully operational and business operations have
continued with minimal disruption.
Following on from the initial phase of the pandemic, IDT has made several public submissions to the Australian
Government regarding critical dependencies in Australia’s pharmaceutical supply chain. The speed at which certain
pharmaceutical supply chains broke down during the global pandemic highlights a fundamental sovereign risk associated
with the outsourcing of Australia’s drug manufacturing to other countries. IDT is Australia’s last small molecule API
manufacturer and one of only a handful of local finished dosage form manufacturers. It is the Company’s stated position
that Australia should have increased local manufacturing capacity to meet the country’s supply needs regarding a range
of essential medicines. The Company will continue to participate in ongoing discussions on mapping and better
2
understanding Australia’s pharmaceutical supply chain and how Australia can best leverage its extant sovereign
capabilities to reshape the nation’s pharmaceutical supply chain post COVID-19.
The Year Ahead
Looking forward, the Company will focus on building on the financial momentum being created with a view to growing
and expanding the business. We will be increasing our efforts to promote greater levels of sovereign pharmaceutical
manufacturing. Australia’s goal should be to actively reduce the number of critical dependencies associated with
outsourced essential medicines.
The Company will also be expanding its activities in GMP medicinal cannabis product manufacture and, in the coming
year, more local and international product launches are planned.
We thank shareholders for their continued support.
Alan Fisher
Chair
25 August 2020
David Sparling
Chief Executive Officer
3
REPORT OF THE DIRECTORS - 30 JUNE 2020 (Including Remuneration Report)
The Directors present their report on the financial report of the Company for the year ended 30 June 2020.
The following persons were Directors of IDT Australia Limited during or since the end of the financial year:
Alan Fisher
Michael Kotsanis (from 23 March 2020)
Graeme Kaufman (retired 18 November 2019)
Hugh Burrill
Mary Sontrop
Except as noted above, all other Directors held office during the whole of the financial year and since the end of the
financial year.
Principal Activities
The principal activities of the Company through the course of the year were the supply of products and provision of research
and development and other technical services within the pharmaceutical and allied industries.
Review of Operations
Total revenue for the year was up by $2.0 million on a year on year basis. As a consequence of this revenue improvement
coupled with stronger controls in procurement and manufacturing, the business has reported a positive movement of
68.4% in reported net profit / (loss) after tax.
Revenue of $14.2 million includes $0.9 million previously capitalised milestones which were recognised into current year
revenue following termination of the temozolomide distribution agreement in December 2019. Excluding this one off
adjustment, the underlying Revenue from operations is 8.7% higher than FY19.
Cost containment initiatives resulted in Direct Expenses (being raw materials and employee related expenses) for the
year being lower by $0.6 million. Whilst alternate commercialisation options are being assessed for temozolomide, an
impairment expense of $0.7 million has been recognised to reduce the carrying value of the temozolomide related
intangible asset to nil.
The FDA formally notified IDT that they had restored IDT’s facility inspection classification from Official Action Indicated
(OAI) to Voluntary Action Indicated (VAI). The Warning Letter was officially lifted by the FDA in September 2019.
IDT continues to make strong inroads into the medicinal cannabis space and in May 2019 IDT secured its own medicinal
cannabis manufacturing licence from the Australian Government Department of Health - Office of Drug Control. IDT’s
medicinal cannabis manufacturing licence allows the Company to manufacture and commercialise medicinal cannabis
extract and finished dosage forms. In August 2019 IDT secured the first in a series of medicinal cannabis manufacturing
permits which allow IDT to undertake extraction and purification activities. Extraction is a precursor to developing and
manufacturing finished dose form medicinal cannabis products for both domestic and export markets.
Earnings per share have increased by 1.7 cents during the year.
Summary of financial performance
Revenue
Net profit / (loss) before tax
Net profit / (loss) after tax
Basic earnings per share
Diluted earnings per share
30 June 2020
$000
30 June 2019
$000
Movement
14,169
(1,981)
(1,919)
(0.8¢)
(0.8¢)
12,130
(6,119)
(6,083)
(2.5¢)
(2.5¢)
2,039
4,138
4,164
1.7¢
1.7¢
Financial position
At 30 June 2020, the Company has cash reserves of $6.9 million. This cash balance is further supported by an unutilised
facility of $2.5 million with the National Australia Bank Ltd, which is next due for renewal on 31 July 2021. These cash
reserves and debt facility are available to support the Company to execute strategies and projects to extend production
and manufacturing capabilities.
In October 2018 the Board of Directors initiated an on market share buy-back within the “10/12 limit” as defined by the
Corporations Act 2001 in order to return excess funds to shareholders. In the financial year ended 30 June 2019, $1.5
million was returned to shareholders through the on market share buy-back. No shares were purchased in this current
reporting period and the on market share buy-back was formally closed in October 2019.
4
Results
The net result of operations after applicable income tax was a loss of $1.9 million (2019: $6.1 million loss).
Dividends
No dividends were paid during the financial year. There are no dividends or distributions recommended or declared for
payment to members.
Significant Changes in the State of Affairs
In the opinion of the Directors, there have been no significant changes in the state of affairs of the Company during the
financial year not otherwise disclosed in this report or the financial statements.
Matters Subsequent to the End of the Financial Year
The COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020 and Australian
Government restrictions commenced in that same month. The financial statements have been prepared based upon
conditions existing at 30 June 2020, which included the impact of COVID on the business at that time. The pandemic has
caused disruption to businesses and economic activity. The Company considers further Government restrictions such as
the Victorian Government’s August 2020 Stage 4 restrictions in Melbourne to be a non-adjusting post balance sheet event
and accordingly the financial effects post year end of COVID-19 have not been reflected in the financial statements at 30
June 2020. The scale and duration of the COVID-19 pandemic and its associated business and economic disruptions
remain uncertain as at the date of this report. However they may have an impact on the Company’s 2021 financial year
earnings, cash flow and financial condition. Options for COVID-19 related government support are being pursued where
they are available for the business to access. Further information has been provided in Likely Developments below.
There has not been any other matter or circumstance occurring subsequent to the end of the financial year that has
significantly affected, or may significantly affect, the operations, results of the operations or the state of affairs of the
Company.
Likely Developments
Towards the end of the financial year, IDT assisted the Federal Government in the initial phase of Australia’s COVID-19
response. The pandemic created challenges and highlighted critical dependencies associated with Australia’s
pharmaceutical supply chain. IDT has made several submissions to the Australian Government in this regard and the
Company will continue to engage with the Government and industry to promote increased levels of sovereign
pharmaceutical manufacturing in Australia.
It is difficult to quantify or predict the future impact of the global COVID-19 pandemic on IDT’s business operations. The
assistance that IDT provided to the Federal Government’s COVID-19 response has resulted in a positive impact on IDT’s
asset utilisation. Sovereign pharmaceutical manufacturing opportunities could (if these opportunities emerge) also impact
the Company in a positive way. In August 2020 IDT made a formal submission to the Australian Government’s COVID-19
Vaccine and Treatment Manufacture and Supply Chain Request for Information. The Company’s submission details of the
IDT’s current facilities and capabilities as well as our future potential capacity in relation to the possible manufacture and
supply of COVID-19 vaccines and treatments. Conversely, occurrences such as increased or extended restrictions in
Melbourne, or supply chain disruption and economic uncertainty could produce negative impacts on the Company in the
future.
Looking to the year ahead, IDT’s focus is on growing and expanding its base business to make further gains on
strengthening the Company’s financial position. IDT will continue to engage with the Government and industry to work to
reduce pharmaceutical supply chain dependencies and to promote locally sourced medicines and sovereign manufacturing.
For the year ahead, IDT intends to continue to utilise its experience and unique manufacturing assets to actively grow its
presence in the medicinal cannabis market. Products are being developed to support more local and international product
launches. Our goal is to establish the Company’s Boronia manufacturing campus as a centre of excellence for GMP
medicinal cannabis product manufacturing for a range of active pharmaceutical ingredients and finished dosage forms.
Environmental Regulations
IDT Australia Ltd is subject to environmental regulations and other licenses in respect of its manufacturing facilities
located in Boronia, Victoria. The Company monitors changes in its regulatory environment and ensures ongoing
compliance with new requirements. It is subject to regular inspections and audits by responsible State and Federal
authorities and by local and international clients. The Company considers it has complied with all necessary
environmental regulations throughout the year ended 30 June 2020 and no related issues have arisen since the end of
the financial year to the date of this report.
5
Corporate Governance Statement
The Company complies with
the Australian Securities Exchange Corporate Governance Principles and
Recommendations, 4th edition (ASX Recommendations). The Company’s Corporate Governance Statements and
Policies, including disclosures required by the ASX Recommendations, may be viewed on the Company’s website,
https://en.idtaus.com.au/investors/corporate-governance/.
Indemnification of Officers
During the financial year, the Company paid an insurance premium to insure Directors and Officers (D&O) of the
Company. Under the terms of this policy the premium paid by the Company is not permitted to be disclosed.
The liabilities insured are legal costs which may be incurred in defending civil or criminal proceedings which may be
brought against D&O in their capacity as D&O of the Company, and any other payments arising from liabilities incurred
by D&O in connection with such proceedings, except for where such liabilities arise out of conduct involving a wilful
breach of duty by D&O or improper use by D&O of their position or of information to gain advantage for themselves or
someone else or to cause detriment to the Company.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify a D&O of the Company against a liability incurred.
6
Information about the Directors
ALAN D FISHER
Qualifications: BCom, FCA, MAICD
Experience: extensive and proven experience in restoring and enhancing shareholder value. He spent 24 years at
global accounting firm Coopers & Lybrand where he headed and grew the Melbourne Corporate Finance Division.
Following this tenure, he developed his own corporate advisory business specialising in M&A, strategic advice,
business restructurings and capital raisings.
Other Current Directorships: Non-Executive Chair Centrepoint Alliance Ltd, Non-Executive Director and Chair of
Audit and Risk Committees of Bionomics Ltd, Thorney Technologies Ltd and Simavita Ltd.
Former Directorships in Last 3 Years: nil
Responsibilities: Chair, Non-Executive Director, member Audit and Risk Committee
Equity interests in Company: nil
HUGH N BURRILL
Qualifications: BSc, MScSt, MBA, FAICD
Experience: formerly Corporate Vice President, Global Pharma Research & Development, Hospira Inc where he was
responsible for overall pipeline portfolio management, and research and development of generic and specialty
pharmaceuticals. Prior to this he held senior international roles within Hospira Inc and the original Mayne Pharma Ltd
and currently provides consulting services in pharmaceutical strategic management, product development, regulatory
affairs and intellectual property
Other Current Directorships: nil
Former Directorships in Last 3 Years: Non-Executive Director and Deputy Chair Nova Aerospace Pty Ltd (2007 –
2020)
Responsibilities: Non-Executive Director, Chair Audit and Risk Committee, Member Remuneration and Nomination
Committee
Equity interests in Company: nil
MARY SONTROP
Qualifications: BAppSci, Grad Dip Quality Management, Grad Dip Management (Health), MBA, GAICD
Experience: experience in the biopharmaceutical sector across manufacturing operations, quality and business
integration. Mary has held executive roles at CSL Limited where she participated in international acquisitions, turned
around unprofitable manufacturing operations and established a globally integrated manufacturing network over four
countries. As head of CSL’s Australia and New Zealand pharmaceutical business she and her team successfully
delivered the human papilloma virus immunisation programs and obtained FDA approval to manufacture and export
seasonal and pandemic influenza vaccines.
Other Current Directorships: nil
Former Directorships in Last 3 Years: nil
Responsibilities: Non-Executive Director, Chair Remuneration and Nomination Committee
Equity interests in Company: 275,000 fully paid ordinary shares
MICHAEL KOTSANIS (from 23 March 2020)
Qualifications: BSc, Grad Dip Business, MBus
Experience: seasoned executive with over 30 years of strategic and operational experience in the global
pharmaceutical industry. Michael was appointed as CEO of Acrux Ltd in November 2014. He was formerly the Chief
Commercial Officer and a Board Member of Synthon Holding BV, a Dutch based international pharmaceutical
company with revenue over EUR250 million, a position he held for four years. Prior to Synthon, he served as
President, Europe, Middle East and Africa, for Hospira and where he was responsible for delivering over US$500
million in annual revenue. Hospira was the global leader in generic injectable pharmaceuticals prior to its acquisition by
Pfizer. Michael joined Hospira following its acquisition of Mayne Pharma in 2007, where he had served as President,
Asia Pacific from 2002. He joined Mayne following their acquisition of FH Faulding in 2001, where he held
responsibility for commercial activities of the pharmaceutical business in Australia and New Zealand. Michael was
formerly a Board Member of the European Generics Association and a Director of the Generic Medicines Industry of
Australia.
Other Current Directorships: Acrux Ltd
Former Directorships in Last 3 Years: nil
Responsibilities: Non-Executive Director, Member of Audit and Risk and Remuneration and Nomination Committees
Equity interests in Company: 50,000 fully paid ordinary shares
GRAEME KAUFMAN (until 18 November 2019)
Qualifications: BSc, MBA
Experience: wide ranging experience in the biotechnology sector, across scientific, commercial and financial areas. At
CSL Limited, he was responsible for manufacturing facilities, operated a division in the high technology medical device
market and as General Manager Finance was responsible for finance, strategy development, human resources and
information technology. He was Executive Vice President Corporate Finance with Mesoblast Limited until 2013.
Other Current Directorships: Non-Executive Chair, Paradigm BioPharmaceuticals Limited (since 2014)
Former Directorships in Last 3 Years: Non-Executive Chair, Bionomics Ltd (until August 2016)
Responsibilities: Non-Executive Director, Member of Audit and Risk and Nomination and Remuneration Committees
Equity interests in Company: 405,000 fully paid ordinary shares
7
Information about the Secretaries
DR DAVID SPARLING (Chief Executive Officer)
Qualifications: BVSc (Hons), LLB (Hons), Grad Dip App Cor Gov
Experience: joined IDT in May 2013 as Vice President Legal and Corporate Development and was promoted to CEO
in February 2018. More than 20 years of pharmaceutical and diagnostics experience in CEO, Director and
corporate/business development roles. David is an experienced senior executive, having held roles at CEO and Chair
level in ASX listed companies, including Chair FYI Resources Limited, Vice President Corporate Development, Genetic
Technologies Limited and General Counsel Agenix Limited.
ANCILA DESAI (Chief Financial Officer)
Qualifications: B Com (Hons), MBS, CA, Executive MBA
Experience: is a Chartered Accountant with over 15 years of experience in strategic finance, commercial finance
including mergers and acquisitions, customer and supplier negotiations, financial modelling and capital management.
Ancila possesses broad experience across sectors, including senior finance roles at Metcash, Toll and Boost Juice.
Meetings of Directors
The following table sets out the number of meetings the Company's Directors held during the year ended 30 June 2020,
and the number of meetings attended by each Director.
Director
Board
Audit and Risk
Committee
Hugh Burrill
Alan Fisher
Mary Sontrop
Michael Kotsanis
Graeme Kaufman
A
12
12
11
3
B
12
12
11
3
A
2
2
-
-
B
2
2
-
-
4
1
A = Meetings attended while a director or committee member
B = Meetings held while a director or committee member
- = Not a member of relevant committee
1
4
Remuneration
and Nomination
Committee
B
A
3
3
3
-
-
3
3
3
-
-
REMUNERATION REPORT
The Directors of the Company are pleased to present the following Remuneration Report which forms part of the Report of
Directors prepared in accordance with s300A of the Corporations Act 2001.
The Remuneration Report has been audited as required by s308 (3C) of the Corporations Act 2001 and sets out remuneration
information for the Company’s key management personnel who have authority and are responsible for planning, directing
and controlling the Company’s activities, directly or indirectly, including any Director (whether executive or otherwise) of the
Company and the broader remuneration policies and philosophy adopted by the Board.
There were no significant changes to remuneration policies during the year.
The Remuneration and Nomination Committee advises the Board on remuneration policies and practices generally, making
specific recommendations on the remuneration framework and other terms of employment for Executive Directors, Non-
Executive Directors and Senior Executives, including incentives, share ownership plans and the relationship between
remuneration policy and Company performance.
At the last Annual General Meeting (AGM) held on 18 November 2019, the Company received 77.51% support on its 2019
Remuneration Report.
Directors’ Remuneration
IDT has a small and focussed Board which works closely with Executive management. Fees and payments to Directors
reflect the demands made on, and the responsibilities of, the Directors. Directors’ fees are reviewed annually by the
Remuneration and Nomination Committee, considering comparative remuneration data for the industry and size of the
Company to attract Directors with relevant expertise in our industry as well as Australian capital markets.
The Non-Executive Directors’ annual base fee is currently $70,000 and the Chair $120,000, inclusive of superannuation
contributions, as required under the Australian superannuation guarantee legislation.
Total Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, periodically referred for
approval by shareholders. The current maximum aggregate Directors’ fee pool for Non-Executive Directors is $400,000.
Executive Remuneration
Remuneration packages are set at levels intended to attract, retain and motivate high quality executives to manage the
Company’s operations and are linked to the Company’s financial and operational performance. The Company is
committed to adhering to Corporate Governance Standards for remuneration of executives.
The framework of executive remuneration and terms of employment of the CEO are reviewed annually by the Remuneration
and Nomination Committee. Other executive remuneration is reviewed by the CEO with oversight of the Remuneration and
Nomination Committee having regard to performance against personal and Company objectives established at the beginning
of the year and relevant comparative information. Independent expert advice is taken where necessary.
8
Remuneration and other key terms of employment for Key Management Personnel (KMP) are formalised in service
agreements. Major provisions of these agreements include the following fixed and performance-based elements:
base salary plus statutory employer contributions to the superannuation fund of the employee’s choice and
statutory leave entitlements
short term performance incentives payable as a cash bonus, based on achievement of both Company-wide and
individual performance objectives, established at the beginning of the year. Depending on assessed performance,
the CEO may receive up to 50% of his base salary as a short term performance incentive whilst other KMP are
eligible in the range of 15-20%
long term incentives are via invitation to participate in the Company’s Loan Funded Employee Share Plan (ESP)
a KMP may be terminated at the Company’s discretion by giving 3 months’ written notice
for employment to be terminated at the discretion of the KMP, 3 months’ written notice is required
in the case of serious misconduct, KMP forgo termination entitlements other than payment of applicable base
salary, statutory leave and superannuation entitlements to the date of termination.
Share-based Compensation
From time to time, Executive Management and Directors may be invited to participate in the Employee Share Plan (ESP)
whereby fully paid ordinary shares of the Company are issued at market value and funded by an interest free limited recourse
loan from the Company, which is repayable at any time during employment or within 90 days of an employee’s termination.
Grants within the framework of the ESP are determined by the CEO together with the Remuneration and Nomination
Committee and are subject to approval by the Board.
Amounts disclosed for emoluments relating to these shares are the assessed fair values at issue date determined using a
Black-Scholes pricing model considering 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 arrangement.
Other staff may be invited to participate in the allocation of up to $1,000 value of shares per year, granted for no consideration
and escrowed for three years whilst participants remain employees of the Company.
Remuneration Details 2020
Short-term benefits
Post-
employment
benefits
Salary
and fees
$
Cash
bonus
$ (4)
Non-
monetary
Super-
annuation
$
$
Long-
term
benefits
Long
Service
Leave
$
Share-
based
payments
Shares
Total
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
136,859
279,473
109,589
24,353
63,927
63,927
17,677
Non-executive Directors
A D Fisher, Chair
G Kaufman
H N Burrill
M E Sontrop
M J Kotsanis
Sub-total
Non-executive Directors
Other key management
personnel
D Broadhurst, Head of
Quality (1)
A Desai, Chief Financial
Officer (2)
J Johnson, Chief Financial
Officer (3)
D Savaglio, Vice President
People and Change
J Sosic, Vice President
Operations, Supply and
Infrastructure
D Sparling, Chief Executive
Officer
Sub-total executive
management
Total key management
personnel compensation
(1) Mr Broadhurst was appointed Head of Quality on 1 December 2019.
(2) Ms Desai was appointed CFO on 16 June 2020.
(3) Ms Johnson was CFO until 15 June 2020.
(4) Short term incentive bonuses were paid on 18 December 2019.
1,264,612
355,510
195,098
211,260
985,140
12,435
30,816
77,182
12,253
30,816
9,231
6,128
-
-
4,726
4,726
4,726
10,411
2,314
6,073
6,073
1,679
26,550
-
-
-
-
-
-
-
-
-
-
-
-
120,000
26,666
70,000
70,000
19,356
306,022
13,002
72
23,997
173,930
877
20,070
-
-
-
10,108
27,786
271,369
7,332
2,282
17,682
110,606
18,534
794
27,786
259,374
-
24,979
32,066
51,025
463,580
84,794
35,215
148,276
1,288,967
111,344
35,215
148,276
1,594,989
9
Summary of Short Term Incentive Bonuses paid in 2020 in relation to achievement of objectives established at the
beginning of the previous financial year
D Broadhurst (1)
J Sosic
D Savaglio (2)
D Sparling
Potential of fixed
remuneration
20%
20%
20%
50%
Achievement of objectives as
set at the start of the year
90%
95%
91.25%
90%
(1) Mr Broadhurst’s bonus was prorated because he was employed by IDT for only part of the financial year ended 30 June 2020.
(2) Ms Savaglio’s bonus was prorated due to leave taken for part of the financial year ended 30 June 2020.
Remuneration Details 2019
Short-term benefits
Post-
employment
benefits
Salary
and fees
$
Cash
bonus
$ (1)
Non-
monetary
Super-
annuation
$
$
Long-
term
benefits
Long
Service
Leave
$
Share-
based
payments
Shares
Total
$
$
109,589
63,927
63,927
63,924
301,367
-
-
-
-
-
-
-
-
-
-
10,411
6,073
6,073
6,073
28,630
-
-
-
-
-
-
-
-
-
-
120,000
70,000
70,000
69,997
329,997
Non-executive Directors
A D Fisher, Chair
G Kaufman
H N Burrill
M E Sontrop
Sub-total
Non-executive Directors
-
-
96,018
32,630
43,700
211,260
194,181
Other key management
personnel
M Coffey, Vice President
Quality and Regulatory (2)
J Johnson, Chief Financial
Officer
D Savaglio, Vice President
People and Change
J Sosic, Vice President
Operations, Supply and
Infrastructure
D Sparling, Chief Executive
Officer
Sub-total executive
management
Total key management
personnel compensation
(1) Short term incentive bonuses were paid on 28 August and 30 October 2018.
(2) Ms Coffey was VP Quality and Regulatory until her resignation on 7 June 2019.
1,053,292
1,354,659
196,079
355,754
150,554
150,554
37,612
21,032
15,580
5,152
5,152
5,152
-
-
15,973
-
32,738
286,592
20,070
5,793
37,897
307,650
9,122
2,703
24,427
153,302
18,628
902
34,424
270,765
22,008
17,815
63,336
496,525
85,801
27,213
192,822
1,514,834
114,431
27,213
192,822
1,844,831
Summary of Short Term Incentive Bonuses paid in 2019 in relation to achievement of objectives established at the
beginning of the previous financial year
M Coffey (1)
J Johnson
D Savaglio
J Sosic (2)
D Sparling (3)
Potential of fixed
remuneration
20%
20%
20%
20%
50%
Achievement of objectives as
set at the start of the year
82%
78%
78%
41%
32%
(1) On 15 January 2019 Ms Coffey also received $15,000 as a special bonus payable following finalisation of the FDA remediation
response by the end of December 2018.
(2) Mr Sosic’s bonus was prorated because he was employed by IDT for only part of the financial year ended 30 June 2018.
(3) Dr Sparling’s potential Short Term Incentive Bonus increased to 50% following his appointment as CEO in February 2018. Before
assuming the CEO role he was eligible at the previous potential of 40%. The STI paid was prorated between the potential entitlements of
both roles applicable during the prior financial year.
Other Transactions with Key Management Personnel
No other transactions or loans were provided to key management personnel other than interest free limited recourse loans
provided in association with the Loan Shares granted within the framework of the Employee Share Plan.
10
Key Management Personnel Holdings of Ordinary Shares
The number of ordinary shares in the Company held during the financial year by Directors and each of the specified
executives are set out below.
All shares issued to employees during the period were made within the provisions of the ESP, funded by an interest free
limited recourse loan from the Company.
2020
Non-executive Directors
G Kaufman
M Kotsanis
M Sontrop
Other key management personnel
D Broadhurst
D Savaglio
J Johnson
J Sosic
D Sparling
Total Holdings
Balance at
start of year
Shares issued
to employees
Other changes
during the year
Balance at the
end of the year
405,000
-
275,000
-
590,431
1,299,156
666,292
1,650,687
4,886,566
-
-
475,000
350,000
550,000
550,000
1,010,000
2,935,000
-
50,000
-
-
-
-
-
-
50,000
(1)
50,000
275,000
475,000
940,431
(1)
1,216,292
2,660,687
5,617,410
(1) Mr Kaufman and Ms Johnson were both not in office at the end of the financial year and accordingly their shareholding as
at 30 June 2020 is not disclosed.
2019
Non-executive Directors
G Kaufman
M E Sontrop
Other key management personnel
M Coffey
J Johnson (1)
D Savaglio (2)
J Sosic
D Sparling (1)
Total Holdings
Balance at
start of year
Shares issued
to employees
Other changes
during the year
Balance at the
end of the year
405,000
275,000
234,940
1,068,678
489,165
255,078
1,128,266
3,856,127
-
-
391,071
452,700
291,793
411,214
744,643
2,291,421
-
-
-
(222,222)
(190,527)
-
(222,222)
(634,971)
405,000
275,000
626,011
1,299,156
590,431
666,292
1,650,687
5,512,577
(1) As the underlying loans on the ESP shares which had been issued to Dr Sparling and Ms Johnson on 15 April 2014 were not repaid,
the shares were cancelled following expiration of the Limited Recourse Loan Agreement.
(2) The Limited Recourse Loan on the shares issued to Ms Savaglio on 1 November 2017 was repaid on 15 November 2018. This
allowed Ms Savaglio to dispose of the shares.
Company performance
The table below sets out summary information about the Company’s earnings and movements in shareholder wealth for the
five years ended 30 June 2020.
Revenue (1)
Net profit / (loss) before tax (2)
Net profit / (loss) after tax
Share price at start of year
Share price at end of year
Final dividend
Basic earnings per share
Diluted earnings per share
# Shares on issue, 30 June
Market capitalisation, 30 June
2020
$000
14,169
(1,981)
(1,919)
$0.165
$0.165
-
(0.8¢)
(0.8¢)
2019
$000
12,130
(6,118)
(6,083)
$0.096
$0.165
-
(2.5¢)
(2.5¢)
2018
$000
13,300
(18,575)
(16,979)
$0.105
$0.096
-
(6.9¢)
(6.9¢)
2017
$000
9,543
(1,116)
(773)
$0.23
$0.105
-
(0.3¢)
(0.3¢)
2016
$000
16,914
(5,704)
(4,006)
$0.23
$0.23
-
(1.9¢)
(1.9¢)
239,313,032
$39.49m
236,359,103
244,466,732
248,161,716
219,355,298
$39.00m
$23.47m
$26.06m
$50.45m
(1) CMAX Revenues are excluded from the year ended 30 June 2017 due to divestment but are retained in prior year comparatives
(2) No asset impairment was recorded for the year ended 30 June 2019, but for the years ended 30 June 2018 and 2017, the net profit
/ (loss) before tax includes asset impairment adjustments of $14.1 million and $7.6 million respectively. The year ended 30 June 2017
includes $13.7 million profit from divestment of CMAX.
11
Non-Audit Services
Details of amounts paid or payable to the auditor for services provided during the year are outlined in note 20 to the
financial statements.
The Company may decide to engage the external auditor on assignments additional to their statutory audit duties where the
external auditor’s expertise and experience with the Company is important.
Directors have considered the position and are satisfied that any provision of non-audit services is compatible with the
general standard of independence for external auditors imposed by the Corporations Act 2001.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included
after this report.
Proceedings on Behalf of the Company
The Corporations Act 2001 allows specified persons to bring, or intervene in, 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.
Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, issued by the Australian Securities and Investments Commission relating to the
“rounding off” of amounts in the Report of Directors. Amounts in the Report of Directors have been rounded off in
accordance with the Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Directors Resolution
This report is made in accordance with a resolution of the Directors made pursuant to s298(2) of the Corporations Act
2001.
Mr Alan Fisher
Chair
25 August 2020
12
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Australia
Tel: +61 3 9671 7000
www.deloitte.com.au
The Board of Directors
IDT Australia Limited
45 Wadhurst Drive
Boronia VIC 3155
25 August 2020
Dear Board Members
IDT Australia Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of IDT Australia Limited.
As lead audit partner for the audit of the financial statements of IDT Australia Limited for the financial
year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Belinda Abbott
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
IDT Australia Limited
For the year ended 30 June 2020
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Revenue from ordinary activities
Raw materials
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Impairment of intangible assets
Loss on disposal plant and equipment
Other operating expenses
Loss before income tax
Income tax benefit
Total comprehensive profit / (loss) for the year
Basic earnings per share
Diluted earnings per share
Note
2
10
4
26
26
2020
$000
14,169
(1,609)
(7,094)
(2,033)
-
(736)
-
(4,678)
(1,981)
2019
$000
12,130
(2,620)
(8,059)
(2,518)
(24)
-
(530)
(4,498)
(6,119)
62
36
(1,919)
(6,083)
(0.8¢)
(0.8¢)
(2.5¢)
(2.5¢)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
14
IDT Australia Limited
For the year ended 30 June 2020
STATEMENT OF FINANCIAL POSITION
ASSETS
Note
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Contract asset
Current tax asset
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Unearned revenue
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Unearned revenue
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
5
6
7
8
9
10
11
12
13
14
15
13
14
15
16
17
18
2020
$000
6,860
5,437
32
40
444
12,813
15,526
248
-
15,774
28,587
4,282
5
39
626
4,952
-
-
337
337
5,289
2019
$000
Restated
9,497
3,235
175
23
489
13,419
16,676
1,106
-
17,782
31,201
4,148
4
151
657
4,960
5
844
382
1,231
6,191
23,298
25,010
51,189
5,752
(33,643)
51,189
5,545
(31,724)
23,298
25,010
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
15
IDT Australia Limited
For the year ended 30 June 2020
STATEMENT OF CHANGES IN EQUITY
Contributed
Capital
$000
Asset
Revaluation
Reserve
$000
Share-based
Payment
Reserve
$000
Accumulated
Losses
Total
Equity
$000
$000
Balance at 1 July 2018
Profit/(Loss) for the year
Shares issued during the year
Small parcel share buy back
On market share buy back
Share based payments expense
Limited recourse loans repaid
Balance at 30 June 2019
Balance at 1 July 2019
Profit/(Loss) for the year
Share based payments expense
Limited recourse loans repaid
Balance at 30 June 2020
52,833
-
-
(111)
(1,533)
-
-
51,189
51,189
-
-
-
51,189
2,163
-
-
-
-
-
-
2163
2163
-
-
-
2,163
3,101
-
-
-
-
246
35
3,382
3,382
-
189
18
3,589
(25,641)
(6,083)
-
-
-
-
-
(31,724)
(31,724)
(1,919)
-
-
(33,643)
32,456
(6,083)
-
(111)
(1,533)
246
35
25,010
25,010
(1,919)
189
18
23,298
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
16
IDT Australia Limited
For the year ended 30 June 2020
STATEMENT OF CASH FLOWS
Note
2020
$000
2019
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest and other costs of finance paid
Income tax refund received
Interest received
NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for development costs
NET CASH INFLOW / (OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of equity
Payments associated with share buy backs
Repayment of borrowings
Repayment of finance leases
NET CASH INFLOW / (OUTFLOW) FROM FINANCING ACTIVITIES
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
HELD
Cash and cash equivalents at the beginning of the financial year
25
16
9,677
(11,676)
(1,999)
-
44
67
(1,888)
(761)
-
-
(761)
16
-
-
(4)
12
(2,637)
9,497
12,492
(14,642)
(2,150)
(24)
410
248
(1,516)
(1,143)
330
(58)
(871)
34
(1,644)
-
(533)
(2,143)
(4,530)
14,027
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL
YEAR
5
6,860
9,497
The above Statement of Cash Flow should be read in conjunction with the accompanying notes.
17
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.
The principal accounting policies adopted in the preparation of the financial report are outlined in this section and have been
consistently applied to all the periods presented, unless otherwise stated.
Statement of Compliance
1.1
These financial statements are general purpose financial statements prepared in accordance with the Corporations Act
2001, Australian Accounting Standards and Interpretations, and comply with International Financial Reporting Standards
and other requirements of the law.
For the purposes of preparing the financial statements, the Company is a for-profit entity.
Basis of Preparation
1.2
These financial statements have been prepared under the basis of historical cost, except for certain financial instruments,
intangible assets and land and buildings that are measured at fair value.
Historical cost is generally based on fair values of the consideration given in exchange for goods and services, being the price
that would be received in an orderly transaction at the measurement date, regardless of whether that price is directly
observable or estimated using another technique.
A fair value measurement of a non-financial asset considers the Company’s ability to generate economic benefits through use
of the asset in its highest or best use or by selling it through an orderly transaction.
In estimating the fair value of an asset or liability, the Company considers the characteristics market participants would take into
account when pricing the asset or liability at measurement date. Fair value has been used in these financial statements except
for transactions within the scope of AASB 2 Share Based Payments, AASB 16 Leases and measurements that have some
similarities to fair value but are not fair value, such as net realisable value in AASB 102 Inventories or fair value less cost to
dispose in AASB 136 Impairment of Assets.
For financial reporting purposes fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in
its entirety, described as follows:
· Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
· Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
· Level 3 inputs are unobservable inputs for the asset or liability.
All amounts are presented in Australian dollars unless otherwise noted.
Going concern basis
1.3
For the year ended 30 June 2020, the Company incurred a loss after tax of $1.9 million and held cash reserves of $6.9 million,
which is sufficient to fund planned strategic initiatives, capital and other development projects for at least the 12 month period
from the date of this report. The Company is not reliant on renewal of bank facilities in July 2021 from a going concern
perspective.
Having carefully assessed the Company’s budget and forward forecasts, including cash flow forecasts which reflect forward
sales orders received from customers as well as available funding facilities, the Directors believe the Company will continue to
operate as a going concern and therefore it is appropriate to prepare the financial statements on a going concern basis
contemplating continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary
course of business.
Impairment of Non-Current Assets
1.4
Non-Current Assets are tested for impairment at least annually and whenever there is an indication the asset may be impaired.
If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss.
In testing for impairment, the recoverable amount of the Company’s Property Plant and Equipment is determined using a fair
value less cost to dispose approach (excess earnings methodology). This is based on discounted cash flows using a fair value
less costs of disposal approach and independent valuations or insured replacement cost.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount is reduced to its
recoverable amount. An impairment loss is recognised in the statement of profit or loss immediately after identification and the
asset is derecognised if no future economic benefits are estimated from use or disposal.
Change in Accounting Policy
1.5
The Company has adopted new and revised Australian Accounting Standards issued by the AASB which are mandatory to
apply to the previous reporting period and are detailed in Note 1.9. Disclosures required by these Standards have been
included in this financial report on the basis they represent significant change in information from that previously made
available.
There have been no other significant changes in accounting policies during the reporting period.
18
Foreign Currency Translation
1.6
Transactions in currencies other than the Company’s functional currency are recognised at the rates of exchange prevailing at
the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are
translated at the rates prevailing at that date.
Foreign exchange gains and losses resulting from settlement of such transactions and translation at period end exchange rates
of foreign currency monetary assets and liabilities are recognised in the Statement of Profit or Loss and Other Comprehensive
Income.
Critical Accounting Estimates and Judgements
1.7
Preparation of these financial statements requires the Company to make estimates and judgements that may affect the
reported values of assets, liabilities, revenues and expenses. Management continually evaluates estimates and judgements
based on historical experience and other factors it believes to be reasonable under the circumstances, including
expectations of future events that may have a financial impact on the entity.
In preparing the financial statements, management has considered the impact of COVID-19 on the various balances, including
the carrying values of trade receivables and accounting estimates for which cash flow forecasts are required to be prepared
such as the recoverable amount of non-current assets.
The following critical judgements have been made in application of the Company's accounting policies and have the most
significant effect on amounts recognised in the Company’s financial statements.
Valuation of non-current assets (being property, plant and equipment and finite life intangibles assets)
The Company applies AASB 136 Impairment of Assets to test the carrying value of non-current assets and impairment.
Judgement is applied to make estimates of future cashflows to support assessment of the appropriateness of the carrying
value. Criteria considered include anticipated future sales prices, market size and expected share, future exchange rates
and the discount rate.
Income taxes
Deferred tax assets are recognised for deductible temporary differences and tax losses as management considers that it is
probable that future taxable profits will be available to utilise those temporary differences. The carrying amount of deferred
tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the asset to be recovered. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the
provision is assessed by taking into account the usage of each item, product expiry date and other factors that affect
inventory obsolescence.
Share-based payments
The issuance of shares to employees are at market rates and funded by interest-free limited recourse loans to the
Company. The fair values of such arrangements utilises the Black-Scholes pricing model and therefore includes elements of
judgment and estimate in determining certain input factors such as an estimate of share price volatility.
In making these judgements, the Company makes reasonable and supportable assumptions to represent management's
estimate of the conditions that will exist over the useful life of the asset. Amongst other factors the Company evaluates
technical feasibility, the cost to complete the project, existence of an attractive commercial market, potential launch dates
and sales expectations to conclude on the value of expected future economic benefits which would be expected to flow to
the entity in order to calculate discounted cashflows.
Balanced estimates of these criteria have been made but key sensitivities could include more competitive market conditions
which could result in higher than expected discounting required to achieve targeted market share.
At any time should the estimated value of future economic benefits relative to the asset’s carrying value be considered
insufficient relative to net book value, the Company would recognise impairment in accordance with AASB 136 Impairment
of Assets.
Rounding of Amounts
1.8
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of
amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class
Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
19
1.9 Application of New and revised Accounting Standards
The Company has adopted all of the new and revised Standards and Interpretations issued by the IASB that are
relevant to its operations and effective for the current year. New and revised Standards and amendments thereof and
Interpretations effective for the current year that are relevant to the Company include AASB 16 “Leases”, annual improvements
to accounting standards and IFRIC 23 “Uncertainty over Income Tax Treatments”.
AASB 16 Leases
In the current year, the Company has applied AASB 16 Leases, which is effective for annual periods that begin on or after
January 1, 2019. AASB 16 introduces new or amended requirements with respect to lease accounting. It introduces significant
changes to lessee accounting by removing the distinction between operating and finance lease and requiring the recognition of
a right-of-use asset and a lease liability at commencement for all leases, except for short-term leases and leases of low value
assets. The date of initial application of AASB16 for the Company is 1 July 2019. The change in definition of a lease mainly
relates to the concept of control. AASB 16 determines whether a contract contains a lease on the basis of whether the
customer has the right to control the use of an identified asset for a period of time in exchange for consideration. This is in
contrast to the focus on “risks and rewards” in AASB 117 “Leases” and IFRIC 4 “Determining whether an Arrangement
Contains a Lease”.
Impact on lease accounting
AASB 16 changes how the Company accounted for operating leases under IAS 117 which were off balance sheet. Applying
AASB 16, for all leases (except as noted below), the Company:
· Recognises right-of-use assets and lease liabilities in the statement of financial position, initially measured at the
present value of the future lease payments;
· Recognises depreciation of right-of-use assets and interest on lease liabilities in profit or loss; and
· Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest
(presented within operating activities) in the statement of cash flows.
Lease incentives (e.g. rent-free period) are recognised as part of the measurement of the right-of-use assets and lease
liabilities whereas under AASB 117 they resulted in the recognition of a lease incentive, amortised as a reduction of rental
expenses generally on a straight-line basis. Under AASB 16, right-of-use assets are tested for impairment in accordance with
AASB 136 Impairment of Assets. For short-term leases (lease term of 12 months or less) and leases of low-value assets (such
as photo copier and telephones), the Company has opted to recognise a lease expense on a straight-line basis as permitted by
AASB 116. This expense is presented within ‘administrative expenses’ in profit or loss.
Given the nature of IDT’s leased assets being classified as low-assets the impact from adopting AASB 116 Leases is not
material.
Standards and interpretations on issue not yet adopted
The following accounting standards, accounting standard amendments and interpretations are on issue not yet due for adoption
· AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material (AASB 101 and AASB 108)
· AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business (AASB 3)
· AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards
Not Yet Issued in Australia.
· AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018–2020 and Other
Amendments (AASB 1, AASB 3, AASB 9, AASB 116, AASB 137and AASB 141)
· Amendments to References to the Conceptual Framework in IFRS Standards
Reclassification of Contract Assets
1.10
The Company classifies billable work-in-progress not yet invoiced as Contract Assets. The amount at 30 June 2020 is $32,000
(2019: $175,000) and has been restated from Inventory to Contract Assets in the Statement of Financial Position. This does
not impact on the Profit or Cashflows.
20
REVENUE
2.
Sales revenue
Other revenue
Interest
-
Key Accounting Policies
2020
$000
2019
$000
14,102
11,882
67
14,169
248
12,130
The Company has two key types of arrangements with Clients; 1) Fee for Service Revenue generated in accordance with a
Scope of Works agreed with clients before project commencement and recognised over the term of the project as specific
performance obligations are completed (i.e. over time), 2) Manufacturing activities, particularly manufacture of Active
Pharmaceutical Ingredients, conducted based on Supply Agreements and Purchase Orders received from clients. Revenue
from these activities is recognised after product has been released by Quality Assurance and shipped in accordance with
client instructions (i.e. point in time).
It must also be probable that the economic benefits of the transaction will flow to the Company and the amount of revenue
can be measured reliably.
EXPENSES
3.
Loss from ordinary activities before income tax expense includes the following expenses:
Cost of goods sold
Depreciation of property, plant and equipment
Amortisation
- Right of use asset
- Development costs
Repairs and maintenance
Impairment of intangible assets
Net foreign currency loss
INCOME TAX
Income Tax Benefit
4.
(a)
Current tax
Deferred tax
(Under) / over recognised current tax asset in prior period
2,618
1,906
5
121
720
736
33
(40)
-
(22)
(62)
3,949
2,171
144
203
756
-
51
(23)
(1,151)
(13)
(1,187)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from ordinary activities before income tax expense
Prima facie tax benefit at 27.5% (2019: 27.5%)
(1,981)
(545)
(6,119)
(1,682)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible expenses
Research and development tax concessions
Employee share issue
Impairment losses
(Under) / over recognised Current tax asset in prior period
Deferred tax losses not brought to account
Prior year losses not brought to account
Income tax expense/(benefit) attributable to operating loss
(25)
25
52
(14)
(507)
(21)
217
249
(62)
9
23
68
-
(1,582)
(13)
1,559
-
(36)
Key Accounting Policies
The income tax expense or benefit for the period is the tax payable / receivable on the current period’s taxable income / (loss)
based on the notional income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and unused
tax losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
The Company incurs eligible expenditure which supports a R&D Tax Incentive Claim, refundable by the Australian Government
at 43.5% for entities with a tax loss and revenues less than $20 million. There are no unfulfilled conditions or other contingencies
in relation to this incentive. This receivable balance is accounted for as a current tax asset and income tax expense / (benefit).
21
CASH AND CASH EQUIVALENTS
5.
Cash at bank and on hand
2020
$000
2019
$000
6,860
9,497
Key Accounting Policies
For purposes of the statement of cashflows, cash and cash equivalents include bank deposits which are readily convertible to
cash on hand and which are used in the cash management function on a day-to-day basis.
6. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for expected credit losses
Accrued revenue
Other receivables
Prepayments
4,732
(190)
4,542
14
881
5,437
2,232
-
2,232
-
27
976
3,235
The average collection period for invoices is 30-60 days from invoice date and interest is not charged on overdue balances.
Age of receivables which are past due, but not impaired:
30-60 days
60-90 days
90+ days
1
1
1
3
-
-
1
1
Key Accounting Policies
Trade receivables represent amounts receivable relating to the provision of goods and services pursuant to a valid purchase
order or contract for product or services. Receivables are recognised at the full value receivable and do not require re-
measurement because they are due for settlement within 60 days of invoice date.
Accrued revenue reflects progress completion and work performed but not yet invoiced on client projects.
After initial measurement, the collectability of receivable balances is reviewed on an ongoing basis and a provision raised if
collection in full is no longer considered probable. Debts which are known to be uncollectable are written off. The Company
does not have a history of collection delays, defaulted balances or client dispute and accordingly does not consider a provision
for expected credit losses is currently necessary. Notwithstanding the forgoing Melinta Therapeutics has entered Chapter 11
insolvency and as a result a provision has been made for the full balance outstanding of $190,000.
7. CURRENT TAX ASSET
Income tax receivable
40
23
Key Accounting Policies
The Company incurs eligible expenditure to support a R&D Tax Incentive Claim. The estimated amount of claim is recognised
as a current tax asset and income tax expense / (benefit) in the year that the R&D was incurred.
INVENTORIES
8.
Raw materials - at cost
Less: Provision for stock obsolescence
2020
$000
1,038
(594)
444
2019
$000
Restated
963
(474)
489
Key Accounting Policies
Inventories are valued at the lower of cost and net realisable value with the cost determined on a first-in-first-out basis. Net
realisable value reflects the estimated selling price in the ordinary course of business less the estimated costs of completion
and costs necessary to make the sale.
Subsequent to initial measurement, balances held in inventory are reviewed at least annually and a provision raised where
future use is no longer considered probable, principally due to reasons of obsolescence or product dating.
22
9. PROPERTY, PLANT AND EQUIPMENT
Land and Buildings
Freehold land (at fair value)
Buildings (at fair value)
Less: Accumulated depreciation
Total Land and Buildings
Plant and Equipment
Plant and equipment – at cost
Less: Accumulated depreciation
Capital Work in Progress
Right of Use Assets
Capitalised cost
Less: Accumulated amortisation
Total Plant & Equipment
Total Property, Plant and Equipment
2020
$000
4,380
5,255
(296)
9,339
41,587
(35,770)
370
6,187
24
(24)
-
6,187
15,526
2019
$000
4,380
5,255
(164)
9,471
41,610
(34,568)
159
7,201
23
(19)
4
7,205
16,676
Reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current
financial year are set out below.
2020
Carrying amount at start of year
Revaluation
Additions
Disposals
Depreciation expense
Carrying amount at end of year
2019
Carrying amount at start of year
Revaluation
Additions
Disposals
Depreciation expense
Carrying amount at end of year
Freehold
Land
$000
4,380
-
-
-
-
4,380
Freehold
Land
$000
4,380
-
-
-
-
4,380
Buildings
$000
5,091
-
-
-
(132)
4,959
Buildings
$000
5,212
-
-
-
(121)
5,091
Plant &
Equipment
$000
Right of Use
Assets
$000
7,201
-
760
-
(1,774)
6,187
4
(4)
-
Plant &
Equipment
$000
Right of Use
Assets
$000
8,597
-
1,143
(489)
(2,050)
7,201
521
-
-
(373)
(144)
4
Total
$000
16,676
-
760
-
(1,910)
15,526
Total
$000
18,710
-
1,143
(862)
(2,315)
16,676
Key Accounting Policies
Freehold land and buildings are shown at revalued amounts being the fair value (level 3) at date of revaluation less subsequent
depreciation for buildings. The most recent fair value measurement by independent valuers was 19 February 2018. The
valuation conforms to Australian Valuation Standards and was calculated based on the fair value of the land and depreciated
replacement cost of the buildings. As revaluations are performed regularly, carrying amounts do not differ materially from those
that would be determined using fair values at the end of each reporting period.
The revaluation increase arising on the revaluation of land and buildings is accumulated in the revaluation reserve within equity.
Decreases that offset previous increases of the same asset are recognised against revaluation reserve directly in equity; all other
decreases are to be recognised in profit or loss.
Plant and equipment, including Right of Use Assets, are measured at cost less accumulated depreciation and any impairment
adjustments which may have been identified. The cost of non-current assets constructed or developed by the Company includes
the costs of all materials used in construction, direct labour on the project and an appropriate proportion of directly attributable
variable and fixed overheads.
23
Depreciation is recognised so as to write off the cost or valuation of assets, other than land, over their estimated
useful lives, net of their residual values, using the straight-line method, as follows:
Buildings
Plant & Equipment
40 years
3-15 years
Estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect
of any changes in estimate accounted for on a prospective basis.
Plant is regularly overhauled through an ongoing cyclical maintenance program. Routine operating maintenance, repair costs
and minor renewals are charged as expenses as incurred.
An item of property, plant and equipment is derecognised upon disposal or where no future economic benefits are expected to
arise from continued use. Any gain or loss arising on disposal or retirement is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in the profit or loss.
Impairment of property plant and equipment
Carrying amounts are reviewed at least annually or whenever there is an indicator the asset’s fair value may be impaired. In
assessing the asset’s fair value, future cashflows are estimated and discounted to their present value using a post-tax discount
rate reflecting current market estimates of the time value of money and risks specific to the asset tested. If this calculated
recoverable amount is less than the carrying amount, an impairment loss would be recognised immediately.
The Company is considered as one cash-generating unit (CGU) for impairment testing purposes (there are nil indefinite life
intangible assets). The Company has prepared fair value less cost to dispose model (level 3) for the purpose of impairment
testing as at 30 June 2020, using a discounted cash flow model based on the five-year forecast. Future cash flows were
discounted at an after-tax rate of 15%. Based on the recoverable amount of the CGU exceeding its aggregate carrying amount
at 30 June 2020 there was no impairment charge.
10.
INTANGIBLE ASSETS
Development expenditure capitalised
Less: Accumulated amortisation development costs
Reconciliation of Intangible Assets
Carrying amount at start of year
Development expenditure capitalised during the year
Amortisation of development costs during the year
Development costs impaired during the year
Carrying amount at end of year
Key Accounting Policies
a) Internally generated Intangible Assets
Research expenditure is recognised as an expense as incurred.
2020
$000
269
(21)
248
1,105
-
(121)
(736)
248
2019
$000
1,759
(653)
1,106
1,251
58
(203)
-
1,106
An internally generated intangible asset arising from development is recognised as a non-current asset where all of the
following conditions can be demonstrated:
technical feasibility of completing the project that it will be available for use or sale
intention to complete the intangible asset and use it or sell it
the intangible asset will generate probable future economic benefits for the Company
availability of adequate technical, financial and other resources to complete the development, and
the ability to measure reliably the expenditure attributable to the development of the asset.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date
the asset first met the recognition criteria listed above. Development expenditures that do not meet all of these criteria are
recognised in profit or loss in the period in which incurred.
Development costs previously recognised as an expense may not be recognised as an asset in a subsequent period.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation
from the date the intangible asset first meets the recognition criteria. The estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the effect of any change accounted for on a prospective basis.
b) Impairment of intangible assets
Carrying amounts are reviewed at least annually or whenever there is an indicator the asset’s fair value may be impaired. In
assessing the asset’s fair value, future cashflows are estimated and discounted to their present value using a post-tax
discount rate reflecting current market estimates of the time value of money and risks specific to the asset tested. If this
calculated recoverable amount is less than the carrying amount, an impairment loss would be recognised immediately.
24
DEFERRED TAX ASSET / (LIABILITY)
11.
Deferred Liability
The balance comprises temporary differences attributable to:
Depreciation
Asset revaluation
Prepayments
Development costs
Movements
Opening balance at 1 July
Increase/(reduction) current tax expense
Current year increase/(decrease not recognised
Closing balance at 30 June
Deferred tax assets
The balance comprises temporary differences attributable to:
Employee entitlements, accruals and other
Tax losses
Movements
Opening balance at 1 July
Increase/(reduction) current tax expense
Unused tax losses de-recognised
Charged/(credited) to equity
Closing balance at 30 June
Net deferred assets / (liability)
Deferred tax liability expected to settle within 12 months
Deferred tax liability expected to settle more than 12 months
Deferred tax asset expected to be recovered within 12 months
Deferred tax asset expected to be recovered after more than 12 months
2020
$000
2019
$000
1,246
1,621
1,178
-
-
68
1,246
1,621
(375)
-
1,246
1,246
624
622
1,246
1,621
76
(451)
-
1,246
-
1,246
1,246
-
1,246
1,246
1,317
-
-
304
1,621
2,173
36
(588)
1,621
1,621
331
1,290
1,621
2,173
(552)
-
-
1,621
-
1,621
1,621
-
1,621
1,621
Key Accounting Policies
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities settled. The relevant tax rate is applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to
temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did
not affect either accounting profit or taxable profit or loss.
Deferred tax assets will only be recognised for deductible temporary differences and unused tax losses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses. In addition to the above deferred
tax assets recognised, the Company has further unrecognised tax losses relating to prior period tax losses.
As at 30 June 2020 the Company has gross carried forward tax losses amounting to $19.8m (2019: $19.0m) and a further
$12.3m (2019: $12.3m) capital losses which have not been recognised as assets in these financial statements.
12. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Total trade and other payables
397
3,885
4,282
433
3,715
4,148
25
BORROWINGS
13.
Current
Lease liabilities
Total current borrowings
Non-Current
Lease liabilities
Total non-current borrowings
UNEARNED REVENUE
14.
Current
Client prepayments
Contractual milestones received
Total current unearned revenue
Non-Current
Contractual milestones received
2020
$000
2019
$000
5
5
-
-
-
39
39
-
4
4
5
5
14
137
151
844
Key Accounting Policies
Fee for Service Revenue generated in accordance with a Scope of Works agreed with clients before project commencement
and recognised over the term of the project as specific performance obligations are completed (i.e. over time). In some cases
the client may pay for services before the work is conducted and this revenue is deferred until earned.
Contractual milestones have been received in accordance with the Company’s long-term distribution agreements. As such
milestones relate to the performance of the contract, revenue is recognised over the term of the distribution contract.
PROVISIONS
15.
Current
Employee entitlements
Non-Current
Employee entitlements
626
337
657
382
Key Accounting Policies
The provision for employee entitlements represents annual leave, vested long service leave and an estimate of the future
value of long service leave which has not yet vested but is expected to be payable to employees.
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave
when it is probable that settlement will be required and they can be reliably measured.
Liabilities recognised in respect of short term employee benefits are classified as current liabilities and measured at their nominal
values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long term
employee benefits are classified as non-current liabilities and measured at the present value of the estimated future outflows to
be made by the Company in respect of services provided by employees up to reporting date.
26
16.
CONTRIBUTED EQUITY
Paid up capital - Ordinary shares, fully paid
2020
Shares
239,313,032
2019
Shares
236,359,103
2020
$000
51,189
2019
$000
51,189
Movements in ordinary share capital of the Company during the past two years were as follows:
Date
1 July 2018
30 June 2019
1 July 2019
30 June 2020
Employee share plan issues
Forfeited employee shares
Small parcel share buy back
On market share buy back
Closing balance
Employee share plan issues
Forfeited employee shares
Closing balance
Shares
$000
2,632,046
(961,626)
(659,381)
(9,118,668)
236,359,103
3,345,000
(391,071)
239,313,032
-
-
(111)
(1,533)
51,189
-
-
51,189
During the year 3,345,000 (2019: 2,632,046) ordinary shares were issued within the rules of the IDT Australia Limited
Employee Share Plan. 391,071 (2019: 961,626) shares were forfeited because the Limited Recourse Loans were not repaid,
due to former employees electing not to repay the Limited Recourse Loan within 90 days of cessation of employment.
In October 2018 the Board of Director’s concluded that the Company held cash reserves which exceeded forecasted
operational requirements. It was resolved to return excess funds to shareholders through a small parcel share buy-back
and an on market share buy-back within the “10/12 limit” as defined by the Corporations Act 2001. In the financial year
ended 30 June 2019, $1.5 million was returned to shareholders through these buy backs. No shares were purchased in
this current reporting period and the on market share buy-back was formally concluded in October 2019.
17. RESERVES
Share-based payments reserve
Asset revaluation reserve
2020
$000
3,588
2,163
5,751
2019
$000
3,382
2,163
5,545
The asset revaluation reserve is used to recognise fair value movements in respect of land and buildings owned by the
Company valued by an independent third party valuer.
ACCUMULATED LOSSES
18.
Accumulated losses at the beginning of the financial year
Net loss attributable to members of IDT Australia Limited
Accumulated losses at the end of the financial year
FINANCING ARRANGEMENTS
19.
Bank overdraft
Commercial loan
Lease liabilities
Total secured liabilities (current and non-current)
(31,724)
(1,919)
(33,643)
(25,641)
(6,083)
(31,724)
-
-
5
5
-
-
9
9
Unrestricted access was available at balance date to the following credit facilities with the National Australia Bank Ltd:
Total facilities
- Bank Overdraft
- Flexible Rate Commercial Loan
- Credit Card Facility
Used at balance date
- Bank Overdraft
- Flexible Rate Commercial Loan
- Credit Card Facility
Available at balance date
- Bank Overdraft
- Flexible Rate Commercial Loan
- Credit Card Facility
1,000
1,500
100
-
-
12
1,000
1,500
88
1,000
1,500
100
-
-
21
1,000
1,500
79
27
At 30 June 2020, the Company has cash reserves of $6.9 million. This cash balance is further supported by an
unutilised facility of $2.5 million with the National Australia Bank Ltd, which is next due for renewal on 31 July 2021.
These cash reserves and debt facility are available to support the Company to execute strategies and projects to
extend production and manufacturing capabilities.
Security for Borrowings
The bank overdraft, lease and business loan facilities are secured by the following:
- A Registered Mortgage over property situated at 39 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 41 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 43-49 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 51-57 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 68 Wadhurst Drive, Boronia
Carrying value of assets pledged as Security
- Freehold land and buildings
Total assets pledged as security
20. AUDITOR’S REMUNERATION
Total amounts payable to Deloitte Touche Tohmatsu for:
Audit and review of the Company’s financial statements
Other services
21.
Financial risks impacting the Company’s activities fall into three categories:
FINANCIAL RISK MANAGEMENT
a) market risk – foreign exchange and interest rate
b) credit risk
c)
liquidity risk
9,339
9,339
2020
$
99,000
-
99,000
9,471
9,471
2019
$
97,400
3,500
100,900
a) Market risk
In order to minimise the impact of currency fluctuation it is Company policy to transact in Australian dollars wherever possible.
From time to time the Company also transacts in foreign currencies, particularly Euro and US dollars, which can give rise to
foreign exchange risk as exchange rates fluctuate.
At reporting date the Company has $6.7 million Cash Reserves held in its operating bank account and short term bank
deposits. Forward cashflow forecasts do not project use of the bank debt facilities. Therefore the Company does not foresee
any increased borrowings or consequentially a material sensitivity from interest rates.
b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in a financial loss to the
Company. Credit risk is closely managed and the Company has procedures to deal with credit worthy counterparties.
Customer credit worthiness is reviewed on an ongoing basis and exposure to any one customer is monitored. Potential credit
loss is regularly reviewed and assessed and a provision for expected credit losses would be raised if there was any evidence
the debt was no longer collectible.
The Company does not have a history of defaulted balances nor does it carry a material level of overdue debtor balances.
c) Liquidity risk
Liquidity risk arises from the financial liabilities of the Company and is the risk that the Company is not able to pay its financial
liabilities as when they fall due. The ultimate responsibility for liquidity risk management rests with the Board of Directors
which has established a framework for management of the Company’s requirements over time through continuous monitoring
of historical and anticipated cash flows and scenario analysis. The Company manages liquidity risk by maintaining cash
reserves and reserve borrowing facilities.
Rolling 18 month cashflow forecasts are prepared each month. Strategic planning also includes liquidity considerations and
based on current strategies, no funding shortfalls have been identified.
In addition to funds on deposit, the Company has $2.5 million undrawn banking facilities.
The Company holds the following financial instruments:
Liquid Financial Assets
Cash and cash equivalents
Trade receivables and other
Total financial assets
Financial Liabilities
Trade and other payables
Borrowings, current and non-current
Total financial liabilities
Net financial position
2020
$000
6,860
5,437
12,298
4,282
5
4,287
8,011
2019
$000
9,497
3,235
12,732
4,149
9
4,158
8,574
28
22. SHARE BASED PAYMENTS
The ESP was approved at the Annual General Meeting held on 18 November 2019.
During the year ended 30 June 2020, the Company issued 3,345,000 ordinary shares under the rules of the IDT ESP (2019:
2,632,046).
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expenses were as follows:
Value of shares issued under employee share plan
Movement in number of shares under Employee Share Plan:
Opening balance
Employee Share Plan granted during the year
Shares on which limited recourse loans have been repaid
Shares on which escrow lifted
Forfeited during the year
Closing balance of shares on issue under Employee Share Plan
2020
$000
189
2019
$000
246
2020
5,800,729
3,345,000
-
-
(391,071)
8,754,658
2019
4,791,438
2,632,046
(467,469)
(193,660)
(961,626)
5,800,729
Key Accounting Policies
Executive Managers and Directors may be offered shares in the Company at the current market value at the date of issue, funded
by an interest free limited recourse loan from the Company. Grants within the framework of the ESP are determined by the CEO
together with the Remuneration and Nomination Committee and are subject to approval by the Board.
Amounts disclosed for emoluments relating to these shares are the assessed fair values at issue date determined using a Black-
Scholes pricing model taking into account 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 arrangement.
The ESP provides an annual value of up to $1,000 of shares may be issued to eligible employees for no consideration. The
value of shares issued is recognised in the income statement as employee benefit costs at the time the shares are granted. Such
shares may not be sold until the earlier of three years after issue or cessation of employment with the Company.
In all other respects ESP shares rank equally with other fully-paid ordinary shares on issue.
23. KEY MANAGEMENT PERSONNEL DISCLOSURES
The following persons were Directors of IDT Australia Limited during the financial year:
Non-Executive Directors
Alan Fisher, Chair
Hugh Burrill
Graeme Kaufman, retired 18 November 2019
Michael Kotsanis, from 23 March 2020
Mary Sontrop
Mr Kaufman and Ms Sontrop assumed Executive roles for the period 14 July 2017 through to 20 February 2018 and consequently
they are not considered to be Independent Directors for a period of 3 years after ceasing these temporary Executive roles.
Mr Fisher, Mr Burrill and Mr Kotsanis are Independent Directors.
Key Management Personnel
The following persons have authority and responsibility for planning, directing and controlling the activities of the Company,
directly or indirectly, during the financial year:
David Sparling
Ancila Desai
Joanna Johnson
Danielle Savaglio
Jim Sosic
Daniel Broadhurst
Chief Executive Officer, Joint Company Secretary
Chief Financial Officer, Joint Company Secretary, from 16 June 2020
Chief Financial Officer, Joint Company Secretary, till 15 June 2020
Vice President People and Change
Vice President Operations, Supply and Infrastructure
Head of Quality, from 1 December 2019
Directors and Key Management Personnel Compensation
Short term employee benefits
Post-employment benefits
Long term benefits
Share based payments
2020
$
1,300,154
111,344
35,215
148,276
1,594,989
2019
$
1,510,365
114,431
27,213
191.822
1,844,831
29
24.
RELATED PARTY TRANSACTIONS
Transactions of Directors and Key Management Personnel Concerning Shares
Aggregate numbers of shares acquired and disposed of by Directors or Key Management Personnel were as follows:
Ordinary shares issued to KMP
Ordinary shares forfeited by KMPs
Ordinary shares acquired
Ordinary shares sold after limited recourse loans repaid
2020
Shares
2,935,000
391,071
50,000
-
2019
Shares
2,291,421
444,444
-
190,527
Other than shares issued as described in Note 22, the terms and conditions of other transactions relating to shares were on
the same basis as similar transactions with other shareholders.
Aggregate numbers of shares of IDT Australia Limited held directly, indirectly or beneficially by Directors or KMP holding office
at balance date were as follows:
Ordinary shares
2020
5,617,410
2019
5,512,577
There were no other transactions or contracts between the Company and Directors and Key Management Personnel in
2020 (2019: nil).
25. RECONCILIATION OF NET CASH INFLOW / OUTFLOW FROM
OPERATING ACTIVITIES TO OPERATING LOSS AFTER INCOME TAX
Net cash inflow /(outflow) from operating activities
Depreciation and amortisation
Profit / (Loss) on Divestment – Property Plant and Equipment
Non-cash share based payment
Impairment of intangible assets
Change in operating assets and liabilities:
Increase/(decrease) in receivables
Increase/(decrease) in inventories
Increase/(decrease) in current tax asset
(Increase)/Decrease in payables
Increase in other provisions
Increase/(decrease) in unearned revenue
Operating loss after income tax
EARNINGS PER SHARE
26.
Basic earnings per share
Diluted earnings per share
2020
$000
(1,888)
(2,033)
-
(189)
-
2,180
(190)
17
1,216
(75)
(957)
(1,919)
2020
(0.8¢)
(0.8¢)
2019
$000
(1,516)
(2,518)
(530)
(246)
-
(239)
(67)
(374)
(452)
88
(229)
(6,083)
2019
(2.5¢)
(2.5¢)
Weighted average number of ordinary shares on issue during the year used to calculate
basic earnings per share
Weighted average number of ordinary shares on issue during the year used to calculate
diluted earnings per share
237,118,228
239,463,575
237,118,228
239,463,575
Basic Earnings per share
Loss attributable to ordinary equity holders used in calculating basic earnings per share
Diluted earnings per share
Loss attributable to ordinary equity holders used in calculating diluted earnings per share
$000
$000
(1,919)
(6,083)
(1,919)
(6,083)
Key Accounting Policies
(i) Basic Earnings per Share - Basic earnings per share is determined by dividing the profit or loss attributable to equity holders
of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year.
(ii) Diluted Earnings per Share - Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
30
27.
EVENTS AFTER THE REPORTING PERIOD
The COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020 and Australian
Government restrictions commenced in that same month. The financial statements have been prepared based upon conditions
existing at 30 June 2020, which included the impact of COVID on the business at that time. The pandemic has caused
disruption to businesses and economic activity. The Company considers further Government restrictions such as the Victorian
Government’s August 2020 Stage 4 restrictions in Melbourne to be a non-adjusting post balance sheet event and accordingly
the financial effects post year end of COVID-19 have not been reflected in the financial statements at 30 June 2020. The scale
and duration of the COVID-19 pandemic and its associated business and economic disruptions remain uncertain as at the date
of this report. However they may have an impact on the Company’s 2021 financial year earnings, cash flow and financial
condition. To-date, post year end the impact of the pandemic on the business has been minimal. Options for COVID-19 related
government support are being pursued where they are available for the business to access.
There has not been any other matter or circumstance occurring subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations, results of the operations or the state of affairs of the Company.
28.
The Company has no contingent assets or liabilities to disclose at the date of this report.
CONTINGENT ASSETS AND CONTINGENT LIABILITIES
31
DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 14 to 31 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Act 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the Company’s financial position as at 30 June 2020 and of its performance, as
represented by the result of its operations, changes in equity and cash flows, for the financial year ended on
that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable; and
the financial statements and notes thereto also comply with International Financial Reporting Standards as disclosed in
Note 1.
(b)
(c)
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the directors
Mr Alan Fisher
Chair
25 August 2020
32
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne VIC 3000
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
IDT Australia Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of IDT Australia Limited (the “Company”) which comprises the
statement of financial position as at 30 June 2020, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies and the directors’ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Company 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.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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 for the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Carrying value of non-current assets
Refer Note 9 Property, plant and
equipment, and 1.7 Critical accounting
estimates and judgements.
As at 30 June 2020 the Company’s
carrying value of Property, Plant and
Equipment totals $15.5 million.
The assessment of the recoverable
amount of Property, Plant and
Equipment requires management to
exercise significant judgement in
identifying indicators of impairment and,
when required, in determining the
assumptions and estimates involved in
preparing the Fair Value less Costs to
Dispose (“FVLCD”) valuation model,
specifically concerning future cashflows,
discount rates and terminal growth
rates.
Our procedures included, but were not limited to:
• Assessing the existence of potential
impairment indicators at year end, as the
Company realised a current year loss of
$1.9m (loss $6.1m in FY19);
• Assessing the design and implementation of
key controls relating to the preparation of
the FVLCD model;
• Agreeing the key inputs in the FVLCD model
to board approved forecasts and/or
strategies;
• Assessing the accuracy of management’s
FY20 forecast against actual results;
In conjunction with our valuation specialists:
o assessing the appropriateness of
•
o
o
management’s FVLCD methodology
testing the mathematical accuracy of the
FVLCD model
challenging key assumptions, including
the FY21 revenue assumptions by
comparing them to FY20 performance,
existing customer agreements,
probability-weighted support for FY21
growth opportunities including technical
feasibility assessments and the growth
assumptions from year 2 of the model
including the terminal growth rate
relative to historical performance,
growth opportunities and relevant
industry and economic external
indicators including the impact of
COVID-19
o evaluating the discount rate used by
comparison to an independently
developed rate;
•
Performing sensitivity analysis on the FVLCD
model using varied discount rates and
growth projections to simulate alternative
market conditions and outcomes and
• Assessing the appropriateness of the
disclosures included in Note 9 to the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Company’s annual report for the year ended 30 June 2020, 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.
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.
Responsibilities of the Directors 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 Company’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 Company or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• 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 Company’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’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 Company’s to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
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
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 11 of the Report of the Directors’
for the year ended 30 June 2020.
In our opinion, the Remuneration Report of IDT Australia Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
DELOITTE TOUCHE TOHMATSU
Belinda Abbott
Partner
Chartered Accountants
Melbourne, 25 August 2020
IDT Australia Limited
For the year ended 30 June 2020
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 10 August 2020
DISTRIBUTION OF EQUITY SECURITIES
A.
Analysis of numbers of equity security holders by size of holding:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001+
B.
The names of the twenty largest individual holders of ordinary shares are listed below:
TWENTY LARGEST INDIVIDUAL SHAREHOLDINGS
UBS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
I'ROM GROUP CO LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ONE MANAGED INVT FUNDS LTD
BRISPOT NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
GRAEME LESLIE BLACKMAN
CS FOURTH NOMINEES PTY LIMITED
JAMPLAT PTY LTD
MR ANTHONY JOHN HUNTLEY
PAULENE BLACKMAN
BELGRAVIA STRATEGIC EQUITIES PTY LTD
MR RODNEY BRUCE EBSWORTH
PICHERIT'S FARM PTY LTD
MR ANTHONY HUNTLEY
GOEN INVESTMENTS PTY LTD
DAVID SPARLING
MR ANTHONY JOHN HUNTLEY
MR GAVIN GEORGE ROGERS & MS KATHRYN ANN ROGERS
Holders 2020 Holders 2019
122
318
274
589
189
1,492
133
406
302
658
193
1,692
Number Held
28,140,173
16,214,169
15,793,001
12,006,448
11,414,315
8,981,173
8,183,784
7,029,710
6,286,074
5,303,927
5,070,044
4,457,737
3,999,791
3,750,000
3,200,000
2,766,338
2,750,000
2,561,144
2,500,000
2,500,000
152,907,828
Percentage of
Issued Shares
11.76
6.78
6.6
5.02
4.77
3.75
3.42
2.94
2.63
2.22
2.12
1.86
1.67
1.57
1.34
1.16
1.15
1.07
1.04
1.04
63.89%
SUBSTANTIAL HOLDERS
C.
The following parties have declared a relevant interest in the number of ordinary shares at the date of giving the notice under
Part 6C.1 of the Corporations Act.
Bank of America and its related bodies corporate
Regal Funds Management Pty Ltd
Anthony Huntley, and associated entities
Number Held
16,171,216
26,360,286
12,828,815
VOTING RIGHTS
D.
A registered holder of shares in the company may attend general meetings of the company in person or by proxy and on a poll
may exercise one vote for each share held.
.
37