Corporate Directory
Directors
Company Secretary
Registered Office
Principle Place of Business
Share Register
Auditor
Steve BAXTER
Danny HOGAN
Wayne JONES
Stephen TOFLER
Indoor Skydive Australia Group Limited
123 Mulgoa Road
Penrith NSW 2750
Indoor Skydive Australia Group Limited
123 Mulgoa Road
Penrith NSW 2750
Boardroom Pty Limited
Level 12
225 George Street
Sydney NSW 2000
Felser Chartered Accountants t/as
Accru Felser
Level 6
1 Chifley Square
Sydney NSW 2000
Bankers
Westpac Banking Corporation
Stock exchange listing code:
IDZ
Website
www.indoorskydive.com.au
Contents
Directors' Review .......................................................................................................................................... 4
Directors’ Report ......................................................................................................................................... 5-8
Remuneration Report (Audited) ............................................................................................................... 9-14
Auditor’s Independence Declaration ........................................................................................................... 15
Financial Reports ..................................................................................................................................... 16-19
Notes to the Financial Statements…………………………………………………………………………………………………..….20-56
Directors' Declaration …………………………………………………………………………………………..…………………………………57
Independent Auditor's Report …………………………………………………………………………………………………….……..58-63
Additional Information ......................................................................................................................... ..64-66
its continued management of the Malaysian joint
venture operation) and eliminated expenses
associated with the offshore expansion strategy,
refocusing on optimising its Australian operations.
For the year ended 30 June 2019, ISA Group reported
statutory loss before interest, tax, depreciation and
amortisation was $4,753,949. The underlying
EBITDA (excluding Perth sale, China JV impairment,
corporate reduction and royalty penalties) is
$1,273,824. This compares to $2,293,178 in 2018.
Looking Forward
With the repair phase almost complete, the company
is now in a position to implement the remaining
phases to its immediate strategy.
Maximising the next 4 years of royalty free period
under the Perth asset sale agreement, the company
will focus on growing the remaining wind tunnel
operations back to levels achieved in FY2018. With
the resources of SkyVenture International and the
local knowledge of ISA Group, the drive of brand
awareness and combined national campaigns
throughout Australia is expected to deliver an
improved pipeline of sales in FY2020.
ISA Group is excited to be launching its new, diverse
entertainment brand later this year and in line with
its diversification strategy will also be further
exploring the B2B range of virtual reality, including
additional training services to industry and defence.
We thank all of our loyal shareholders for their
support throughout a difficult year and we look
forward to sharing a successful FY2020.
Directors’ Review
Repair, Grow, Diversify
The financial year ended 30 June 2019 was a
challenging year for ISA Group with a focus on
repairing the company after the costly legal dispute,
settled in September 2018. Post settlement, the
company formulated and commenced executing its
strategy of repair, growth and diversification.
An immediate and material reduction in interest
bearing debt and liabilities has been achieved
through the sale of the Perth indoor skydiving facility,
combined with a capital raise in August 2019. In
conjunction with these activities, the company has
commenced increasing operational performance,
new business streams, and reducing costs.
Existing operations have been bolstered through
investment in a new digital marketing strategy which
includes a new website and booking system to
increase sales and improve the customer purchasing
experience.
The new Virtual Reality business is under
development with the first location to be fully
operational by the Christmas school holidays. The
initial offering will be located in Penrith and will be
focused on team play with state-of-the-art
technology from around the world. The price point
for the new experience will attract a new market and
will be supported heavily through direct and indirect
awareness and launch campaigns in the lead up to
the Christmas gifting period.
2019 Financial Performance
FY2019 results have been affected by the lack of
marketing spend due to cashflow restrictions which
saw a correlating reduction in sales, distraction due
to the legal settlement and costs associated with the
restructure of the Company headquarters as part of
the Company’s cost reduction measures. Subsequent
to the resolution of the dispute, the Company has
significantly downsized its corporate footprint and
ceased all offshore wind tunnel projects (other than
Indoor Skydive Australia Group Limited
2019 Annual Report
4
Directors’ Report
Your Directors present their report on the
consolidated entity (referred to hereafter as ISA
Group) consisting of Indoor Skydive Australia
Group Limited (the Company) and the entities it
controlled at the end of, or during, the year ended
30 June 2019.
DIRECTORS
The individuals listed below were Directors of the
Company at all times during the year and at the
date of this Directors’ Report, unless otherwise
stated:
Wayne Jones
Director & Chief Executive Officer
Appointed 4 November 2011
Wayne served for 21 years in the Australian
Defence Force and was part of the highly
acclaimed Special Air Service Regiment for the last
14 years of his career. Wayne holds various senior
instructor qualifications and has been at the
forefront of Australian Military Freefall
development and training over the past 10 years.
He is still involved in the training of special forces
troops and he continues to participate in the sport
of skydiving at the highest levels. Wayne is a
member of the Australian Institute of Company
Directors.
Wayne served as Interim Chairman between 6
August 2018 and 24 September 2018 while the
process of selecting a Chairman and appointing
additional non-executive directors was conducted.
Danny Hogan MG
Director & Chief Operations Officer
Appointed 4 November 2011
Danny enlisted in the Australian Regular Army in
1991, and in 1997 was selected for further service
within the Special Air Service Regiment. He has
been recognised and awarded for his actions and
leadership during his 21 year military career
including receiving the Medal for Gallantry. He was
selected and completed a two year military
exchange in the USA with two of the USA’s elite
Special Forces Commands. While in the USA he
gained his freefall parachuting qualifications and
developed a very strong background in the use of
vertical wind tunnel simulation training. Danny
was a highly qualified senior dive instructor within
the Special Air Service Regiment. Danny is a
member of the Australian Institute of Company
Directors.
Steve Baxter
Chairman - Non-Executive
Appointed 13 August 2012
(appointed Chairman 15 July 2019)
Former Australian Regular Army electronics
technician turned successful entrepreneur, Steve is
the founder of early Internet Provider SE Net and
co-founder of telecommunications infrastructure
company, Pipe Networks Ltd. In 2008 he moved to
the USA and joined Google Inc deploying high
speed telecommunication infrastructure, before
returning to Australia.
Steve is known for his entrepreneurial skills and
appears on the popular TV show “Shark Tank”. He
is the founder of Brisbane based not-for-profit
River City Labs - an early stage and start-up co-
working space for tech and creative companies.
Steve is a former director of Other Levels Limited
and Vocus Communications Limited.
Jon Brett
Chairman – Non-Executive
Appointed 24 September 2018
Resigned 15 July 2019
Jon Brett is an experienced operations, finance and
corporate advisory professional. He is a chartered
accountant and a former executive of Investec
Wentworth Private Equity. Jon has served as the
managing director of a number of publicly listed
companies and is an experienced non-executive
director. He served as the non-executive deputy
president of the National Roads and Motoring
Association and been Chairman of the Audit & Risk
Committees for a number of different companies
In the last three years Jon has been a director of
Vocus Group Limited, Godfreys Limited and The
PAS Group Limited.
Jon remains as an advisor to the ISA Group Board.
James Spenceley
Non-Executive Director
Appointed 24 September 2018
Resigned 15 July 2019
James Spenceley is an experienced entrepreneur,
company director and CEO with a track record of
organic and acquisition related value creation. He
is the founder and former CEO of Vocus
Communications, an ASX100 business and now
Australia’s 4th largest telecommunications
company. James is the Chairman of Airtasker and
former owner of the Illawarra Hawks basketball
team. He is co-founder and CEO of MHOR asset
management, an Australian small capital
investment fund, and twice been recognised as an
EY Entrepreneur of the Year award winner.
James is currently Chairman of Silver Heritage
Group Limited and Chairman of AirTasker. In the
Indoor Skydive Australia Group Limited
2019 Annual Report
5
Directors’ Report
last three years James was an executive director of
Vocus Communications Limited.
Appointed 16 October 2013
Resigned 27 September 2018
James remains as an advisor to the ISA Group
Board.
Simon Ward
Non-Executive Director
Appointed 5 October 2018
Resigned 11 March 2019
As International President of iFLY and a director of
SkyVenture International Limited, Simon Ward has
a detailed understanding of the developments and
innovation occurring in the manufacture of vertical
wind tunnels. Simon founded the indoor skydiving
industry in the United Kingdom and brings over 13
years experience in the operation of indoor
skydiving facilities. He is a senior member of the
SkyVenture and iFLY leadership team and works
with franchisees worldwide to drive the
performance of indoor skydiving facilities.
Ken Gillespie AC, DSC, CSM
Former Chairman – Non-Executive
Appointed 18 October 2012
Resigned 6 August 2018
One of Australia’s most distinguished career
soldiers, Lieutenant General (retired) Ken Gillespie,
AC, DSC, CSM, is the Chairman of ISA Group. Ken is
on the Board of Directors of leading local defence
manufacturer, Airbus Asia Pacific Group, and ASX
listed, Senetas Limited. He is also Chair of the
Council of the Australian Strategic Policy Institute,
an internationally recognised Canberra based think
tank, on the advisory board of Veolia Waste and a
board member of the not-for-profit, ANZAC
Research Institute. Ken also provides advice to the
NSW Government in his role as Co-ordinator of
Rural & Regional Infrastructure of NSW.
Ken, served with the Australian Defence Force for
over 43 years, and was Chief of Army for three
years before his retirement in June 2011.
Previously he had served as Land Commander
Australia and Vice Chief of the Australian Defence
Force.
COMPANY SECRETARY
Stephen Tofler
Chief Financial Officer & Company Secretary
Appointed 1 February 2019
Salesh Nischal
Chief Financial Officer & Company Secretary
Appointed 24 September 2018
Resigned 1 February 2019
Fiona Yiend
General Counsel & Company Secretary
DIRECTORS’ MEETINGS
The number of Directors’ meetings that Directors
were eligible to attend and the number of
meetings attended by each Director during the
year are listed below.
Board
Eligible to
Attend
Attended
Wayne Jones
Danny Hogan
Steve Baxter
Jon Brett
James Spenceley
Simon Ward
Ken Gillespie
18
18
18
12
12
6
3
18
18
17
12
10
6
3
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Director’s
relevant interest in shares and options in shares of
ISA Group as at the date of this report.
Director
Number of Shares and Nature of
Interest
Wayne Jones
Danny Hogan
Indirect interest in 16,060,000
shares held by Excalib-air Pty
Ltd, indirect interest in
2,625,000 shares held by
Project Flight Pty Ltd ATF
Wayne Jones Superannuation
Fund, indirect interest in
14,000 shares held by Project
Gravity Pty Ltd, indirect
interest in 5,327,307 shares
held by Project Gravity Pty Ltd
ATF Jones Family Trust. Direct
interest in 1,100,000 unlisted
Options with an exercise price
of $0.35, subject to vesting
conditions being met, and an
expiry date of 23 August 2021.
Indirect interest in 16,060,000
shares held by Excalib-air Pty
Ltd, indirect interest in
Indoor Skydive Australia Group Limited
2019 Annual Report
6
Directors’ Report
Director
Number of Shares and Nature of
Interest
200,000 shares held by Hogan
Superannuation Fund, indirect
interest in 2,187,833 shares
held by Australian Indoor
Skydiving Pty Ltd ATF Hogan
Family Trust. Direct interest
in 1,100,000 unlisted Options
with an exercise price of
$0.35, subject to vesting
conditions being met, and an
expiry date of 23 August 2021.
Indirect interest in 59,638,163
(17,039,475 30 June 19)
shares held by Birkdale
Holdings (QLD) Pty Ltd.
Contractual right to be issued
6,000,000 unlisted options
with an exercise price of $0.25
and an expiry date of 26 June
2020
Steve Baxter
Jon Brett
Nil
James
Spenceley
Indirect interest in 8,826,251
shares held by Spenceley
Management ATF Spenceley
Family Trust
Simon Ward
Nil
Ken Gillespie
Indirect interest in 436,142
shares held by Sector West
Pty Ltd ATF Gillespie Family
Trust
No Director has any relevant interest in shares or
options in shares of a related body corporate of ISA
Group as at the date of this report.
DIVIDENDS
No dividends were declared during the period.
PRINCIPAL ACTIVITIES
ISA Group is a company that specialises in the
experiential leisure industry. Providing experiences
through indoor entertainment and realistic
simulation, targeting a wide market that includes
families, tourists, thrill seekers and military.
In FY2019, the Company owned and operated
three indoor skydiving operations in Australia; iFLY
Downunder (Sydney), iFLY Gold Coast and iFLY
Perth.
Following the iFLY Perth Sale, the Company will
own and operate iFLY Downunder (Sydney) and
iFLY Gold Coast.
ISA Group also currently manages an indoor
skydiving operation in Malaysia under a
partnership with 1 Utama Shopping centre in Kuala
Lumpur.
CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the affairs of
the Company during the financial year which have
not been disclosed to the market.
SUBSEQUENT EVENTS
The Company has entered into an agreement to
sell iFLY Perth to SkyVenture in return for the
extinguishment of outstanding debt and
outstanding royalty payments to SkyVenture,
SkyVenture granting a royalty free period for iFLY
Downunder (Sydney) and iFLY Gold Coast as well
as a cash payment to the Company as outlined
previously to the market. The Asset sale
agreement was signed on 21st August 2019. In
conjunction with the asset sale, the company also
conducted a capital raise through an entitlement
offer and placement which raised $2 million. The
completion of the entitlement offer was 21st
August 2019.
REMUNERATION REPORT (AUDITED)
The Remuneration Report set out from page 9
forms part of this Directors’ Report.
INTERESTS IN ISA GROUP SECURITIES
Details of the ISA Group securities issued during
the year, and the number of ISA Group securities
on issue as at 30 June 2019 are detailed in Note 16
of the Financial Statements and form part of this
Directors’ Report.
As at 30 June 2019 ISA Group had 2,200,000
employee and executive director unlisted options
on issue with an exercise price of $0.35, tenure
based vesting conditions and an expiry date of 23
August 2021.
As at 30 June 2019 ISA Group had a contractual
obligation to issue 6,000,000 unlisted options with
an exercise price of $0.25 and an expiry date of 26
June 2020 to Birkdale Holdings (QLD) Pty Ltd.
ENVIRONMENTAL REGULATION
ISA Group is not subject to any significant
environment regulation under any law of the
Commonwealth or of a State or Territory.
Indoor Skydive Australia Group Limited
2019 Annual Report
7
Directors’ Report
DIRECTORS’ AND OFFICERS’ INSURANCE
During the financial year, ISA Group has paid
premiums to insure all Directors and Officers
against liabilities for costs and expenses incurred
by them in defending any legal proceedings arising
out of their conduct while acting in the capacity of
a director or officer of the Company, other than
conduct involving a wilful breach of duty in
relation to the Company. In accordance with
common commercial practice, the insurance policy
prohibits disclosure of the nature of the liability
insured against and the amount of the premium.
The Directors and Company Secretary of ISA Group
are also party to a deed of access and indemnity.
The Company has not otherwise, during or since
the financial year, indemnified or agreed to
indemnify an officer or auditor of the Company or
any related body corporate against a liability
incurred by such an officer or auditor.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the court under section
237 of the Corporations Act 2001 for leave to
bring, or intervene in, proceedings on behalf of
any entity within ISA Group.
AUDITOR
Felser Chartered Accountants trading as Accru
Felsers was appointed as ISA Group’s auditor on 13
June 2018 and continues in office in accordance
with section 327 of the Corporations Act 2001.
NON-AUDIT SERVICES
The Directors have considered and are satisfied that
the provision of non-audit services during the year
is compatible with the general standard of
the
independence
Corporations Act 2001. The Directors are satisfied
the services disclosed below did not
that
for auditors
imposed by
compromise the external auditor’s independence
for the following reasons:
-
-
all non-audit services are reviewed and
approved by the Board prior to
commencement to ensure they do not
adversely affect the integrity and
objectivity of the auditor; and
the nature of the services provided does
not compromise the general principles
relating to auditor independence in
accordance with APES 110: Code of Ethics
for Professional Accountants set by the
Accounting Professional and Ethical
Standards Board.
The fees paid or payable to Felser Chartered
Accountants for non-audit services provided
during the year ended 30 June 2019 were
$16,740.90.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s independence declaration at page 15
forms part of this Directors’ Report.
ROUNDING OF AMOUNTS
ISA Group is not an entity to which ASIC Legislative
Instrument 2016/199 applies. Accordingly,
amounts in the financial statements and annual
reports have been rounded to the nearest dollar
not the nearest thousand dollars.
BUY BACK
ISA Group does not currently have any on-market
buy-back of shares.
STATEMENT OF CORPORATE GOVERNANCE
ISA Group’s Statement of Corporate Governance
for the year ended 30 June 2019 is available at
http://www.indoorskydiveaustralia.com.au/skydiv
ecompany/charters-and-policies/.
This Directors’ Report is made in accordance with a resolution of the directors made pursuant to section 298(2)
of the Corporations Act.
On behalf of the Board
Steve Baxter
Chairman & Non-Executive Director
27 September 2019
Sydney
Wayne Jones
Director & Chief Executive Officer
27 September 2019
Sydney
Indoor Skydive Australia Group Limited
2019 Annual Report
8
Remuneration Report
1.
Introduction
This Remuneration Report for the year ended 30 June 2019 forms part of the ISA Group Directors’ Report and has
been audited in accordance with the Corporations Act 2001.
The Remuneration Report details remuneration information for the KMP of ISA Group comprising the Non-
Executive Directors, Executive Directors and the senior executives responsible for planning, directing and
controlling the activities of ISA Group.
2. Remuneration Governance
ISA Group’s remuneration strategy has been designed to promote shareholder growth by setting strategic and
operational targets for at risk remuneration while maintaining a base salary that fairly rewards employees.
Consideration of Remuneration & Nomination Matters
All remuneration matters across ISA Group are reviewed by a ‘one up’ manager to ensure that no single individual
is determining remuneration. In the case of the Chief Executive Officer and his direct reports all remuneration
matters are submitted to the Board for consideration and, if appropriate, approval.
Where appropriate external advice is obtained for the benefit of the Board in considering remuneration matters.
This advice can take the form of remuneration benchmarking, remuneration consultancy, tax or financial
consultancy services.
The approval of remuneration matters is restricted to non-executive directors only. Throughout FY2019
remuneration matters have been considered by the Board of Directors (Executive Directors excluded) under the
auspices of the Remuneration & Nomination Committee Charter which is available at www.indoorskydive.com.au.
Remuneration Recommendations
ISA Group engages independent external consultants to provide advice and assistance in relation to remuneration
from time to time as required. ISA Group received preliminary advice on long term incentives to drive
performance in 2018 and the following years. This advice formed the foundation of ISA Group’s long term
incentive which utilises premium priced options.
Hedging of Remuneration
ISA Group’s KMP and their closely related parties are prohibited from hedging or otherwise reducing or eliminating
the risk associated with equity based incentives.
3. Key Management Personnel
The KMP for ISA Group for 2019 comprise the Non-Executive Directors, Executive Directors and the senior
executives responsible for planning, directing and controlling the activities of ISA Group.
Executive KMP
Wayne Jones
Executive Director & Chief Executive Office
Danny Hogan
Executive Director & Chief Operations Officer
Stephen Tofler
Chief Financial Officer & Company Secretary (Feb 19 – present)
Fiona Yiend
General Counsel & Company Secretary (Sep 13 – Sep 18)
Salesh Nischal
Chief Financial Officer (May 17 – Feb 19) Company Secretary (May 17 – Feb 19)
Indoor Skydive Australia Group Limited
2019 Annual Report
9
Remuneration Report
Non-Executive Directors
Notes
Stephen Baxter
Appointed 13 August 2012 (appointed Chairman 15 July 2019)
Jon Brett
Appointed 24 September 2018 - Resigned 15 July 2019
Ken Gillespie
Appointed 18 October 2012 - Resigned 6 August 2018
James Spenceley
Appointed 24 September 2018 - Resigned 15 July 2019
Simon Ward
Appointed 5 October 2018 - Resigned 11 March 2019
4. Remuneration Principles, Strategy and Outcomes
Remuneration principles
ISA Group’s remuneration strategy is based on the following principles:
• Retain Top Talent – As ISA Group operates in a unique environment with a limited pool of talent ISA
Group seeks to retain the high calibre people it has identified.
• Align rewards with business performance – ISA Group seeks to align remuneration rewards with business
performance through the use of “at risk” remuneration and the assessment of performance.
•
•
Support the execution of business strategy – ISA Group seeks to motivate employees to execute our
aggressive growth strategy by setting performance objectives in line with strategic outcomes.
Fairness, equity and consistency – ISA Group implements a consistent, transparent process for
remuneration review and structures remuneration to achieve equity for like positions taking into account
performance and tenure.
These principles are applied as we assess remuneration in the context of the operational demands of the business,
the labour market we operate in, and returns to shareholders.
Remuneration Strategy
ISA Group’s remuneration strategy for 2019 focused on driving the delivery of operations, and growth strategies.
Throughout the year ISA Group restructured its corporate footprint which resulted in several positions becoming
redundant.
As a result of the corporate overhead reduction and cost saving initiatives, all incentives to KMP were ceased.
Remuneration Outcomes for Executive KMP
The remuneration received by Executive KMP in 2019 and 2018 is set out below.
Indoor Skydive Australia Group Limited
2019 Annual Report
10
Remuneration Report
Short Term Benefits
Post
Employment
Benefits
KMP
Year
Salary
STI
Non
Mone-
tary
$
Super-
annuation
$
12,738
20,820
15,090
20,782
16,274
20,820
16,571
20,782
-
-
10,450
17,740
1,394
4,826
$
2019 219,161
2018 218,759
2019 219,161
2018
218,759
2019 110,004
2018 176,550
2019
50,800
$
-
-
-
-
-
-
-
2018 185,038
-
7,560
17,579
2019
66,461
2018
-
-
-
-
-
6,314
-
Wayne
Jones
CEO
Danny
Hogan
COO
Salesh
Nischal
CFO1
Fiona
Yiend
General
Counsel/
Company
Secretary
Stephen
Tofler
CFO2
Long
Term
Benefits
Long
Service
Leave
$
-
-
-
-
-
-
-
-
-
-
Other
Term-
ination
$
-
-
-
-
Share
Based
Payments
Rights
Total
$
-
$
252,719
13,034
267,665
-
256,255
13,034
269,146
13,162
-
133,616
-
15,788
209,111
107,786
-
164,806
-
-
-
15,788
225,965
-
-
72,775
-
1 Resigned 1 February 2019
2 Appointed CFO on 1 February 2019
Executive Remuneration Structure
Remuneration Mix
Fixed annual remuneration provides a “base” level of remuneration. Previously, short and long-term variable
incentives (“at risk”) reward executives for meeting and exceeding pre-determined targets. The targets for at-risk
rewards is linked to clear measurable targets which the Company considers are significant to achieving our
strategic plan and delivering shareholder returns. For FY2019 all incentives were ceased.
Fixed Remuneration
Fixed remuneration consists of cash salary, superannuation and other limited non-monetary benefits. The levels
are set to attract and retain qualified, skilled and experienced executives and are determined based on
comparable market data, the skills and experience of the individual executive and the accountability and
responsibility of the role.
Short Term Incentive Structure
Due to corporate overhead reductions in FY2019, all short term incentive plans were ceased.
Indoor Skydive Australia Group Limited
2019 Annual Report
11
Remuneration Report
Long Term Incentive Awards and Outcomes
Due to corporate overhead reductions in FY2019, there were no changes to the 2018 long term incentive plan.
During 2018 the following options were issued under the ISA Group Employee Incentive Option Plan. Each vested
option entitles the holder to purchase one ordinary ISA Group share for the exercise price of $0.35. Shareholder
approval was granted to the issue of options to Wayne Jones and Danny Hogan on 21 November 2017.
Employee
Options
Exercise
Price
Vested Vesting Date
Tranche 1 (50%)
Vesting Date
Tranche 2 (50%)
Expiry Date
Value of
Option on
Grant Date
Wayne
Jones
Danny
Hogan
1,100,000
$0.35
No
24 August 2019
24 August 2020
23 August 2021
3.55 cents
1,100,000
$0.35
No
24 August 2019
24 August 2020
23 August 2021
3.55 cents
Summary of Executive Contracts
Executive contracts set out remuneration details and other terms of employment for each individual executive.
The key provisions of the KMP contracts relating to terms of employment and notice periods are set out below.
Contractual terms vary due to the timing of contracts, individual negotiations and different market conditions.
Date of
contract
Term of
contract
Termination Payments
Notice required
to be given to the
Company for
termination by
Employee
Wayne Jones
Director and CEO
October 2012 Ongoing
6 months
Danny Hogan
Director and COO
October 2012 Ongoing
6 months
January 2019
Ongoing
3 Months
Stephen Tofler
Chief Financial
Officer & Company
Secretary
6 months’ notice for
termination by Employer
and legislative entitlements
on redundancy.
6 months’ notice for
termination by Employer
and legislative entitlements
on redundancy.
3 months’ notice for
termination by Employer
and legislative entitlements
on redundancy.
5. Non-Executive Director Remuneration
Approved Fee Pool
Non-Executive Director fees are determined within a maximum directors’ fee pool limit. The directors’ fee pool
was set in 2012 as $500,000. No director’s fees are paid to Executive Directors, Wayne Jones and Danny Hogan.
Total non-executive remuneration paid during 2019 was $187,027 (FY18: $125,417).
Approach to setting Non-Executive Director Remuneration
Non-Executive Directors receive fixed remuneration in the form of a fee. The fee is set taking into account the
Indoor Skydive Australia Group Limited
2019 Annual Report
12
Remuneration Report
conditions at the time of the director’s appointment, the director’s skills and expertise and the role to be
performed by the director.
Non-Executive Directors do not receive variable remuneration or other performance-related incentives.
The Non-Executive Director fees were not increased in 2018. The Non-Executive Directors fees for the last two
financial years are set out below.
Financial
Year
Salary and
Fees
Bonus
Share based
payments
Total
2019
2018
2019
2018
2019
2019
2019
40,012
40,417
7,083
85,000
76,370
63,562
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Stephen Baxter
Ken Gillespie*
Jon Brett**
James Spenceley**
Simon Ward***
* Resigned 6 August 2018
** Resigned 15 July 2019
*** Resigned 11 March 2019
40,012
40,417
7,083
85,000
76,370
63,562
-
6. Other Statutory Disclosures
ISA Group’s Financial Performance
The table below sets out ISA Group’s earnings and movements in shareholder wealth over the last 5 years.
2015
2016
2017
2018
2019
Revenue
6,431,444
8,155,888
12,271,081
13,880,529
11,376,877
Net Profit/(Loss) after
Tax
(1,903,921)
(1,506,760)
(891,290)
(10,140,582)
(7,400,998)
Share price at 30 June
0.45
0.40
0.20
0.12
0.018
Indoor Skydive Australia Group Limited
2019 Annual Report
13
Remuneration Report
Option holdings of KMP
Details of the option holdings of KMP are set out below. Non-Executive Directors are not granted options as part
of their remuneration:
Balance at 1
July 2018
Granted as
remuneration
Rights
exercised
Rights
lapsed
Rights
Forfeited
Balance at 30
June 2019
Wayne Jones
1,100,000
Danny Hogan
1,100,000
-
-
-
-
-
-
-
-
1,100,000
1,100,000
Shareholdings of KMP
The shareholding of the KMP including their associates is as follows:
KMP
Role
Interest in
shares held
at 1 July
2018
Interest in
shares
acquired
/(disposed)
during the
period
Interest in shares
issued on
exercise of
vested
performance
rights during the
period
Balance at 30
June 2019
Steve Baxter
Non-Executive Director
17,039,475
-
Wayne Jones
Chief Executive Officer
& Director
19,026,307
450,000
Danny Hogan
Chief Operations
Officer & Director
18,447,833
Stephen Tofler Chief Financial Officer
-
-
-
-
-
-
-
17,039,475
19,476,307
18,447,833
-
2018 Annual General Meeting (AGM)
At the Company’s AGM in November 2018, 96.59% of votes received were in favour of adopting the remuneration
report.
Indoor Skydive Australia Group Limited
2019 Annual Report
14
Auditor’s Independence Declaration
Indoor Skydive Australia Group Limited
2019 Annual Report
15
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2019
Revenue
Cost of sales
Gross profit
Other income
Selling and marketing expenses
Administration expenses
Impairment of AirRider Brand
Legal expenses
Dispute settlement costs
Other expenses
Note
3
3
3(a)
3(b)
Consolidated Group
2019
$
2018
$
7,507,202
(1,682,872)
5,824,330
8,858,825
(1,778,506)
7,080,319
337,016
396,753
(3,201,054)
(3,349,291)
-
-
-
(790,453)
(4,213,330)
(3,120,662)
(2,627,648)
(2,520,068)
(3,532,751)
(1,441,303)
Loss before interest and tax
(1,179,452)
(9,978,690)
Finance income
Finance expense
Net financing costs
Share of loss of a joint venture entity
Loss before tax from continuing operations
Loss before tax from discontinuing operations
Total Loss from operations
Income tax benefit
Loss after tax
Other comprehensive income
Exchange differences on translation of foreign operations
Other comprehensive income for the period
Total comprehensive income for the period
Earnings per share
From continuing operations:
-
(1,060,004)
(1,060,004)
(53,031)
(2,292,487)
(4,797,363)
(7,089,850)
615
(535,8545)
(535,239)
(339,583)
(10,853,512)
1,631,081
(9,222,431)
11
4(a)
5
(311,148)
(918,151)
(7,400,998)
(10,140,582)
2,357
2,357
805
805
(7,398,641)
(10,139,777)
- Basic earnings per share (cents)
- Diluted earnings per share (cents)
From discontinuing operations:
- Basic earnings per share (cents)
- Diluted earnings per share (cents)
24
24
24
24
(1.90)
(1.87)
(3.51)
(3.45)
(7.42)
(7.42)
-
-
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the Notes to the financial Statements.
Indoor Skydive Australia Group Limited
2019 Annual Report
16
Consolidated Statement of Financial Position
As at 30 June 2019
Notes
Consolidated Group
2019
$
2018
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for disposal
Other financial asset
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Investment in joint venture entities
Intangible asset
Deferred tax asset
Other financial asset
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Deferred revenue
Borrowings
Liabilities held for disposal
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
6
7
4(b)
8
9
11
5
8
12
13
14
4(b)
15
14
15
140,665
215,254
30,148
9,736,903
49,360
10,172,330
26,285,762
153,298
-
938,339
132,585
27,509,984
953,541
105,473
83,156
-
130,890
1,273,060
42,151,324
206,329
264,350
1,249,487
197,440
44,068,930
37,682,314
45,341,990
3,334,028
759,681
1,651,465
6,722,153
196,619
12,663,946
9,454,229
632,692
10,086,921
3,997,700
1,231,797
1,886,317
-
425,288
7,541,102
9,081,123
6,338,337
15,419,460
TOTAL LIABILITIES
22,750,867
22,960,562
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
14,931,447
22,381,428
16
40,810,939
9,467
(25,888,959)
14,931,447
40,810,939
58,450
(18,487,961)
22,381,428
The Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Financial
Statements.
Indoor Skydive Australia Group Limited
2019 Annual Report
17
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Balance at 1 July 2018
Employee share based payment performance
rights
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Issued
Capital
Reserves
Retained
Earnings
Total
$
40,810,939
$
58,450
$
(18,487,961)
$
22,381,428
(51,340)
(51,340)
-
-
-
-
2,357
(7,400,998)
-
(7,400,998)
2,357
2,357
(7,440,998)
(7,398,641)
Balance at 30 June 2019
40,810,939
9,467
(25,888,959)
14,931,447
Balance at 1 July 2017
Share issue on exercise of performance
rights
Employee share based payment performance
rights
Issue of share options
40,466,917
340,448
(8,347,379)
32,459,986
344,022
(344,022)
3,574
57,645
-
-
-
-
3,574
57,645
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive loss for the half
year
-
-
-
-
805
(10,140,582)
-
(10,140,582)
805
805
(10,140,582)
(10,139,777)
Balance at 30 June 2018
40,810,939
58,450
(18,487,961)
22,381,428
The Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Financial
Statements.
Indoor Skydive Australia Group Limited
2019 Annual Report
18
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Grant and Other Operational Income
Interest received
Finance costs
Note
Consolidated Group
2019
$
2018
$
12,412,011
(12,432,960)
210,250
-
(1,065,550)
14,946,055
(13,508,159)
-
615
(558,598)
Net cash inflows from operating activities
18
(876,249)
879,913
Cash Flows From Investing Activities
Purchase of property, plant and equipment
Payments for investment in joint venture
Payments for intangibles
(74,883)
-
-
(106,485)
(545,107)
(1,263,202)
Net cash outflows from investing activities
(74,883)
(1,914,794)
Cash Flows From Financing Activities
Proceeds from borrowings
Repayment of borrowings
1,500,000
(1,361,744)
1,500,000
(1,218,035)
Net cash inflows from financing activities
138,256
281,965
Net decrease in cash held
(812,876)
(752,916)
Cash and cash equivalents at beginning of
year
953,541
1,706,457
Cash and cash equivalents at end of year
5
140,665
953,541
The Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Financial
Statements.
Indoor Skydive Australia Group Limited
2019 Annual Report
19
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
These consolidated financial statements and notes represent those of Indoor Skydive Australia Group Limited and
Controlled Entities (the Consolidated Group or Group).
The separate financial statements of the parent entity, Indoor Skydive Australia Group Limited have not been
presented within this financial report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 27 September 2019 by the Directors of the Company.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board and the Corporations Act 2001. Indoor Skydive Australia Group Ltd is
the Group’s ultimate parent company. Indoor Skydive Australia Group Ltd is a public company listed on the
Australian Stock Exchange and domiciled in Australia. The Group is a for-profit entity for financial reporting
purposes under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has
concluded would result in financial statements containing relevant and reliable information about transactions,
events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements
and notes also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board. Material accounting policies adopted in the preparation of these financial statements are
presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based
on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets,
financial assets and financial liabilities.
Indoor Skydive Australia Group Limited
2019 Annual Report
20
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Accounting
The Group incurred a loss for the year after tax of $7,400,998 (2018: loss of $10,140,582) and has a net current
deficiency in assets of $5,506,366. Included within current liabilities are deferred revenue of $759,681 that will be
realised as revenue once the service has been delivered to the customer. Therefore, excluding this balance, the
Group has an adjusted current asset deficiency position of $4,746,685 at 30 June 2019.
The following matters have been considered by the directors in determining the appropriateness of the going
concern basis of preparation in the financial statements:
i)
ii)
iii)
in August 2019, ISA Group entered into an agreement with SkyVenture to sell the assets of iFLY Perth
to SkyVenture in exchange for (amongst other things) the extinguishment of outstanding debt and
royalties owed by ISA Group to SkyVenture, a suspension of royalty payments for a period of 4 years
for iFLY Downunder (Sydney) and iFLY Gold Coast (which will be recorded in our financial statements
as deferred consideration based on forecast royalty payments FY20) and a payment of A$500,000
from SkyVenture to the Company.
In August 2019, ISA Group raised $2m through an entitlement offer and placement. The proceeds
will be used to further reduce interest bearing debt and to invest in growth activities to improve
operational performance
In conjunction with the Entitlement Offer, to assist with the Company’s strategy of reducing debt
and liabilities, Birkdale (an entity associated with Chairman, Steve Baxter) has agreed to convert $1.2
million of its existing $3.0 million loan into New Shares at the Offer Price.
The above Conversion is subject to Shareholder approval being obtained for the issue of New Shares
to Birkdale. In addition, Birkdale has agreed to extend the repayment date of the loan until 26 June
2021 and capitalise interest on the loan until 30 June 2020.
If the Company does not obtain shareholder approval for the Conversion, the Company and Birkdale
have agreed to amend the terms of the Birkdale Loan facility by extending the repayment date for
the whole amount of the outstanding principal under the Birkdale Loan facility, being $3 million, by
a further 12 months to 26 June 2021.
A cash flow forecast for the next 12 months prepared by management has indicated that the consolidated entity
will have sufficient cash assets to be able to meet its debts as and when they fall due. The directors are satisfied
that the consolidated entity is able to meet its working capital liabilities through the normal cyclical nature of
receipts and payments.
As a result, the financial report has been prepared on a going concern basis.
Indoor Skydive Australia Group Limited
2019 Annual Report
21
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
a.
Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled
by Indoor Skydive Australia Group Limited at the end of the reporting period. A controlled entity is any
entity over which Indoor Skydive Australia Group Limited has the ability and right to govern the financial
and operating policies so as to obtain benefits from the entity’s activities.
Where controlled entities have entered or left the Group during the year, the financial performance of
those entities is included only for the period of the year that they were controlled. A list of controlled
entities is contained in Note 10 to the financial statements.
In preparing the consolidated financial statements, all intragroup balances and transactions between
entities in the consolidated group have been eliminated in full on consolidation. Non-controlling interests,
being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately
within the equity section of the consolidated statement of financial position and statements showing
profit or loss and other comprehensive income. The non-controlling interests in the net assets comprise
their interests at the date of the original business combination and their share of changes in equity since
that date.
b.
Income Tax
The income tax expense/(benefit) for the year comprises current income tax expense/(benefit) and
deferred tax expense/(benefit).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax
liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant
taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances
during the year as well as unused tax losses.
Current and deferred income tax expense/(benefit) is charged or credited outside profit or loss when the
tax relates to items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an
asset or liability, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled and their measurement also reflects the manner in
which management expects to recover or settle the carrying amount of the related asset or liability. With
respect to non-depreciable items of property, plant and equipment measured at fair value and items of
investment property measured at fair value, the related deferred tax liability or deferred tax asset is
measured on the basis that the carrying amount of the asset will be recovered entirely through sale.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the
extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of
set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur
in future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
Indoor Skydive Australia Group Limited
2019 Annual Report
22
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Tax Consolidation - Australia
The Company and its wholly-owned Australian resident entities have formed a tax consolidated group
with effect from 1 November 2011 and will therefore be taxed as a single entity from that date. The
Company is the head entity within the tax-consolidated group.
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary
differences of the members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using a modified stand-alone tax allocation
methodology.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the
controlled entities are assumed by the head entity in the tax-consolidated group and are recognised as
amounts payable (receivable) to (from) other entities in the tax-consolidated group in conjunction with
any tax funding arrangements.
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group
to the extent that it is probable that future taxable profits of the tax-consolidated group will be available
against which the asset can be utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of
revised assessments of the probability of recoverability is recognised by the head company only.
c.
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where
applicable, any accumulated depreciation and impairment losses.
Plant and Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment
is greater than the estimated recoverable amount, the carrying amount is written down immediately to
the estimated recoverable amount and impairment losses are recognised either in profit or loss or as a
revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of
recoverable amount is made when impairment indicators are present (refer to Note 1(j) for details of
impairment).
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess
of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the
expected net cash flows that will be received from the asset’s employment and subsequent disposal.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
recognised as expenses in profit or loss during the financial period in which they are incurred.
Indoor Skydive Australia Group Limited
2019 Annual Report
23
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding
freehold land, is depreciated on a straight-line basis over the asset’s useful life to the consolidated group
commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over
the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Office equipment
Furniture and fittings
IT equipment
Vertical wind tunnel building infrastructure
Vertical wind tunnel equipment
Useful Life
3 years
5 years
5 years
40 years
20 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are recognised in profit or loss in the period in which they arise. When revalued assets
are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained
earnings.
Indoor Skydive Australia Group Limited
2019 Annual Report
24
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
d.
Intangibles
Subsequent measurement
Intangible assets are not amortised but tested for impairment annually either individually or at cash
generating unit level.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference
between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within
other income or other expenses.
e.
Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the
asset – but not the legal ownership – are transferred to entities in the consolidated group, are classified
as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to
the fair value of the leased property or the present value of the minimum lease payments, including any
guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and
the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or
the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor,
are recognised as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis
over the lease term.
Indoor Skydive Australia Group Limited
2019 Annual Report
25
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
f.
Foreign Currency Transactions and Balances
Functional and Presentation Currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are
presented in Australian dollars, which is the parent entity’s functional currency.
Transactions and Balances
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other
comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange difference is recognised in profit or loss.
g.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks and bank
overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the
statement of financial position.
h.
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that
remain unpaid at the end of the reporting period. Payables expected to be settled within 12 months of
the end of the reporting period are classified as current liabilities. All other liabilities are classified as non-
current liabilities.
i.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the ATO are presented as operating cash
flows included in receipts from customers or payments to suppliers.
j.
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may
be impaired. The assessment will include the consideration of external and internal sources of
information. If such an indication exists, an impairment test is carried out on the asset by comparing the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in
use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable
amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in
accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116: Property,
Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in
accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for intangible assets with indefinite lives and intangible assets
not yet available for use.
Indoor Skydive Australia Group Limited
2019 Annual Report
26
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
k.
Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to the end of the reporting period. Employee benefits that are expected to be settled within
a year have been measured at the amounts expected to be paid when the liability is settled. Expenses for
non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid
or payable. Liabilities for long service leave are recognised when employees reach a qualifying period of
continuous service. Liabilities and expenses for bonuses are recognised where contractually obliged or
where there is a past practice that has created a constructive obligation.
Share-based Payments
Share-based compensation benefits are provided to certain employees (including key management
personnel) via the Indoor Skydive Australia Group Limited Performance Rights Plan. The fair value is
measured at grant date and is recognised over the period the services are received, which is the expected
vesting period during which the employees would become entitled to exercise the performance rights.
Non-market vesting conditions are included in assumptions about the number of performance rights that
are expected to become exercisable. Estimates are subsequently revised if there is any indication that the
number of performance rights expected to vest differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense
recognised in prior periods if performance rights ultimately exercised are different to that estimated on
vesting.
The fair value of performance rights granted for rights with non-market based performance criteria are
measured using the binomial option pricing methodology which is the approach typically used for valuing
rights which may be exercised, once vested, at any time up until expiry.
Upon exercise of performance rights, the proceeds received net of any directly attributable transaction
costs are allocated to contributed equity.
l.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events,
for which it is probable that an outflow of economic benefits will result and that outflow can be reliably
measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the
end of the reporting period.
Make good provisions are recognised on a systematic basis over the life of the lease, based on the most
reliable evidence available at reporting date, including the risks and uncertainties associated with the
present obligation. Where there are a number of similar obligations, the likelihood that an outflow will
be requited in settlement is determined by considering the class of obligations as a whole. The provision
is discounted to its present value, where the time value of money is material.
m.
Revenue and Other Income
Revenue is measured at the fair value of the consideration received or receivable after taking into account
any trade discounts and volume rebates allowed. When the inflow of consideration is deferred, it is
included in the Statement of Financial Position as a current liability.
Revenue from the sale of goods and services is recognised at the point of delivery as this corresponds to
the transfer of significant risks and rewards of ownership and the cessation of all involvement in those
goods and services. For gift card revenue, refer to Note 1(s)(iii).
Interest revenue is recognised on an accruals basis using the effective interest method.
Indoor Skydive Australia Group Limited
2019 Annual Report
27
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
n.
Deferred Revenue
Income relating to future periods is initially recorded as deferred revenue, and is then recognised as
revenue over the relevant periods of admission or rendering of other services.
o.
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services performed
in the ordinary course of business. Receivables expected to be collected within 12 months of the end of
the reporting period are classified as current assets. All other receivables are classified as non-current
assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method, less any provision for impairment. Refer to Note 1(j) for further
discussion on the determination of impairment losses.
p.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined using the weighted
average cost method, after deducting any purchase settlement discount and including logistics expenses
incurred in bringing the inventories to their present location and condition.
q.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that
necessarily take a substantial period of time to prepare for their intended use or sale are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
r.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
Where the Group has retrospectively applied an accounting policy, made a retrospective restatement or
reclassified items in its financial statements, an additional statement of financial position as at the
beginning of the earliest comparative period will be disclosed.
s.
Critical Accounting Estimates and Judgements
i.
Useful lives, Residual Values and Classification of Property, Plant and Equipment
There is a degree of judgement required in estimating the residual values and useful lives of the Property,
Plant and
Equipment. There is also a degree of judgement required in terms of the classification of such Property,
Plant and Equipment. The Group’s main assets at present comprise the Vertical Wind Tunnel (VWT)
Equipment and its related Building Infrastructure. The construction of these assets are typically foreseen
in the lease agreements, however the Board has exercised their judgement in determining that the nature
of these assets are that of buildings and equipment, rather than leasehold improvements. To this extend,
the Board has confirmed the useful life of the Buildings to be 40 years and VWT equipment to be 20 years
and the residual values of both these classes of assets to be nil.
ii.
Deferred Tax Asset
In the future years, the Group is expected to generate a taxable income that will utilise the deferred tax
balance. It is probable that the balance of unused tax losses will be recouped in future years, the directors
have therefore recognised a deferred tax asset to the extent of the tax losses and deductible temporary
differences.
Indoor Skydive Australia Group Limited
2019 Annual Report
28
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
iii.
Gift Card Revenue
Gift card revenue from the sale of gift cards is recognised when the card is redeemed for the purchase of
flight time (Flight Revenue), or when the gift card is no longer expected to be redeemed (Gift Card
Revenue). At 30 June 2019, $664,328 of Gift Card Revenue is recognised (2018: $797,913). The key
assumption in measuring the liability for gift cards and vouchers is the expected redemption rates by
customers with a portion recognised upfront, which are reviewed based on historical information. Any
reassessment of expected redemption rates in a particular period impacts the revenue recognised from
expiry of gift cards and vouchers (either increasing or decreasing). Any foreseeable change in the estimate
is unlikely to have a material impact on the financial statements.
iv.
Site Restoration
Provisions for site restoration obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events; it is probable that an outflow of resources will be
required to settle the obligation and the amount has been reliably estimated.
In the current year, the Group has recognised a provision for site restoration for its three tunnels. To this
extent, an estimate of the costs to remove the VWT’s and its related Building Infrastructure has been
determined based on current costs using existing technology at current prices. Management used the
services of an expert and determined the cost to restore the sites. These costs were projected forward
at a 2.5% inflationary escalation and then discounted back at 12.87% (2018: 8.73%), which is a change in
estimate from the prior year, after consideration of the associated risks. The discount rate has been
amended to reflect the time value of money and risks specific to the operation of the tunnels. The site
restoration asset is depreciated over the remainder of each extended lease period being 40 years in the
case of each of iFLY Downunder (Penrith), iFLY Gold Coast and iFLY Perth. The unwinding of the effect of
discounting on the site restoration provision is included within finance costs in the statement of
comprehensive income.
Indoor Skydive Australia Group Limited
2019 Annual Report
29
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
u.
New and amended standards and interpretations
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is
not yet effective. At the date of this financial report the following standards and interpretations, which may
impact the entity in the period of initial application, have been issued but are not yet effective:
Reference
Title
Summary
AASB 16
Leases
This standard is applicable to annual
reporting periods beginning on or
after 1 January 2019. The standard
replaces AASB 117 'Leases' and for
lessees will eliminate the
classifications of operating leases
and finance leases.
Application
date
Expected
Impact
1 July 2019
The Group is yet
to assess the
effect.
Indoor Skydive Australia Group Limited
2019 Annual Report
30
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 2: PARENT INFORMATION
The following information has been extracted from the books and
records of the parent and has been prepared in accordance with
Australian Accounting Standards.
2019
$
2018
$
Statement of Financial Position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Equity
Issued capital
Share based payments reserve
Retained earnings
Total Equity
Statement of Profit or Loss and Other Comprehensive Income
Total comprehensive loss for the year
336,808
1,059,762
31,535,823
35,055,595
31,872,631
36,115,357
1,812,552
2,609,814
19,960,122
14,485,115
21,772,674
17,094,928
40,810,939
40,810,939
7,109
57,645
(30,718,092)
(21,848,155)
10,099,956
19,020,429
(8,869,937)
(10,662,509)
(8,869,937)
(10,662,509)
Contingent liabilities
The parent entity does not have any contingent liabilities as at 30 June 2019.
Contractual commitments
Other than amounts disclosed in the financial statements, the parent entity has no additional contractual
commitments as at 30 June 2019.
Indoor Skydive Australia Group Limited
2019 Annual Report
31
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 3: REVENUE AND EXPENSES
Revenue
VWT revenue – rendering of services
Other sales
2019
$
6,941,395
565,807
7,507,202
Other sales revenue relates to cafeteria income, merchandise income and sub-let income.
Other Income
Grant Income
Other
Included in the expenses are the following:
a)
Selling and Marketing Expenses
Marketing expenses
Employment expenses
b) Administrative Expenses
Depreciation and amortisation expenses
Occupancy expenses
Employment expenses
Share based payments
Directors’ fees
210,250
126,766
337,016
2019
$
479,969
2,721,085
3,201,054
2019
$
674,735
689,591
1,751,281
-
238,684
2018
$
8,029,861
828,964
8,858,825
176,220
220,533
396,753
2018
$
794,603
3,418,727
4,213,330
2018
$
1,001,962
888,089
1,047,549
57,645
125,417
3,349,291
3,120,662
Indoor Skydive Australia Group Limited
2019 Annual Report
32
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE: 4 DISCONTINUING OPERATIONS
On 21 August 2019 the company entered into an agreement with SkyVenture International Ltd to sell the
assets of the Perth Indoor Skydiving facility, as a part of the realignment of the future direction of the firm. This
sale is subject to certain conditions and is in exchange for:
•
•
Full satisfaction of amounts payable by the ISA Group of companies to SkyVenture
under the Promissory Notes which were issued on settlement of the legal dispute in
2018
Full satisfaction of all outstanding amounts payable by the ISA Group of companies
under the Purchase and Licence Agreements for its three current operations
• A royalty suspension period of 4 years for Indoor Skydiving Penrith and Indoor
Skydiving Gold Coast
• Cash payment to ISA Group of A$500,000
•
•
Termination of the Purchase and Licence Agreement in relation to iFly Perth
SkyVenture assuming the liabilities for presold and unused flights of up to $250,000
a)
Profit or Loss from Discontinuing Operations
Revenues
Cost of Sales
Gross Profit
2019
$
2018
$
3,869,675
(845,079)
5,021,704
(796,795)
3,024,596
4,224,909
Selling and marketing expenses
Administration expenses
Other expenses
(1,312,652)
(1,235,691)
(145,947)
(969,939)
(1,482,325)
(118,820)
Profit/Loss Before Interest and Tax
330,306
1,653,825
Finance expense
Net financing costs
Loss on disposal
Profit/Loss Before Tax
(5,546)
(5,546)
(5,122,123)
(4,797,363)
(22,744)
(22,744)
-
1,631,081
Indoor Skydive Australia Group Limited
2019 Annual Report
33
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
b) Financial Position of Discontinuing Operations
The carrying amounts of assets and liabilities are summarised as follows:
Assets & Liabilities
held for Disposal
ASSETS
CURRENT ASSETS
Inventories
Property, plant and equipment
Provision for loss on disposal
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Deferred revenue
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
$
16,533
14,842,495
(5,122,123)
9,736,905
9,736,905
857,789
250,000
5,864,364
6,972,153
6,972,153
2,764,752
Indoor Skydive Australia Group Limited
2019 Annual Report
34
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 5: INCOME TAX (EXPENSES)/BENEFIT
Income tax benefit
Current income tax:
Current income tax charge
Deferred tax:
Relating to origination and reversal of temporary differences
Income tax benefit
2019
$
2018
$
-
104,482
(311,148)
(311,148)
(1,022,633)
(918,151)
A reconciliation of income tax expense applicable to accounting loss before income tax at the statutory
income tax rate to income tax expense at the company’s effective income tax rate for the year ended 30
June 2019 is as follows:
Accounting loss before income tax
At the statutory income tax rate of 27.5%
Share of results of joint venture
Tax losses not recognised
Non-deductible expenses for tax purposes:
Entertainment expenses
Share based payments
Amortisation expenses
Dispute settlement costs
Impairment of AirRider brand
Other exempt income
Other non-deductible expenses
Effect of lower tax rates in Malaysia
Income Tax Benefit
Deferred tax assets (timing difference) comprises of:
Share issue costs
Accruals and provisions
Deferred tax asset (timing difference) brought to account
Deferred tax asset (tax losses) brought to account
Total deferred tax brought to account
2019
$
(7,089,850)
(1,949,709)
14,584
2,316,058
1,142
(14,119)
-
-
-
(57,819)
-
1,011
311,148
-
938,339
938,339
-
938,339
2018
$
(9,222,431)
(2,536,168)
81,500
1,666,342
4,950
15,852
28,141
971,507
722,603
(48,460)
-
11,884
918,151
80,797
1,168,691
1,249,487
-
1,249,487
The Group has tax losses that arose in Australia for which no deferred tax asset of $2,823,562 is recognised on
the Statement of Financial Position. The tax losses are available indefinitely for offsetting against future taxable
profits of the Group.
NOTE 6: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
2019
$
140,665
140,665
2018
$
953,541
953,541
Indoor Skydive Australia Group Limited
2019 Annual Report
35
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 7: TRADE RECEIVABLES AND OTHER ASSETS
Trade receivables
Other receivables
Prepaid expenses
2019
$
39,713
138,060
37,481
215,254
2018
$
38,885
9,400
57,188
105,473
All amounts are short- term. The carrying value is considered a reasonable approximation of fair value. The
Group’s trade and other receivables have been reviewed for indicators of impairment. No impairment has been
recognised and no receivables are past due.
NOTE 8: OTHER FINANCIAL ASSETS
Current
Non- current
2019
$
49,360
132,585
181,945
2018
$
130,890
197,440
328,330
Other financial assets relate to costs associated with the bank loan facility. This financial asset is amortised over
the period of the loan facility.
NOTE 9: PROPERTY PLANT AND EQUIPMENT
2019
2018
2019
2018
2019
2018
Cost
Depreciation
Carrying Value
Vertical wind tunnel building Infrastructure
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
32,422,344 32,338,525
28,446
55,373
-
(16,226,352)
(2,158,394)
(220,281)
2,119,939
(1,354,288)
(804,106)
-
30,263,950 30,984,237
(775,660)
55,373
(220,281)
(14,106,413)
Balance at end of year
16,195,992 32,422,344
(258,736)
(2,158,394)
15,937,256 30,263,950
Vertical wind tunnel equipment
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
12,763,818 12,763,735
83
-
-
(602,447)
(1,760,100)
(691,290)
-
(1,058,479)
(701,621)
-
11,003,718 11,705,256
(701,538)
-
(691,290)
(602,447)
Balance at end of year
12,161,371 12,763,818
(2,451,390)
(1,760,100)
9,709,981 11,003,718
Indoor Skydive Australia Group Limited
2019 Annual Report
36
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 9: PROPERTY PLANT AND EQUIPMENT (CONT)
IT Equipment
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
Balance at end of year
Furniture and fittings
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
Balance at end of year
Office Equipment
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
Balance at end of year
Capital Work in Progress
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
Balance at end of year
Total
Balance at Beginning of year
Acquisitions / depreciation
Disposals / transfers
Balance at end of year
2019
2018
2019
2018
2019
2018
Cost
Depreciation
Carrying Value
942,655
74,883
(168,528)
849,010
666,502
21,911
254,242
942,655
(368,096)
(112,244)
52,762
(427,578)
(222,694)
(145,402)
-
(368,096)
574,559
(37,361)
(115,766)
421,432
443,808
(123,491)
254,242
574,559
632,603
-
(22,372)
610,231
21,997
-
(18,697)
3,300
598,281
34,322
-
632,603
(334,172)
(66,804)
7,529
(393,447)
(227,723)
(106,449)
-
(334,172)
298,431
(66,804)
(14,843)
216,784
370,558
(72,127)
-
298,431
21,268
729
-
21,997
(11,331)
(7,332)
15,673
(2,990)
(4,034)
(7,297)
-
(11,331)
10,666
(7,332)
(3,024)
310
17,234
(6,568)
-
10,666
-
-
-
-
444,599
-
(444,599)
-
-
-
-
-
-
-
-
-
-
-
-
-
444,599
-
(444,599)
-
46,783,417
74,883
(17,038,396)
29,819,904
46,832,910
85,491
(134,984)
46,783,417
(4,632,093)
(1,097,951)
2,195,902
(3,534,142)
(2,867,218)
(1,764,875)
-
(4,632,093)
42,151,324 43,965,692
(1,679,384)
(1,023,068)
(134,984)
(14,842,494)
26,285,762 42,151,324
Indoor Skydive Australia Group Limited
2019 Annual Report
37
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 10: INTEREST IN SUBSIDIARIES
Set out below are the Group’s subsidiaries at 30 June 2019. The subsidiaries listed below have share capital
consisting solely of ordinary shares, which are held directly by the Group and the proportion of ownership
interests held equals the voting rights held by the Group. Each subsidiary’s country of incorporation or
registration is also its principal country of business.
Subsidiaries
Country of
2019
2018
Indoor Skydiving Penrith Holdings Pty Ltd
Indoor Skydiving Penrith Pty Ltd
Indoor Skydiving Gold Coast Pty Ltd
ISA FLIGHT Club Pty Ltd
Indoor Skydiving Perth Pty Ltd *
ISAG Holdings D Pty Ltd
ISAG Café Pty Ltd
ISA Asia Holdings Pty Ltd
ISA Asia Operations Pty Ltd
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
%
100
100
100
100
100
100
100
100
100
%
100
100
100
100
100
100
100
100
100
* Indoor Skydiving Perth Pty Ltd is a discontinuing entity
Indoor Skydive Australia Group Limited
2019 Annual Report
38
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 11: INTEREST IN JOINT VENTURE ENTITIES
a)a)
b)b)
The Group has a 40% interest in Leisureworld Assets Sdn. Bhd., a joint venture involved in owning
an indoor skydive facility in Kuala Lumpur, Malaysia. The Group’s interest in Leisureworld Assets
Sdn. Bhd. is accounted for using the equity method.
The Group has a 60% interest in Leisureworld Escapades Sdn. Bhd., a joint venture operating and
managing the indoor skydive facility in Kuala Lumpur, Malaysia. The Group’s interest in
Leisureworld Escapades Sdn. Bhd. is accounted for using the equity method.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group’s carrying value of the investment
Revenue
Cost of sales
Administration expenses
Finance costs
Loss before tax
Income tax benefit
Loss for the period
Group’s share of loss for the period
30 June 2019
Leisureworld Assets
Leisureworld Escapades
Sdn. Bhd.
1,027,146
4,255,697
Sdn. Bhd.
102,026
72,025
(4,899,598)
(1,320,171)
-
383,245
153,298
-
(1,146,120)
-
Year ended 30 June 2019
Leisureworld Assets
Leisureworld Escapades
Sdn. Bhd.
1,227,836
(536,464)
(345,046)
(450,580)
(104,245)
-
(104,245)
(41,698)
Sdn. Bhd.
1,035,701
(1,630,275)
(678,425)
-
(1,272,999)
-
(1,272,999)
-
Note that LeisureWorld Escapades Sdn. Bhd. has a negative Net Assets. Accordingly, equity accounting is
discontinued and the investment is carried as nil.
Under the September 2018 Deed of Settlement with SkyVenture International Ltd, any economic benefit derived
by the Group from the Malaysian joint venture is to be passed on to SkyVenture International Ltd.
Indoor Skydive Australia Group Limited
2019 Annual Report
39
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 12: TRADE AND OTHER PAYABLES
Trade payables
Other accruals
NOTE 13: DEFERRED REVENUE
Deferred revenue
2019
$
1,305,784
2,028,244
3,334,028
2018
$
1,267,853
2,729,847
3,997,700
2019
$
2018
$
759,681
1,231,797
759,681
1,231,797
Deferred revenue primarily represents prepaid sales in respect of flight time purchased in advance. The
sales are released to revenue at the time the services are rendered except the gift card revenue in relation
to expected redemption rates.
Indoor Skydive Australia Group Limited
2019 Annual Report
40
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 14: BORROWINGS
Current Liabilities
Westpac debt facility (a)
Non - Current Liabilities
Westpac debt facility (a)
Loan from Birkdale Holdings (QLD) Pty Ltd (b)
2019
$
2018
$
1,651,465
1,651,465
1,886,317
1,886,317
6,454,229
3,000,000
9,454,229
7,581,123
1,500,000
9,081,123
a) Interest payable on each component is based on current market rates, over a maximum 5 year term. Security
provided is:
Fully Interlocking Guarantee and Indemnity by:
Indoor Skydive Australia Group Limited
Indoor Skydiving Penrith Holdings Pty Ltd
Indoor Skydiving Penrith Pty Ltd
Indoor Skydiving Gold Coast Pty Ltd
Indoor Skydiving Adelaide Pty Ltd
Indoor Skydiving Perth Pty Ltd
ISAG Holdings D Pty Ltd
ISAG Café Pty Ltd
Supported by General Security Agreement over all existing and future assets and undertaking by:
Indoor Skydive Australia Group Limited
Indoor Skydiving Penrith Holdings Pty Ltd
Indoor Skydiving Penrith Pty Ltd
Indoor Skydiving Gold Coast Pty Ltd
Indoor Skydiving Adelaide Pty Ltd
Indoor Skydiving Perth Pty Ltd
ISAG Holdings D Pty Ltd
ISAG Café Pty Ltd
Mortgage over lease by Indoor Skydiving Penrith Holdings Pty Ltd.
Flawed Asset Arrangement – deposits by Indoor Skydiving Penrith Holdings Pty Ltd over a deposits account held
with Westpac Banking Corporation.
b) The company has in place a loan facility of $3,000,000 with Birkdale Holdings (QLD) Pty Ltd, a company
associated with Steve Baxter Director of Indoor Skydive Australia Group Limited. During the year the company
drew down the remaining $1,500,000 of this facility. The term of the loan is 24 months with full repayment at
expiry.
Indoor Skydive Australia Group Limited
2019 Annual Report
41
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 15: PROVISIONS
Current Provisions
Non Current Provisions
Total
2019
196,619
632,692
829,311
2018
425,288
6,338,337
6,763,625
Provision
for Dispute
Settlement
Provision for
Employee
Benefits
Provision for
Lease Straight
Lining
Provision for
Site
Restoration
Provision for
Onerous
lease
Total
Provisions
Carrying amount 1
July 2018
Additional
Provisions
$
$
$
$
$
$
5,532,751
271,475
617,306
242,093
100,000
6,763,625
-
-
16,071
-
(100,000)
Amount Utilised
(5,532,751)
(57,650)
(185,867)
(74,117)
(100,000)
-
Carrying amount 30
June 2019
Current
Non-current
-
213,825
431,439
184,047
-
158,273
16,289
22,057
-
55,552
415,150
161,990
-
-
-
829,311
196,619
632,692
Carrying amount 1
July 2017
Additional
Provisions
Transfer from
payables
-
223,970
648,222
222,655
-
1,094,847
3,532,751
262,891
2,000,000
-
-
-
19,438
100,000
3,915,080
-
-
-
-
2,000,000
(246,302)
Amount Utilised
-
(215,386)
(30,916)
Carrying amount 30
June 2018
5,532,751
271,475
617,306
242,093
100,000
6,763,625
Current
-
268,985
35,168
21,135
100,000
425,288
Non-current
5,532,751
2,490
582,138
220,958
-
6,338,337
The Provision for Dispute Settlement has been written back against the sale of the Perth assets.
Indoor Skydive Australia Group Limited
2019 Annual Report
42
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 15: PROVISIONS (CONT)
a) Provisions for employee benefits
The current portion for this provision includes the total amount accrued for annual leave entitlements that have vested due
to employees having completed the required period of service.
b) Provision for Lease Straight Lining
Rental lease payments for operating the wind tunnels are expensed on a straight lining basis. All unamortised lease
incentives in the form of rent free periods are recognised as provision. This provision is reduced by allocating lease
payments between rental expenses and reduction of the provision over the remaining term of the lease.
c) Provision for Site Restoration
This provision relates to present value of expected site restoration costs for two tunnels. These costs are projected forward
to an extended lease period of 40 years using 2.5% inflationary escalation and discounted to present value at 12.84% after
consideration of the associated risks.
Indoor Skydive Australia Group Limited
2019 Annual Report
43
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 16: ISSUED CAPITAL
136,696,514 (2018: 136,696,514) fully paid ordinary shares
Share issue costs
Ordinary Shares
2019
$
42,803,385
(1,992,446)
40,810,939
2018
$
42,803,385
(1,992,446)
40,810,939
2019
No.
2018
No.
At the beginning of the reporting period
136,696,514
135,884,625
· Performance rights exercised
-
811,889
136,696,514
136,696,514
b.
Capital Management
The Board controls the capital of the Group in order to generate long-term shareholder value and to ensure that
the Group can fund its operations and continue as a going concern. The Board assesses the Group’s capital
requirements based on the Company’s stage of operations, having regard to available debt funding and equity
funding and seek to maintain a capital structure based on the lowest cost of capital available to the Group. The
Board achieves this through the internal generation of capital and the management of debt levels and, if necessary,
share issues.
Indoor Skydive Australia Group Limited
2019 Annual Report
44
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 17: CAPITAL AND LEASING COMMITMENTS
a)
Operating Lease Commitments
leases contracted for but not
Non-cancellable operating
recognised in the financial statements
Payable – minimum lease payments:
- Not later than 12 months
-
-
Between 12 months and five years
Later than five years
2019
$
2018
$
764,077
3,056,308
23,299,656
27,120,041
861,571
3,072,662
24,063,733
27,997,966
The Group has entered into operating leases for occupancy of the vertical wind tunnels with extended lease
terms of 40 years.
b) Capital Commitments
Subsidiary capital commitments contracted
recognised in the financial statements
for but not
-
-
-
-
Indoor Skydive Australia Group Limited
2019 Annual Report
45
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 18: CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations with Loss after Income Tax
2019
$
2018
$
Loss after income tax
Non-cash flows in loss:
- Share based payments
- Impairment
- Share of loss from joint venture
- Unwind of make good discount
- Depreciation expense
- Amortisation expense
Changes in assets and liabilities:
- (increase)/decrease in trade and term receivables
- (increase)/decrease in prepaid expenses
- (increase)/decrease in other financial assets
(7,400,998)
(10,140,582)
16,980
57,645
264,350
2,627,648
53,031
14,534
339,583
19,438
1,097,950
1,764,875
177,947
172,701
(828)
19,707
9,335
(10,926)
24,116
(160,351)
- (increase)/decrease in deferred tax asset
311,148
918,151
- increase/(decrease) in trade payables and accruals
94,647
2,296,270
- increase/(decrease) in unearned revenue
(472,116)
(675,503)
- increase/(decrease) in provisions
4,938,064
3,646,848
Cash flow provided by operations
(876,249)
879,913
Other Non-Cash Transactions
Capital expenditure
-
1,369,687
Depreciation & Amortisation
1,275,897
1,937,576
Other non-cash expense
16,980
57,645
Indoor Skydive Australia Group Limited
2019 Annual Report
46
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 19: RELATED PARTY TRANSACTIONS
a. The Group’s main related parties are as follows:
(i)
Entities exercising control over the Group:
The ultimate parent entity is Indoor Skydive Australia Group Ltd.
(ii)
Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of
the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are
considered key management personnel.
For details of disclosures relating to key management personnel, refer to the Remuneration Report.
(iii)
Entities subject to significant influence by the Group:
An entity that has the power to participate in the financial and operating policy decisions of an entity, but
does not have control over those policies, is an entity which holds significant influence. Significant
influence may be gained by share ownership, statute or agreement. There are no such entities in the
Group.
(iv) Other related parties:
Other related parties include entities controlled by the ultimate parent entity and entities over which key
management personnel have joint control.
-
The entities disclosed in Note 9 are 100% owned subsidiary companies of the parent entity. Refer to
Note 9 for further details.
b. Transactions with related parties:
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and are not disclosed in this Note.
During the year, a loan facility of $3,000,000 which had previously been made available from Birkdale Holdings
(Qld) Pty Ltd, a company controlled by Steve Baxter, Non-Executive Director and Chairman of Indoor Skydive
Australia Group Limited, was fully drawn down from its previous $1,500,000 level.
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
c.
Key Management Personnel Compensation
The Key Management Personnel compensation included in employment expenses is as follows:
Consolidated Entity
Company
2019
$
2018
$
2019
$
2018
$
Short term employee benefits
1,003,957
1,076,798
1,003,957
1,076,798
Post employment benefits
63,230
85,728
63,230
85,728
Share based payments
-
57,644
-
57,644
1,067,187
1,220,170
1,067,187
1,220,170
Indoor Skydive Australia Group Limited
2019 Annual Report
47
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 20: SHARE BASED PAYMENTS
Year Ended 30 June 2019
Under the Employee Incentive Options Plan, awards are made to the executives who have an impact on the
Group’s Performance. Employee Incentive Option awards are delivered in the form of options over shares
which vest over a period of three years subject to meeting performance measures. The group uses share
price as the performance measure.
The fair value of share options granted is estimated at the date of grant using a Black-Scholes valuation
model., taking into account the terms and conditions upon which the share option is equal to 145% of the
volume weighted average market price on the ASX for up to 5 trading days. The contracted term of the share
options is four years and there are no cash settlement alternatives for employees.
The following table illustrates the reconciliation of share options during the year:
Outstanding as at 1 July 2018
Granted during the year
Forfeited during the year
Outstanding as at 30 June 2019
Number of Share Options
3,500,000
-
1,300,000
2,200,000
The following table lists the inputs to the model used for the Employee Incentive Option Plan for the year
ended 30 June 2019:
24 Aug 2019
21 Nov 2019
Fair Value at grant/approval date (weighted average)
Share Price at grant/approval date
Exercise Price
Expected Volatility
Expected life (weighted average number of days)
Expected dividends
Risk-free rate (weighted average)
$0.02
$0.02
$0.35
50%
1,460
0%
0.88%
$0.02
$0.02
$0.35
50%
1,460
0%
0.88%
Indoor Skydive Australia Group Limited
2019 Annual Report
48
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
Year Ended 30 June 2018
Under the Employee Incentive Options Plan, awards are made to the executives who have an impact on the
Group’s Performance. Employee Incentive Option awards are delivered in the form of options over shares
which vest over a period of three years subject to meeting performance measures. The group uses share
price as the performance measure.
The fair value of share options granted is estimated at the date of grant using a Black-Scholes valuation
model., taking into account the terms and conditions upon which the share option is equal to 145% of the
volume weighted average market price on the ASX for up to 5 trading days. The contracted term of the share
options is four years and there are no cash settlement alternatives for employees.
The following table illustrates the reconciliation of share options during the year:
Outstanding as at 1 July 2017
Granted during the year
Forfeited during the year
Outstanding as at 30 June 2019
Number of Share Options
-
4,150,000
(650,000)
3,500,000
The following table lists the inputs to the model used for the Employee Incentive Option Plan for the year
ended 30 June 2018:
24 Aug 2018
21 Nov 2018
Fair Value at grant/approval date (weighted average)
Share Price at grant/approval date
Exercise Price
Expected Volatility
Expected life (weighted average number of days)
Expected dividends
Risk-free rate (weighted average)
$0.24
$0.24
$0.35
50%
1,460
0%
2.66%
$0.17
$0.17
$0.35
50%
1,460
0%
2.66%
Indoor Skydive Australia Group Limited
2019 Annual Report
49
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 21: SEGMENT INFORMATION
General Information
Identification of reportable segments
The Group’s operations are in one segment being the construction and operation of indoor skydiving facilities.
The Group operates in one segment being Australia. All subsidiaries in the Group operate within the same
segment. All three tunnels have been aggregated to one operating segment.
Types of Products and Services by Segment
The products and services will include a number of indoor skydiving facilities allowing human flight within a safe
environment used by tourists, enthusiasts and military.
NOTE 22: FINANCIAL RISK MANAGEMENT
Financial Risk Management Policies
The Board of Directors for, among other issues, manages financial risk exposures of the Group. The Board
monitors the Group’s financial risk management policies and exposures and approves financial transactions
within the scope of its authority. It also reviews the effectiveness of internal controls relating to commodity price
risk, counterparty credit risk, currency risk, liquidity risk and interest rate risk. The Board meets on a regular
basis.
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, while
minimising potential adverse effects on financial performance. Its functions include the review of the use of
hedging derivative instruments, credit risk policies and future cash flow requirements.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market
risk consisting of interest rate risk, foreign currency risk and other price risk (commodity and equity price risk).
There have been no substantive changes in the types of risks the Group is exposed to, how these risks arise, or
the Board’s objectives, policies and processes for managing or measuring the risks from the previous period.
a.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counter
parties of contract obligations that could lead to a financial loss to the Group.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit
rating, or in entities that the Board has otherwise assessed as being financially sound.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting
period excluding the value of any collateral or other security held, is equivalent to the carrying amount
and classification of those financial assets (net of any provisions) as presented in the statement of financial
position.
No collateral is held by the Group securing receivables.
Indoor Skydive Australia Group Limited
2019 Annual Report
50
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 22: FINANCIAL RISK MANAGEMENT (CONT)
The Group only has significant concentrations of credit risk with any single counterparty in the form of its
bankers, and therefore significant credit risk exposures to Australia.
There are no trade and other receivables that are past due nor impaired.
Credit risk related to balances with banks and other financial institutions is managed by the Board. which
requires that surplus funds are only invested with counterparties with a Standard & Poor’s rating of at
least AA–.
The following table provides information regarding the credit risk relating to cash and term deposits based
on Standard & Poor’s counterparty credit ratings.
Cash and Term Deposits:
Cash at bank and on hand
b.
Liquidity risk
2019
$
140,665
140,665
2018
$
953,541
953,541
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the
following mechanisms:
–
–
preparing forward-looking cash flow forecasts in relation to its operating, investing and financing
activities;
using derivatives that are only traded in highly liquid markets;
– monitoring undrawn credit facilities;
–
obtaining funding from a variety of sources;
– maintaining a reputable credit profile;
– managing credit risk related to financial assets;
–
–
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet it liabilities when
they become due.
The table below reflects an undiscounted contractual maturity analysis for financial liabilities.
Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation.
Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to
settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s
expectations that banking facilities will be rolled forward.
Indoor Skydive Australia Group Limited
2019 Annual Report
51
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 22: FINANCIAL RISK MANAGEMENT (CONT)
Financial liability and financial asset maturity analysis for the Consolidated Group.
Within 1 Year
1 to 5 Years
2019
2018
2019
2018
Over 5 Years
2019
2018
Total
2019
2018
$
$
$
$
$
$
$
$
Financial liabilities
due for payment
Borrowings
Trade and other
payables
Total contractual
outflows
Total expected
outflows
Financial assets –
cash flows realisable
Cash and cash
equivalents
Trade and other
receivables
Total anticipated
inflows
Net inflow on financial
instruments
1,651,465 1,886,317 9,454,229
9,081,123
3,334,028 3,997,700
-
-
4,985,493 5,884,017 9,454,229
9,081,123
4,985,493 5,884,017 9,454,229
9,081,123
140,665
953,541
215,254
105,473
355,919 1,059,014
-
-
-
-
-
-
(4,629,574) (4,825,003) (9,454,229)
(9,081,123)
-
-
-
-
-
-
-
- 11,105,694 10,967,440
-
3,334,028
3,997,700
- 14,439,722 14,965,140
- 14,439,722 14,965,140
-
-
-
140,665
953,541
215,254
105,473
355,919
1,059,014
- (14,083,803) (13,906,126)
Refer to Note 1 Basis of Accounting for matters that have been considered by the directors in determining the
appropriateness of the going concern for the preparation of the financial statements.
Market risk
c.
(i)
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of
fixed rate financial instruments. The Group is not exposed to earnings volatility on floating rate instruments.
The financial instruments that primarily expose the Group to interest rate risk are borrowings, cash and cash
equivalents and term deposits.
Interest rate risk is managed using a mix of fixed and floating rate debt where possible.
Indoor Skydive Australia Group Limited
2019 Annual Report
52
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 22: FINANCIAL RISK MANAGEMENT (CONT)
(ii)
Foreign exchange risk
Most of the Group’s transactions are carried out in AUD. Exposures to currency exchange rates
primarily arise from the purchase of vertical wind tunnel equipment from SkyVenture
International, which is denominated in US dollars.
To mitigate the Group’s exposure to foreign currency risk, non-AUD cash flows are monitored and
forward exchange contracts are entered into in accordance with the Group’s risk management
policies. Forward exchange contracts are mainly entered into for significant long-term foreign
currency exposures that are not expected to be offset by other currency transactions. Exposure
to foreign exchange risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds
financial instruments which are other than the AUD functional currency of the Group.
(iii)
Other price risk
Other price risk relates to the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices largely due to demand and supply factors (other
than those arising from interest rate risk or currency risk) for commodities.
The Group is not exposed to commodity price risk. The Group is not exposed to securities price
risk on investments held for trading over the medium to longer terms.
Sensitivity analysis
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates,
and exchange rates. In respect of the exchange rates, the table summarises the sensitivity of the
balance of financial instruments held at the reporting date to movement in the exchange rate of
the US dollar to the Australian dollar, with all other variables held constant. The table indicates
the impact on how profit and equity values reported at the end of the reporting period would
have been affected by changes in the relevant risk variable that management considers to be
reasonably possible.
These sensitivities assume that the movement in a particular variable is independent of other
variables.
Indoor Skydive Australia Group Limited
2019 Annual Report
53
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 22: FINANCIAL RISK MANAGEMENT (CONT)
Year ended 30 June 2019
+/–1% in interest rates
+/–10% in devaluation of the AUD
Year ended 30 June 2018
+/–1% in interest rates
+/–10% in devaluation of the AUD
Profit
$
109,740
508,527
100,291
541,419
Equity
$
109,740
508,527
100,291
541,419
There have been no changes in any of the methods or assumptions used to prepare the above sensitivity analysis
from the prior year. These movements are considered to be reasonably possible based on observation of current
market conditions.
Fair Values
Fair value estimation
The fair values of financial assets and financial liabilities are presented in the following table and can be compared
to their carrying amounts as presented in the statement of financial position. Fair value is the amount at which an
asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction.
Fair values derived may be based on information that is estimated or subject to judgment, where changes in
assumptions may have a material impact on the amounts estimated. Areas of judgement and the assumptions have
been detailed below. Where possible, valuation information used to calculate fair value is extracted from the
market, with more reliable information available from markets that are actively traded. In this regard, fair values
for listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes
are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly
used by market participants.
Differences between fair values and carrying amounts of financial instruments with fixed interest rates are due to
the change in discount rates being applied by the market since their initial recognition by the Group.
Most of these instruments, which are carried at amortised cost (i.e. term receivables, held-to-maturity assets, loan
liabilities), are to be held until maturity and therefore the fair value figures calculated bear little relevance to the
Group.
Indoor Skydive Australia Group Limited
2019 Annual Report
54
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 22: FINANCIAL RISK MANAGEMENT (CONT)
Consolidated Group
Note
Carrying Amount
$
Fair Value
$
Carrying Amount
$
Fair Value
$
2019
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
(i)
(i)
(i)
(ii)
140,665
215,254
355,919
140,665
215,254
355,919
953,541
105,473
1,059,014
953,541
105,473
1,059,014
3,334,028
11,105,695
14,439,723
3,334,028
11,105,695
14,439,723
3,997,700
3,997,700
10,967,440 10,967,440
14,965,140 14,965,140
The fair values disclosed in the above table have been determined based on the following methodologies:
(i)
Cash and cash equivalents, term deposits, trade and other receivables, and trade and other
payables are short-term instruments in nature whose carrying amount is equivalent to fair
value. Trade and other payables exclude amounts provided for annual leave, which is outside
the scope of AASB 139.
(ii)
Debt is recorded at the current carrying value which is considered equivalent to fair value.
NOTE 23: AUDITOR’S REMUNERATION
Remuneration of the auditor for:
–
Audit fees
– Half year review
–
Taxation compliance
– Other advisory services
2019
$
2018
$
55,300
21,500
5,000
2,500
55,300
27,550
5,000
2,500
84,300
90,350
The auditor for financial year 2018 and 2019 was Felsers, Chartered Accountants.
Indoor Skydive Australia Group Limited
2019 Annual Report
55
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 24: EARNINGS PER SHARE
Earnings per share (cents per share)
From continuing operations:
-
-
basic earnings per share
diluted earnings per share
From discontinuing operations:
-
-
basic earnings per share
diluted earnings per share
a.
Reconciliation of earnings to profit or loss:
Loss
Earnings used to calculate basic EPS – continuing operations
Earnings used to calculate basic EPS – discontinuing operations
Earnings used in the calculation of dilutive EPS – continuing
operations
Earnings used in the calculation of dilutive EPS – discontinuing
operations
Weighted average number of ordinary shares for basic EPS
b.
Weighted average number of ordinary shares for diluted EPS
All performance rights on issue at 30 June 2019 are anti-dilutive.
2019
Cents
2018
Cents
(1.90)
(1.87)
(3.51)
(3.45)
(7.42)
(7.42)
-
-
2019
$
2018
$
(7,400,998)
(10,140,582)
(2,603,635)
(10,140,582)
(4,797,363)
-
(2,603,635)
(10,140,582)
(4,797,363)
-
No.
No.
136,696,514
136,640,752
138,896,514
139,818,500
NOTE 25: EVENTS AFTER REPORTING DATE
No other matters or circumstances have arisen since the end of the financial year which significantly affected or
may significantly affect the operations of the consolidated group, the results of those operations, or the state of
affairs of the consolidated group in future financial years.
Subsequent Event
The Company has entered into an agreement to sell iFLY Perth to SkyVenture in return for the extinguishment
of outstanding debt and outstanding royalty payments to SkyVenture, SkyVenture granting a royalty free period
for iFLY Downunder (Sydney) and iFLY Gold Coast as well as a cash payment to the Company as outlined
previously to the market. The Asset sale agreement was signed on 21st August 2019. At the date of signing, final
conditions are still being met, and it will have an effective settlement date of 30th August 2019. In conjunction
with the asset sale, the company also conducted a capital raise through an entitlement offer and placement
which raised $2 million. The completion of the entitlement offer was 21st August 2019.
NOTE 26: CONTINGENT LIABILITIES
The Group does not have any contingent liabilities at the reporting date.
Indoor Skydive Australia Group Limited
2019 Annual Report
56
DIRECTORS’ DECLARATION
For the year ended 30 June 2019
In the opinion of the Directors of Indoor Skydive Australia Group Limited:
a. the financial statements and notes, as set out on pages 16 to 56, are in accordance with the Corporations
Act 2001, including:
i.
ii.
giving a true and fair view of the financial position as at 30 June 2019 and of its performance
for the financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b. There are reasonable grounds to believe that Indoor Skydive Australia Group Limited will be able to pay
its debts as and when they become due and payable.
Note 1 includes a statement that the financial statements also comply with International Financial Reporting
Standards.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the
Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019.
This declaration is made in accordance with a resolution of the Directors.
For and on behalf of the Board
Wayne Jones
Director and Chief Executive Officer
27 September 2019
Sydney
Indoor Skydive Australia Group Limited
2019 Annual Report
57
Independent Auditor’s Report
Independent Auditor's Report
To the Members of Indoor Skydive Australia Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Indoor Skydive Australia Group Limited (the Company)
and its subsidiaries (the Group), which comprises the consolidated statement of financial
position as at 30 June 2019, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and the notes to the financial statements, including a summary of
significant accounting policies and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2019 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 Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of
Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the 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.
Indoor Skydive Australia Group Limited
2019 Annual Report
58
Independent Auditor’s Report
Material Uncertainty Related to Going Concern
We draw attention to Note 1 of the financial report, which indicates that the Group incurred
a net loss of $7,400,998 and has a current deficiency in assets of $4,746,685 as at 30 June
2019. A stated in Note 1, these events or conditions, along with other matters as set forth in
Note 1, indicate that a material uncertainty exists that may cast doubt on the Group’s ability
to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be
communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Revenue – Note 3, 13
The group recognised revenue derived from the sales of
goods and services as well as the sale of prepaid gift cards.
Our audit procedures included, among others:
Evaluating the operating effectiveness of revenue
• Assessing whether the Group’s revenue recognition
policies were in compliance with Australian Accounting
Standards
•
recognition
• Testing the appropriateness and accuracy of general
ledger revenue journals
• Reviewing the mathematical accuracy of management’s
calculation of the gift card revenue recognised and tracing a
sample of general
supporting
documentation;
•
estimates relating to gift card breakage rates including
corroborating management’s assertions
to historical
redemption rates; and
Performing testing on a sample of sales at year end to
•
determine that the revenues recorded relate to the
appropriate period.
Evaluating the reasonableness of management’s
journals posted
to
Wind Tunnel Revenue for the year ended 30 June 2019 was
$10,587,226. It was noted that the point-of-sale system
(Siriusware) used to record and track revenue receipts from
the original point of sale is not integrated with general
ledger. We therefore considered revenue to be a key audit
matter given the potential for revenue to be materially
misstated when posted via manual general ledger journal
entries based off the monthly summary extracted from
Siriusware. Our procedures were designed to corroborate
our assessment that revenue should be closely aligned to
actual cash banked and identify manual adjustments made
to revenue for additional testing.
A portion of the revenue attributable to gift card sales is
recognised upfront using management’s internal estimates
of the historical redemption rates of the gift cards. As at 30
June 2019, gift card revenue or ‘breakage’ of $664,328 was
recognised along with a corresponding deferred revenue
balance of $759,681. Given the management judgement
and inherent subjectivity in the development and application
of appropriate accounting policies in compliance with
Australian Accounting Standards as well as adherence to
proper cut-off procedures as to the timing of the revenue,
we believe this constitutes a key audit matter.
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Independent Auditor’s Report
Recovery of deferred tax assets – Note
1(s)(ii), 5
In accordance with Australian Accounting Standards,
deferred tax assets can only be recognised to the extent that
it is probable sufficient future taxable profits will be
generated to utilise the benefits associated with the deferred
tax assets through reductions in the tax payable in future
reporting periods. Gross deferred tax assets of the Group for
the year ended 30 June 2019 amounted to $938,339, all
arising from future deductible temporary differences have
been recognised. Due to several years of losses, the
directors have deemed it prudent not to recognise a deferred
tax asset of $2,823,562 on tax losses. The balance of unused
tax losses may be recouped in future years.
Given the material amount of deferred tax assets recognised
or unrecognised and the judgement required in determining
their recoverability in accordance with the Australian
Accounting Standards, we believe this constitutes a key
audit matter.
Impairment of non-current assets – Note 9,
11
As at 30 June 2019, the carrying amount of the group’s
property, plant and equipment totaled $26,285,762. Based
on the Group’s assessment of both external and internal
indicators of impairment, there was no impairment charge.
We focused on this area due to the size of the intangible
and PPE balances and because the director’s assessment of
the value in use (VIU) of the CGU’s involves inherent
judgement and subjectivity as to the future cash flows and
discount rates applied to them.
Provision for site restoration – Note 1 (s)(iv),
15
Our audit procedures included, among others:
• reviewing the tax calculations prepared by the Group;
• evaluating the key assumptions used by the Group to
determine its tax balances;
• involving our taxation specialists to assist in the assessment
of the determination of the tax bases;
• evaluating the assessment of the recoverability of its
deferred tax assets; and
• assessing the Group’s taxation disclosures.
Our audit procedures included, among others:
• Updating our understanding of managements
procedures for annual impairment testing
• Agreeing key assumptions such as discount rates and
revenue growth to supporting documentation and
reasonableness when compared with industry averages
and trends.
• Comparing cash flow projections to historical
performance and observable trends corroborating any
deviations to third party evidence where applicable
The Group entered into long term lease agreements at
each of their tunnel facilities – Penrith, Gold Coast and
Perth. There is a contractual obligation that the Group is
responsible for restoring the site to its original condition at
the conclusion of the lease.
The Group has recognised a provision of $184,047 for the
site restoration as at 30 June 2019 in accordance with
AASB 137 Provision, Contingent Liabilities and Contingent
Assts.
This is a key audit matter due to the inherent complexity in
estimating future restoration costs, particularly those that
are forecast to be incurred several years in the future.
Our audit procedures included, among others:
• Reviewing the mathematical accuracy of the Group’s
calculation;
• Evaluating the key assumptions used by the Group in
calculating the provision including the inputs to calculate
the discount factor;
• Reading the terms of the lease agreements to verify the
Group’s rights and obligations;
• Reviewing qualification and experience of Management’s
expert in relation to the valuation of the restoration costs at
their presents value to use as the basis of the estimate;
and
• Assessing the adequacy of the financial statement
disclosure.
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Independent Auditor’s Report
Basis of Accounting - Note 1
In accordance with the Australian Accounting Standards,
when assessing whether the going concern assumption is
appropriate, management is required to consider all
information about the future encompassing at the least
twelve months from the end of the reporting period. The
assessment is largely based on the assumptions made by
directors in formulating cash flow forecasts, with key
assumptions including the timing of the future cash flows,
operating results, capital raising activities, any potential sale
of assets and any capital commitments.
Our audit procedures included, among others:
• Evaluation of the underlying data used as the basis of cash
flow projections prepared by management and those
charged with governance;
• Analysing the impact of potential changes in projected cash
flows and their timing, to the projected periodic cash
positions
• Assessing the resulting impact on the ability of the Group
to pay debts as and when they fall due and the Group’s ability
to continue as a going concern;
• Recalculation of the ability to meet debt covenant ratios
attached to existing facilities on the basis of budgeted and
forecasted figures prepared by management and those
charged with governance
• Obtaining and reviewing correspondence between existing
financiers and the Group to determine the options available
to the Group inclusive of variable debt facilities
• Evaluating the Group’s disclosures in the financial report by
comparing them to our understanding of the matter, the
events or conditions incorporated into the cash flow
projection assessment, the Group’s plans, and accounting
standard requirements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group's annual report for the year ended 30 June 2019 but does
not include the financial report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information obtained prior to the date
of this auditor's report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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Independent Auditor’s Report
Responsibilities of 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 Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
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Independent Auditor’s Report
• Evaluate the overall presentation, structure and content of the financial report,
including the disclosures, and whether the financial report represents the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 9 to 14 of the directors' report
for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Indoor Skydive Australia Group Limited, for the
year ended 30 June 2019, 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.
Vindran Vengadasalam
Partner
27 September 2019
Sydney, Australia
FELSERS
Chartered Accountants
Indoor Skydive Australia Group Limited
2019 Annual Report
63
ADDITIONAL INFORMATION
The following information is current as at 4 September 2019:
Shareholder Information
1.
Distribution of Shareholders
Category (size of holding):
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number
Ordinary Shares
37
70
65
235
156
563
15,579
176,164
553,494
9,703,461
326,251,401
336,700,099
The number of shareholdings held in less than marketable parcels is 320.
The names of the substantial shareholders listed in the holding company’s register are:
Shareholder:
Number of Shares
% of Issued Capital
BIRKDALE HOLDINGS (QLD) PTY LTD
59,638,163
17.713
UBS NOMINEES PTY LTD
PARRY CAPITAL MANAGEMENT LTD
MR ALEXANDER BEARD & MRS PASCALE BEARD
MR KIM HOPWOOD
Voting Rights
26,331,698
25,000,000
20,435,000
17,956,983
7.821
7.425
6.069
5.333
ISA Group has 336,700,099 ordinary shares on issue which are listed on the ASX. The voting rights attached
to each ordinary share is one vote per share when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
ISA Group also has 3,300,000 options on issue which are not listed on the ASX. Options do not give a holder
the right to vote at any meeting of ISA Group or to participate in any share issues.
Indoor Skydive Australia Group Limited
2019 Annual Report
64
ADDITIONAL INFORMATION
20 Largest Shareholders – Ordinary Shares
Name
BIRKDALE HOLDINGS (QLD) PTY LTD
UBS NOMINEES PTY LTD
Number of
Ordinary Fully
Paid Shares
Held
59,638,163
26,331,698
% Held of Issued
Ordinary Capital
17.713
7.821
PARRY CAPITAL MANAGEMENT LTD
25,000,000
7.425
MR ALEXANDER BEARD & MRS PASCALE BEARD
MR KIM HOPWOOD
EXCALIB-AIR PTY LTD
MR ALEXANDER DAMIEN BEARD & MRS PASCALE MARIE BEARD
QUAD INVESTMENTS PTY LTD
BNP PARIBAS NOMS (NZ) LTD
SPENCELEY MANAGEMENT PTY LTD
HOWARD-WILLIS LIMITED
SANDHURST TRUSTEES LTD
EXERTUS CAPITAL PTY LTD
PROJECT GRAVITY PTY LTD
DRILL INVESTMENTS PTY LTD
20,435,000
17,956,983
16,060,000
15,228,274
11,916,667
10,095,914
8,826,251
7,706,759
6,820,139
5,472,603
5,327,307
5,000,000
6.069
5.333
4.770
4.523
3.539
2.998
2.621
2.289
2.026
1.625
1.582
1.485
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
DRP
3,200,563
0.951
MR ALEXANDER DAMIEN BEARD & MRS PASCALE MARIE BEARD
MR DAVID LEYLAND
GALDARN PTY LTD
LYNDCOTE SUPER PTY LTD
3,000,000
2,800,000
2,570,000
2,521,667
0.891
0.832
0.763
0.749
255,907,988
76.005
Indoor Skydive Australia Group Limited
2019 Annual Report
65
ADDITIONAL INFORMATION
2. The name of the company secretary is Stephen Tofler.
3. The address of the principal registered office in Australia is 123 Mulgoa Road, Penrith NSW
2750
4. The Register of Securities is held at Grosvenor Place, Level 12, 225 George Street, Sydney NSW
2000.
5. Stock Exchange Listing
Quotation has been granted for all 336,700,099 ordinary shares of ISA Group on all Member
Exchanges of the Australian Securities Exchange Limited.
6. Unquoted Securities
ISA Group has 2,200,000 incentive options on issue to 2 eligible executive directors. The
incentive options are subject to vesting conditions relating to tenure, have an exercise price
of $0.35 and expire on 23 August 2021.
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ADDITIONAL INFORMATION
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2019 Annual Report
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