ANNUAL REPORT 2018
PERFORMANCE HIGHLIGHTS
2018
A$33.6m A$5.6m A$5.2m
REVENUE
NPATA
EBITDA
UP 44%
UP 93%
UP 148%
NPATA and EBITDA is adjusted to exclude significant expense items and includes
other income as outlined in Note 1 and Note 5 of the financial statements.
DENMARK
UK
MSL has a head office in Brisbane
and offices in Sydney, Melbourne,
UK and Denmark. MSL currently
has approximately 130 staff.
BRISBANE
(HEAD OFFICE)
MELBOURNE
SYDNEY
MPower MSL Annual Report 2018 MSL is a global provider of hosted, software as
a service (SaaS) and on-site deployed solutions
to clients in the following key segments in the
sport, leisure and hospitality sectors:
2,400+
CLIENTS
› Golf clubs and associations;
› Registered clubs;
› Stadia and arenas; and
› Other hospitality and entertainment venues
25+
COUNTRIES
DENMARK
UK
BRISBANE
(HEAD OFFICE)
MELBOURNE
SYDNEY
MPower MSL Annual Report 2018 CONTENTS
CHAIRMAN’S REPORT
MANAGING DIRECTOR’S REPORT
MSL BOARD OF DIRECTORS
DIRECTOR'S REPORT
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE
DECLARATION
FINANCIAL STATEMENTS
DIRECTORS' DECLARATION
1
2
5
12
16
32
33
91
INDEPENDENT AUDITOR’S REPORT 92
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
100
102
D
MPower MSL Annual Report 2018 CHAIRMAN’S REPORT
"
As we currently stand MSL is a
market leader in Australia and
UK. We have continued to
expand into Asia, Europe,
Middle-East and the Americas
in 2018. The company now has
approximately 2,400 customers
in circa 25 countries globally.
John Down
Chairman
On behalf of the Board it is my pleasure to present the
annual report for fiscal year 2018.
I am also pleased to be able to reconfirm MSL’s status as
a leading provider of solutions that enhance the income
generating potential of the sports, hospitality,
entertainment and stadium member-based organisation
(MBO) market across the Americas, Asia Pacific, Europe
and the Middle East. Our solutions materially improve the
profitability of our customers.
During the year the company continued to deliver on its
committed strategic growth, and to strengthen and
develop its governance practices, processes and
capabilities. MSL has achieved revenue growth with a
compound annual growth rate (CAGR) of 57% over the
last three years, with organic growth over this period
being between 15% to 20% annually.
In 2018 MSL grew its topline operating revenues by 44%,
20% organically and a further 24% through strategic
acquisitions. MSL continues to focus on achieving
significant top-line revenue growth and market share
globally. Offshore revenue constituted 50% of the
group’s total revenue for FY18.
There can be no bottom line without a top line, and we
have been able to generate a strong NPATA profit in line
with expectations coupled with positive operating
cashflows. Our first year in the capital market is now
behind us. The overarching focus is to settle the business
into a growth trajectory that builds on our performance
to date and is clear and convincingly achievable.
We have as a Board presided over and approved a
compelling growth strategy to be implemented over the
next four years. This is supported by an executive team
capable of delivering it. Craig will have more to say on
this in due course.
As we currently stand MSL is a market leader in
Australia and UK. We have continued to expand into
Asia, Europe, Middle-East and the Americas in 2018. The
company now has approximately 2,400 customers in
circa 25 countries globally.
Worthy of specific mention is our expanded presence in
the UAE when in May 2018 we formalised the
establishment of a branch office in Dubai to allow the
company to take advantage of a growing pipeline of
opportunities in the region being triggered by Expo 2020.
We are at the end of the beginning, and we are all
excited and committed to the journey ahead. On behalf
of the MSL Directors, I look forward to welcoming you to
our 2018 Annual General Meeting in November and
having the opportunity to present our 2018 financial year
performance to you in detail.
Sincerely,
John Down
Chairman
1
MPower MSL Annual Report 2018 MANAGING DIRECTOR’S REPORT
"Operating revenue of $33.6 million for
the year was in line with our guidance,
and up 44% on the prior reporting
period. Of this growth 20% was
generated organically, and 24%
primarily from the strategic European
acquisitions in the prior year.
Craig G Kinross
Managing Director & Chief Executive Office
The MSL team are pleased to have delivered on our
growth objectives for 2018, and we are excited by the
near-term growth opportunities opening to us to grow
our company in the sport, leisure & hospitality sectors
in the international markets both organically and
through acquisitions.
All our customers in the sport, leisure & hospitality
market globally talk to us about a priority need to
enhance engagement with their guests and optimise
their visitor experience. Increased engagement improves
the venues sustainability by diversifying and increasing
their revenue streams. We live in an ever-connected
world, and guests at a sport, leisure or hospitality venue
respond well to the improved experience that technology
can provide.
MSL exists to optimise the fan/guest engagement at a
venue, we believe that all fans/guests deserve a premium
and personalised experience. Our platform sweet-spot is
assisting the venue to understand who is attending a
venue, what they are doing whilst at the venue and
utilising this information to provide a better personalised
experience to the fan/guest. This redefines their venue
operations and allows them to thrive as a business
generating more revenue.
The relevance of the MPower MSL platform to meet our
market needs has been confirmed internationally. We are
now successfully deployed in approximately 2,400
venues in more than 25 countries globally.
Over the last three years MSL have delivered on a strong
cumulative annual growth rate (CAGR) of 57%.
Organically the business has been growing at between
15% to 20% annually over this time and continuing to
consolidate value accretive acquisitions each year. We
expect to continue achieving these average rates of
topline organic revenue growth in coming years and
continuing to bring on strategic acquisitions.
A highlight is that almost half of the company revenues
are recurring in nature, and this is an important measure
of growth for our company. The Annual Recurring
Revenue (ARR) at June 2018 was $16.8 million, providing
the company with great confidence in achieving its goals
in the periods ahead.
Reflecting our success in the global marketplace, for the
first time in the company’s history half of the annual
revenues have been generated in the international
markets in 2018 confirming the real need for the MSL
platform. We expect the share of revenues generated
offshore to continue to increase relative to the Australian
revenues in the coming years.
MSL has achieved these growth objectives, whilst also
achieving strong NPATA profits and with positive
operating cashflows. We continue to invest above market
rates in the MPower technology platform and into new
geographic and adjacent markets to support future
growth initiatives. We expense all this investment in the
year incurred, and do not capitalise any research and
development spend, despite it being a key driver of
future year’s growth in the business.
2
MPower MSL Annual Report 2018 We would like to thank the entire MSL team for their
efforts in 2018. It has been great to be part of a top-class
global team collaborating so well to achieve the
momentum we have in the market, with a very strong set
of values focused on our committed customer base.
2017-18 FINANCIAL PERFORMANCE
Operating revenue of $33.6 million for the year was in
line with our guidance, and up 44% on the prior
reporting period. Of this growth 20% was generated
organically, and 24% primarily from the strategic
European acquisitions in the prior year.
In the current year $15.8 million or 47% of operating
revenue is sticky recurring annuity revenue. This
compares to $12.1 million in the prior reporting period.
The annual recurring revenue (ARR) as at 30 June 2018
was $16.8 million. The exciting growth is in the SaaS/
subscription revenues that grew over 40% in 2018 to
make up $6.6 million of the recurring annuity revenue.
Net profit after tax before amortisation (NPATA) and
significant items was a profit of $5.6 million. Amortisation
in the year associated with the prior acquisitions of
intangibles was $4.5 million.
The final FY18 EBITDA before significant items of $5.2
million was ultimately impacted by the following items:
›
Approximately $1.8 million of revenue from sales
executed prior to 30 June 2018 was not able to be
recognised in FY18 due to timing of delivery of
obligations;
› Other income of $1.1 million represents net proceeds
from the sell-down of MSL’s investment in Zuuse of
$0.6 million, and $0.5 million from the release of an
earn out provision;
› During the year MSL brought forward investment of
circa $1.4 million in product development and
overseas expansion that was not forecasted, however
is expected to deliver future growth in earnings; and
›
In addition, the Company made key senior
appointments to strengthen the management and
sales teams globally.
During the year, as noted earlier, MSL has also continued
to invest in its proprietary software and data solutions
spending over $5.7 million or 17% of revenue (2017: $4.3
million, 18% of revenue) on our solutions. The company
policy is to expense all of this to the profit and loss
statement, rather than capitalise these costs as is the
practice by many companies in the software sector.
OPERATIONS
We have continued to achieve good growth outcomes in
each of our key market segments, with the main
disappointment in 2018 being below par expectations in
our new MPower Media segment. The core MPower
Venues & MPower Golf business units performed well.
The new growth product lines previously highlighted
separately of MPower BI and MPower Media are now
being consolidated within the MPower Venue and
MPower Golf business units.
Operationally we have established a structure to drive
global functional excellence to enhance our ability to
accelerate growth in these domains, and we have
continued to attract high caliber leaders, experienced to
drive growth in our business. These functions include:
›
Sales
› Marketing
›
›
Professional Services
Product Management
› Research & Development
› Customer Service & Support
›
Finance & Administration
GROWTH STRATEGY
MSL’s stated objectives are to grow organically and
through strategic acquisitions in a large global
fragmented market.
The company is targeting a customer base of over 5,000
venues over the next 4-year period, whilst continuing to
grow MPower Platform solutions at existing customer
venues increasing our average revenue per customer.
Over time, we see our business scaling and driving
functional excellence to achieve NPATA margins above 30%
in line with comparable companies in international markets.
We expect the seasonality skew of 60% of our revenues
in the second half of the year to continue in the coming
year with profitability generated in the second half of the
year. Looking forward we will influence smoothing of this
skew with increases in our recurring revenue base and
expansion into markets such as the US that have a local
financial year end of 31 December.
3
MPower MSL Annual Report 2018 MANAGING DIRECTOR’S REPORT
Organically our growth opportunities can be
summarised as follows:
› Current segments – strong future growth
opportunities driving target organic growth with
operational efficiencies as the business scales:
- Australian golf, pubs and leagues clubs;
- UK stadia and arena market.
› New markets:
- Global golf market – an opportunity that is
evolving with the movement of the world golf
market to a unified world handicap system in
2020 creating golf system opportunities in all
major golf countries worldwide;
- UAE hospitality and leisure venues – Expo 2020 is
driving a significant pipeline of opportunities in
hospitality venues in the region;
- United States – utilizing our strong iconic
references from the Europe and Australia markets
there are opportunities for us to penetrate the US
sport and entertainment market;
- Sporting Associations –replicating our success in
golf working closely with various associations on
data and administration activities right down to
grass-roots venues.
- Retirement Living – a significant global market is
opening up with new retirement living venues
being structured much like a club venue focused
on their members. Added to this a number of
retirement living venues are being established
with or near lifestyle venues such golf clubs or
bowls clubs.
› New products:
- Further establishment of MSL’s data platform with
increasing data-sets providing a 360 degree
one-customer view at a venue;
- Transaction systems such as Point of Sale being
extended and deployed anywhere, anytime on
any device to improve the guest experience.
The new market and new product growth items are
company making opportunities opening up now we are a
credible international player. The company will look to
reinvest a share of profits into these initiatives to
accelerate future growth.
In addition to the organic growth opportunities, MSL
continue to work through various stages of qualifying a
pipeline of acquisition opportunities.
MSL has demonstrated a strong track-record of
successfully acquiring good businesses and integrating
these into the core operations. MSL uses acquisitions to
enter new markets and new geographies, acquire new
software capabilities and knowledge, acquire new
customer bases and ultimately develop cross-sell
opportunities between acquisitions and existing sales
segments. We believe the acquisition of complementary
software companies to be an efficient and relatively
low-cost growth strategy to build our presence and
expand our customer base.
MSL’s key criteria for assessing acquisitions are:
› Growth of the marketplace of clients;
›
›
Filling a gap in relation to technology or staff
capabilities;
Positively improve EBITDA; and
› Complement the international profile of MSL.
INVESTMENTS
Zuuse
At 30 June 2018, MSL continues to hold a 10% investment
in the Zuuse business, which is being held for sale. The
asset in the balance sheet is recorded at $1.9 million.
MSL recent sales of Zuuse at 65c would value the
remaining holding at $5.4 million.
Zuuse is non-core to the MSL business and is a full asset
lifecycle solution with market leading technology
blending 3D building information modeling (BIM)
capability, mobility and information management.
Thank you for your continuing support in our business,
we remain focused on achieving our growth objectives
for MSL. I look forward to providing you with a business
update at our Annual General Meeting in November.
Craig Kinross
Managing Director & Chief Executive Officer
4
MPower MSL Annual Report 2018
MSL BOARD OF DIRECTORS
John holds a Bachelor of Economics from the University
of Queensland and a Master of Economics from the
University of New England.
Interest in Shares and Options
7,385,347 fully paid Ordinary Shares and 785,714 Options
over ordinary Shares of MSL Solutions Limited were held
by Mr Down and associated entities as at 30 June 2018.
As part of the Company’s IPO, Mr Down voluntarily
agreed to escrow all fully paid shares held at the date of
listing (being 7,385,347 ordinary shares), which will be
released from escrow upon release of the FY18 results
under the terms of the agreement.
Kenneth John Down
Non-Executive Chairman
John Down was appointed as non-executive Chairman in
October 2008. His extensive private and public sector
experience has contributed to forming the corporate
vision for, and the building of, the company that MSL has
become today.
In 1997 he founded Viking Industries Ltd, a multi- faceted
marine industrial business which was subsequently sold
as a mid-cap publicly listed company to private equity in
2008. He was appointed to the position of Co-ordinator
General and Director-General, in the Office of Major
Projects, by the Premier of Queensland in 1993, and held
this position until 1996. In 1970, John co-founded the
GRM Group of Companies, a multifaceted agribusiness
with operations in over 50 countries, which was also sold
to private equity in 1992.
He has significant Board experience in both public and
private companies. He is currently the Chairman of Asia
Pacific Aircraft Storage Pty Ltd; Chairman of Nutrafruit
Pty Ltd and is on the Council of Brisbane Boys College.
His former Board appointments include AUSTRADE
(Deputy Chairman), Export Finance Insurance
Corporation; QCT Resources Ltd; Anaconda Nickel Ltd;
Santos Ltd – UK & USA; and Herron Pharmaceutical
Advisory Board.
5
MPower MSL Annual Report 2018 MSL BOARD OF DIRECTORS
Craig Kinross
Managing Director & Chief Executive Officer
Craig was appointed from within MSL to the role of
Managing Director and Chief Executive Officer in
November 2012, and has facilitated important strategic
partnerships, acquisitions and capital raisings to
profitably grow revenue by over 7 times during this time.
Previously he served as the Company’s Chief Operating
Officer from 2010 to 2012, where he was instrumental in
the restructure of MSL.
He has also held corporate finance roles with Invensys
Plc and Credit Suisse Financial Products in London, and
prior to moving to London Craig started his career at
KPMG Brisbane as an accountant in their Business
Advisory Group. He holds a Bachelor of Commerce
degree from the University of Queensland and is a
Member of The Institute of Chartered Accountants,
Australia and New Zealand.
He brings almost 20 years software industry experience
holding various senior operations and finance
management roles in successful international
companies. His career also includes over 10 years’
experience with global software company Mincom,
which operated in over 40 countries. He was a key
member of the deal team securing the sale of the
business to a US private equity business for over
$300 million, and post the acquisition was the internal
company lead of a substantial organisation restructure
during the Global Financial Crisis reducing headcount
and costs by over 30%, while still maintaining a platform
for revenue growth.
Interest in Shares and Options
10,748,271 fully paid Ordinary Shares of MSL Solutions
Limited were held by Mr Kinross and associated entities
as at 30 June 2018. As part of the Company’s IPO, Mr
Kinross voluntarily agreed to escrow all fully paid shares
held at the date of listing (being 10,498,271 ordinary
shares), which will be released from escrow upon release
of the FY18 results under the terms of the agreement.
6
MPower MSL Annual Report 2018 Ian Daly
Non-Executive Director
Kaylene Gaffney
Non-Executive Director
Ian joined the Board in December 2009 bringing over
48 years of first hand corporate experience to MSL.
Kaylene joined the MSL Board in 2017, having enjoyed
a 26-year career in senior financial roles.
He commenced his career with John Rawlinson &
Partners in 1967 as a Senior Chartered Quantity Surveyor,
and over 31 years grew with the firm to become Qld
Managing Director and Chairman of The Rawlinsons
Group, recognised as one of Australia’s leading quantity
surveying and project management consultancies
operating from 21 local and overseas offices.
She has previously served as non-executive Director and
Chair of the Audit and Risk Committee for Wotif.com.
Her senior financial role experience is in the retail,
aviation, telecommunications and information
technology sectors. Kaylene is a non-executive Director
and Chair of the Audit and Risk Committee for National
Veterinary Care Limited.
He joined the Brisbane Marine Industry Park in 1999, then
its successor Viking Industries Ltd in 2001 serving as an
Executive Director to both organisations. Ian currently
serves as a Director of Zuuse Pty Ltd, a software
company servicing the infrastructure, building and asset
management sectors.
Ian is a Fellow of The Royal Institution of Chartered
Surveyors and a Fellow of the Australian Institute of
Quantity Surveyors.
Kaylene holds a Masters Degree in International Business
from the Queensland University of Technology, and is a
Graduate member of The Australian Institute of
Company Directors and is a Fellow of The Institute of
Chartered Accountants Australia and New Zealand.
Interest in Shares and Options
80,000 fully paid Ordinary Shares of MSL Solutions
Limited were held by Ms Gaffney and associated entities
as at 30 June 2018.
Interest in Shares and Options
9,214,286 fully paid Ordinary Shares and 785,714 Options
over ordinary Shares of MSL Solutions Limited were held
by Mr Daly and associated entities at 30 June 2018. As
part of the Company’s IPO, Mr Daly voluntarily agreed to
escrow all fully paid shares held at the date of listing
(being 8,821,429 ordinary shares), which will be released
from escrow upon release of the FY18 results under the
terms of the agreement.
7
MPower MSL Annual Report 2018 MSL BOARD OF DIRECTORS
Dr Richard Holzgrefe
Non-Executive Director
David Trude
Non-Executive Director
Richard was appointed as a non-executive Director in
December 2007. He brings corporate experience across
multiple industry sectors to the Company.
David joined the Board in 2017 bringing over 40 years’
experience as a senior corporate executive within the
banking and securities industries.
He joined MSL from VLRQ Pty Ltd where he served as a
Director from 1998 to 2004. He was a Director of
Kenlynn Property Syndicates Pty Ltd from 1997 to 2000,
and co-founded The BOH Dental Group, in 1976. He left
in 1997 to pursue interests in the Property and
Retirement Living sectors.
He currently serves as Chairman of Urana Road
Developments Pty Ltd and is a Director of Holmac
Holdings Pty Ltd.
Richard holds a Bachelor of Dental Science degree from
the University of Queensland.
Interest in Shares and Options
12,871,917 fully paid Ordinary Shares and 785,714 Options
over ordinary Shares of MSL Solutions Limited were held
by Dr Holzgrefe and associated entities as at 30 June
2018. As part of the Company’s IPO, Dr Holzgrefe
voluntarily agreed to escrow all fully paid shares held at
the date of listing (being 12,561,917 ordinary shares),
which will be released from escrow upon release of the
FY18 results under the terms of the agreement.
He was formerly Managing Director, Australian Chief
Executive Officer/Country Manager of Credit Suisse,
Australia for 10 years from 2001.
He has served as Chairman of Baillieu Holst Limited since
2010 having been a Board member since 2007, is
Chairman of Waterford Retirement Village, Hansen
Technologies Limited and East West Line Parks Limited,
a member of the Board of Chi-X Australia Pty Ltd and
non-executive Director of Acorn Capital Investment Fund
Limited, an ASX listed entity.
David holds a Bachelor of Commerce Degree from the
University of Queensland, is a Senior Associate of the
Financial Services Institute of Australasia, a member of
the Australian Institute of Company Directors and Master
Member of the Stockbrokers and Financial Advisers
Association.
Interest in Shares and Options
300,000 fully paid Ordinary Shares of MSL Solutions
Limited were held by Mr Trude and associated entities as
at 30 June 2018. As part of the Company’s IPO, Mr Trude
voluntarily agreed to escrow all fully paid shares held at
the date of listing (being 250,000 ordinary shares),
pending completion of the FY18 results.
8
MPower MSL Annual Report 2018 COMPANY SECRETARY
Andrew Ritter was appointed as Company Secretary on
27 March 2017. Mr Ritter has approximately 20 years of
international finance experience with various listed global
IT & Telco organisations. Andrew is a Chartered
Accountant, holds a Bachelor of Commerce degree, a
Graduate Diploma of Applied Corporate Governance and
is a Fellow of the Governance Institute of Australia and
the International Institute of Chartered Secretaries and
Administrators.
9
MPower MSL Annual Report 2018 2018
DIRECTORS' REPORT
DIRECTOR'S REPORT
The Directors of MSL Solutions Limited (‘MSL’ or ‘the
Company’) submit their report together with the
consolidated financial report of the Company, comprising
the Company and its controlled entities for the year
ended 30 June 2018 and the audit report thereon.
PRINCIPAL ACTIVITIES
MSL is a global provider of hosted, software as a service
(SaaS) and on-site deployed solutions to clients in the
following key segments in the sport, leisure and
hospitality sectors:
DIRECTORS
The names of the Directors of the Company in office
during the year and to the date of this report are:
› Golf clubs and associations;
› Registered clubs;
›
Stadia and arenas; and
NAME
Non-Executive
Mr Kenneth J (John) Down
(Chairperson)
DIRECTOR SINCE
October 2008
Mr Ian M Daly
December 2009
Ms Kaylene J Gaffney
March 2017
Dr Richard W Holzgrefe
December 2007
Mr David D Trude
March 2017
Executive
Mr Craig G Kinross (Managing
Director and Chief Executive
Officer)
November 2012
› Other hospitality and entertainment venues.
MSL provides scalable full venue business software
applications and data solutions integrated through the
MPower core integration architecture which connects
member organisations’ business software and data
needs, to improve guest engagement, loyalty, gain
business efficiencies and governance.
The MPower platform combines software applications,
data and media channels in an open architecture
platform that provides total integration from the back
office to member facing solutions encompassing the full
needs of the business. The MPower platform “connects
the dots” for the customer organisation connecting
every department of the business from food and
beverage point of sale, to membership, marketing,
financials and workforce management.
The principal activities of MSL during the year ended
30 June 2018 were related to sales, implementation and
support of the MPower platform and component
solutions to our customer base, and also included the
acquisition of assets of Xcite Media Pty Ltd on 9 January
2018, and the acquisition of Pricap Services Pty Ltd on 1
May 2018.
12
MPower MSL Annual Report 2018 KEY FINANCIAL RESULTS
The table below provides a summary of the FY18 results, with a comparison to the prior year’s statutory performance:
RESULTS SUMMARY FOR THE YEAR ENDED 30 JUNE 2018
STATUTORY RESULTS
Revenue from operating activities
Other income(1)
Total revenue & income
Costs of sales
Gross margin
Sales and Marketing
Customer support and techincal services
Research and Development expenses
General and Administration expenses
FY18
A$ MILLION
33.6
1.5
35.1
FY17
A$ MILLION
23.4
0.7
24.1
VARIANCE
A$ MILLION
10.2
0.8
11.0
%
44%
46%
(9.0)
(5.4)
(3.6)
26.1
(4.8)
(5.4)
(5.4)
(5.3)
18.7
(4.6)
(3.8)
(4.3)
(3.9)
7.4
40%
(0.2)
(1.6)
(1.1)
(1.4)
Operating expenses before significant items
(20.9)
(16.6)
(4.3)
Adjusted (1) EBITDA
Significant expense items
EBITDA
Depreciation
Amortisation
EBIT
5.2
(0.9)
4.3
(0.2)
(4.5)
2.1
(9.8)
(7.7)
(0.2)
(4.1)
148%
3.1
8.9
12.0
156%
-
(0.4)
(0.4)
(12.0)
11.6
97%
Net finance income/(costs)
(0.3)
-
(0.3)
NPBT
Income tax benefit
NPAT (2)
NPATA
Adjusted(1) NPATA
(0.7)
(12.0)
11.3
94%
0.8
0.1
4.6
5.6
1.0
(0.2)
(11.0)
11.1
101%
(6.9)
2.9
2.7
93%
1
Adjusted EBITDA and Adjusted NPATA excludes significant expense items of $0.9m predominately relating to transaction related expenses,
and includes other income from the release of an earn out provision (FY18: $0.5m, FY17: $0.7m) and gain on the sale of Zuuse shares (FY18:
$0.6m, FY17: Nil). The prior year was result was restated for revenue and expense allocation (refer to Note 1 and Note 5 of the financial
statements).
2 The Company’s NPAT benefited from a revision to the useful life of acquired intangible assets in FY17, resulting in a lower amortisation
charge compared to forecast, and the income tax benefit for FY18 was enhanced due to higher than forecasted R&D tax concessions and
foreign based income at lower corporate tax rates.
13
MPower MSL Annual Report 2018 DIRECTOR'S REPORT
COMPANY STRATEGY
DIVIDENDS
MSL’s vision is to drive engagement for sport, leisure,
hospitality venues & guests globally with its unique open
architecture MPower Platform.
No dividends were paid to shareholders during the
financial year, and no dividend has been declared or paid
subsequent to the end of the financial year.
MSL connects the full venue business software and data
needs for a member based organisation to grow their
revenues, gain efficiencies and improve governance.
MSL’s growth strategy is based upon four key components;
strong organic growth in existing sales segments, cross-
selling opportunities between sales segments, expansion
of the business intelligence & analytics platform and
accelerating growth through acquisitions.
ORGANIC GROWTH WITHIN EACH SALES SEGMENT
The scalability of the MPower platform enables our
clients to increase the use of the MPower platform and
its modules as their business grows. MSL intend to grow
the use of the MPower platform and additional modules
through increased promotion and education by our sales
managers to existing customers and new customers.
CROSS-SELL OF PRODUCTS BETWEEN
SALES SEGMENTS
MSL’s ability to acquire companies with leading software
capabilities provides us with an opportunity to cross sell
software products across our expanded customer base.
MSL uses a direct sales & marketing strategy to offer our
client base an expanded suite of software solutions
through the MPower platform.
MEASURES OF PROFITABILITY AND BASIS
OF PREPARATION
The accounting policies adopted in the preparation of
this report are summarised in Note 24 of the Financial
Statements.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
As at the reporting date, MSL has on issue 249,248,965
ordinary shares. During the period, the Company
continued the growth and development of its customer
base and product offerings through the acquisitions of:
› Xcite Media Pty Ltd (assets only) - an Australian company
specialising in music video and member engagement
products in the private clubs and venues industry.
›
Pricap Services Pty Ltd - an Australian company
focused on the development and sale of software for
the golf industry.
Furthermore, during the financial year, the Company
recognised revenue from the following transactions:
› An accouting gain of $490k from the reversal of the
earnout provision for the Pallister acquisition. In the
prior corresponding period, a similar gain of $687k
was recorded from the reversal of the earnout
provision for the Marketown Media acquisition.
INCREASING THE NUMBER OF CUSTOMERS USING
THE MPOWER BI SOLUTION
›
Central to the value proposition of the MPower platform
is our BI Solution. Our clients have a need to not only
know their customers but how they will behave. The
ability for the MPower BI Solution to collect data from
multiple systems allows our clients to achieve this.
ACCELERATING GROWTH THROUGH ACQUISITIONS
MSL uses acquisitions to enter new markets and new
geographies, acquire new software capabilities and
knowledge, acquire new customer bases and ultimately
develop cross sell opportunities between acquisitions
and existing sales segments. We believe the acquisition
of complementary software companies, using the
following criteria, is an efficient and relatively low cost
growth strategy to build our presence and expand our
customer base:
grow the marketplace of clients;
The Company sold 1,472,346 shares of its
shareholding in Zuuse Limited at a price of $0.65 per
share. Cash proceeds of $957k was received, and a
net gain on sale of $627k was included in other
income for the period.
No other significant changes in the state of affairs of the
Company occurred during the financial year, other than
those disclosed in this report.
SUBSEQUENT EVENTS
The following matters have arisen since the end of the
financial year which may materially affect operations of
MSL, the results of those operations, or the state of
affairs of MSL in future financial years:
› On 1 July 2018 segment consolidation of MPower
Media and MPower BI segments to be integrated into
MPower Golf and MPower Venue segments based on
their customers.
fill a gap in relation to technology or staff capabilities;
› On 1 July 2018, MSL has created two new segments
positively improve EBITDA; and
complement the international growth profile of MSL.
focusing on the retirement living community and the
sports association segment. These segments will
form the Emerging Markets segment.
›
›
›
›
14
MPower MSL Annual Report 2018 FUTURE DEVELOPMENTS, PROSPECTS AND OPPORTUNITIES
Information regarding the Company’s future developments, prospects and business opportunities is included in the
report above. Overall, MSL will continue to:
› Enhance and develop its products and services by investing in research and development;
› Expand services to clients geographically through investment into new markets; and
›
Focus on increasing revenue and market share in the markets in which it operates, and enter new markets.
ENVIRONMENTAL ISSUES
There are no significant environmental regulations applying to the Company.
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings
attended by each of the Directors of the Company during the financial year are:
KJ Down
CG Kinross
IM Daly
KJ Gaffney
RW Holzgrefe
DD Trude
BOARD
AUDIT & RISK COMMITTEE
REMUNERATION COMMITTEE
ELIGIBLE
ATTENDED
ELIGIBLE
ATTENDED
14
14
14
14
14
14
14
14
14
14
14
14
-
-
4
4
4
-
-
-
4
4
4
-
3
-
-
-
3
3
3
-
-
-
3
3
There were no meetings held for the Nomination Committee for the year ended 30 June 2018.
15
MPower MSL Annual Report 2018 REMUNERATION REPORT – AUDITED
The information provided in the remuneration report relates to the Company for the year ended 30 June 2018 and
has been audited as required by section 308(3C) of the Corporations Act (2001).
The directors present the MSL Solutions Limited FY18 remuneration report, outlining key aspects of our remuneration
policy and framework, and remuneration awarded. This report is structured as follows:
1. Key management personnel covered in this report
2. Remuneration policy and link to performance
3. Elements of remuneration
4. Link between remuneration and performance
5. Remuneration expenses for executive KMP’s
6. Contractual arrangements with executive KMP’s
7. Non-executive director arrangements
8. Additional Statutory information
16
MPower MSL Annual Report 2018 REMUNERATION HIGHLIGHTS
PERFORMANCE HIGHLIGHTS
Group Operating
Revenue of
$33.6m (up 44%)
Group revenue of $33.6 million was up 44% in FY18 due to organic growth within the Group,
plus the material impact of the European acquisitions. This result was materially in line with the
Prospectus forecast.
Group NPATA of
$5.6m (up 93%)
Group NPATA of $5.6 million was up 93% compared to the prior year, and materially in line
with the Prospectus forecast.
REMUNERATION HIGHLIGHTS
Initial Public
Offering
The Board tailored remuneration outcomes for senior executives based on a strategy of
increasing shareholder value and achieving an equity event for shareholders.
The IPO therefore resulted in a number of one-off expenses and equity bonus payments, which
were accrued in FY17 and paid in FY18.
Group
Remuneration
Fixed Remuneration is expected to increase in FY18 by an average of 2.5% across the Group.
This is consistent with the Group’s remuneration strategy of maintaining a position at or above
the 50% percentile based on market survey.
Managing
Director & CEO
Remuneration
›
Total FY18 remuneration was $320K (FY17: $3,215K), as:
base salary of $300K (FY17: $150K)
›
›
›
nil cash bonus (FY17:$800K)
nil non-cash share bonus (FY17 $2,217k)
leave & other benefits of $20k (FY17: $28k)
The FY17 cash bonus and share bonus were considered one-off events, associated with the IPO.
LTI Incentive Plan
Total vested and exercisable options as at 30 June 2018 are 2,871,429 (FY17: 2,871,429).
Non-Exec
Director Fees
Total Non-Executive Remuneration for FY18 was $240K and within the maximum aggregate
amount of $250K approved by shareholders.
17
MPower MSL Annual Report 2018 REMUNERATION REPORT
1. KEY MANAGEMENT PERSONNEL COVERED IN THIS REPORT
1.1 NON-EXECUTIVE AND EXECUTIVE DIRECTORS
NON-EXECUTIVE DIRECTORS
Kenneth John Down
Ian Daly
Richard Holzgrefe
Kaylene Gaffney
David Trude
EXECUTIVE DIRECTORS
Craig Kinross
Managing Director & Chief Executive Officer
1.2 OTHER KEY MANAGEMENT PERSONNEL (KMP)
KEY MANAGEMENT PERSONNEL (KMP)
Andrew Ritter
Chief Financial Officer & Company Secretary 1
James Aleman
Chief Revenue Officer
Gregory Davies
Chief Operating Officer
Ashis Govind 2
Chief Technology Officer
Kieran Branagan 2
Chief Product & Innovation Officer
Paul Shipley
Interim Chief Financial Officer 1
1
2
Andrew Ritter was appointed as Company Secretary on 27 March 2017, and then subsequently appointed Chief Financial Officer on
17 August 2017. During FY17 Paul Shipley was interim Chief Financial Officer, and upon Mr Ritter’s appointment Mr Shipley was the
Company’s Group Financial Controller up until his date of resignation on 30 November 2017. For FY18, Mr Shipley was deemed to be KMP
up to 17 August 2017.
During FY18, Ashis Govind and Kieran Branagan were formally appointed to executive roles. However they have been considered as KMP for
the full year based on the duties and responsibilities they performed throughout the twelve month period.
1.3 CHANGES SINCE THE END OF THE REPORTING PERIOD
Subsequent to the end of the reporting period, James Aleman has been appointed to the role of Chief Operating
Officer. As a transition to retirement, Greg Davies has remained as a consultant to the Company to focus on executing
the Group’s acquisition growth strategy.
18
MPower MSL Annual Report 2018 2. REMUNERATION POLICY AND LINK TO PERFORMANCE
The remuneration committee is made up of independent non-executive directors and was formed post the successful
listing of MSL Solutions Limited on the Australian Stock Exchange. It is the role of the committee to review and
determine the remuneration policy and structure annually to ensure it remains aligned to business needs, and meets
the Company’s remuneration principles.
From time to time, the committee may also engage external remuneration consultants to assist with this review.
In particular, the Board aims to ensure that remuneration practices are:
›
›
›
›
competitive and reasonable, enabling the Company to attract and retain key talent,
aligned to the Company’s strategic and business objectives and the creation of shareholder value,
transparent and easily understood, and
acceptable to shareholders.
Figure 1: Remuneration Framework
ELEMENT
PURPOSE
PERFORMANCE
POTENTIAL VALUE
CHANGES FOR FY2018
Fixed
remuneration (FR)
Provide competitive
market salary including
superannuation and
non-monetary benefits
Nil
Positioned at median
market rate
Reviewed in line with
market positioning
Short Term
Incentive (STI)
Cash based reward for
in-year performance
EBITDA for business
unit and group
Managing Director:
33% of FR
Execs:
20%-60% of FR
STI’s were set based
on over-achievement
of FY18 EBITDA
Budget
Long Term
Incentive (LTI)
Alignment to long-term
shareholder value
Increase in
shareholder value
Managing Director:
7.4 x FR
Refer note below
Execs:
80% of FR
For FY18, there was no LTI issued in respect of financial performance, as the company had only recently undertaken
an IPO. During FY17, the MSL Board, in preparation for a planned equity event, had set STI and LTI objectives for the
CEO and executives, in accordance with the strategy of increasing shareholder value and achieving an equity event
for shareholders.
For FY19, the Board will continue its adopted remuneration strategy on mix of STI and LTI, which is consistent with
the strategy used by other listed companies in the Software sector. From 1 July 2018 the Board intends to adopt a
performance rights plan for long-term incentive purposes.
19
MPower MSL Annual Report 2018 3. ELEMENTS OF REMUNERATION
3.1 FIXED ANNUAL REMUNERATION (FR)
Executives generally receive their fixed remuneration as
cash. FR is reviewed annually, or on promotion. It is
benchmarked against market data for comparable roles
in companies in a similar industry, using the Australian
Information Industry Association salary survey produced
by Aon Hewitt. The committee aims to position
executives at or near the median, with flexibility to take
into account capability, experience, and value to the
organisation and performance of the individual.
For all executives, superannuation is included in FR.
During FY18, fixed remuneration was adjusted for the
following KMP’s:
› CEO – prior to March 2017, the CEO’s total
remuneration mix had a higher proportion of LTI and
lower proportion of fixed remuneration, to reflect the
strategy of increasing shareholder value and
achieving an equity event. In March 2017, the total
remuneration package and remuneration mix was
adjusted to align the remuneration with the median
level for comparative roles, and this change was
applied effective 1st July 2017;
› Chief Technology Officer – effective 1st August, 2017,
the total remuneration package was set to align the
remuneration with the median level for comparative
roles and reflect the appointment of Mr Govind to
the role
› Chief Product & Innovation Officer – effective 1st
December 2017, the total remuneration package was
set to align the remuneration with the median level
for comparative roles and reflect the appointment of
Mr Branagan to the role.
2.1 BALANCING SHORT-TERM AND
LONG-TERM PERFORMANCE
STI’s are set as a percentage of fixed remuneration, in
accordance with industry benchmarks, to drive
achievement of annual targets, without encouraging
undue risk-taking. Current STI’s for CEO and KMP’s have
been based on achievement of revenue and EBITDA
targets, and have been set at 20% to 60% of FR.
Prior to the IPO in late FY17, LTI’s were designed to
promote long-term stability in the management team,
and to achieve shareholder return and an equity event
for shareholders. The current long-term incentives will be
allocated by the Board and assessed on an annual basis
to promote long term shareholder return.
The target remuneration mix for FY18 was reviewed by
the Board, based on a strategy of increasing shareholder
value and achieving forecast financial targets. The Board
will continue to review the target remuneration mix for
CEO, KMP and other management personnel to ensure
remuneration packages are with the mix used by other
public listed companies in the Software sector.
2.2 ASSESSING PERFORMANCE
The remuneration committee is responsible for
determining the performance requirements and
calculation mechanism used to provide STI and LTI
rewards based on performance. To assist in this
assessment, the committee receives detailed reports on
performance from management which are based on
independently verifiable data such as financial measures
and data from independently run surveys, such as the
Australian Information Industry Association salary survey
produced by Aon Hewitt.
In the event of serious misconduct or a material mis-
statement in the Company’s financial statements, the
remuneration committee can cancel or defer
performance-based remuneration.
During FY18, the Board consolidated the various STI
plans across the group, with a view to aligning STI
payments to financial targets to promote consistent
achievement of financial targets.
20
MPower MSL Annual Report 2018REMUNERATION REPORT 3.2 SHORT-TERM INCENTIVES
Figure 2: Structure of the Short Term Incentive Plan
FEATURE
DESCRIPTION
Max opportunity
CEO and other executives: 20 - 60% of fixed remuneration
Performance
metrics
The STI metrics align with our strategic priority of consistent achievement of financial targets.
Metric
Target
Weighting
Reason for selection
EBITDA Achievement BU or Group target
100%
Reflects profitable
growth in line with
forecast
Delivery of STI
100% of the STI award is paid in cash at the end of the financial year
Board discretion
The Board has discretion to adjust remuneration outcomes up or down as they see fit to
prevent any inappropriate reward outcomes, including reducing (down to zero, if appropriate)
any STI award.
The Company has completed a number of acquisitions in recent years, and as a result some executives had STI plans
based on metrics other than as outlined in Figure 2. In FY18, the Board started the process of consolidating the
various STI plans across the group, with a view to aligning STI payments based solely on Net Revenue and EBITDA
achievement, in order to promote consistent achievement of financial targets.
3.3 LONG-TERM INCENTIVES
Executive KMP and other management personnel participate, at the Board’s discretion, in the Company’s Long-term
incentive plan (“LTIP”), which may be in the form of options or performance rights. During FY18, the Board received
independent advice from McCullough Robertson on the structure and conditions relevant to the LTIP. LTI grants held
during FY2017 had been set by the Board, based on that advice and on a strategy of increasing shareholder value
and achieving an equity event such as an IPO, these grants had no performance hurdles in place and immediately
vested. Grants were exercisable from grant date with an exercise price targeted at a minimum 40% increase in share
value from the grant date. As part of the strategy moving forward the Board will now consider performance hurdles
as part of the vesting considerations as it sees fit.
During FY18, the Board implemented a target remuneration mix for FY18 for CEO, KMP and other management
personnel which is more consistent with the mix used by other public listed companies in the Software sector,
including the use of grants for the purpose of LTI. The Board intends to allocate LTI grants during FY19, in line with
these targets.
21
MPower MSL Annual Report 2018 Figure 3: Structure of the LTI Plan
FEATURE
DESCRIPTION
Opportunity/
Allocation
Performance
hurdle
The value of LTIP will be determined based on independent market salary survey. The number
of LTIP to be allocated will be determined using the Black-Scholes method for valuation of
LTIP.
Current grants under this LTIP do not include additional performance hurdles other than
exercise price. The plan does allow for performance hurdles to be applied to specific grants
and the Board may consider performance hurdles as part of further grants.
Exercise price
The exercise price for options granted prior to IPO was based on a target of 40% increase over
the most recent share trade prior to grant date.
Future LTIP grants will be determined by the Board and the exercise price will be determined
based on the weighted average price at which the Company’s shares are traded on the
Australian Stock Exchange during the week up to and including the date of the grant.
Forfeiture and
termination
Options will lapse 5 years after grant.
Options will be forfeited on cessation of employment unless the Board determines otherwise,
eg in the case of retirement due to injury, disability, death or redundancy.
4. LINK BETWEEN REMUNERATION AND PERFORMANCE
The Company has completed a number of acquisitions in recent years, and as a result some executives have STI plans
based on metrics other than as outlined in Figure 2, and therefore some one-off bonus or KPI payments have been
made for non KMP executives, in accordance with their employment contracts.
4.1 STATUTORY PERFORMANCE INDICATORS
MSL aims to align our executive remuneration to our strategic and business objectives and the creation of
shareholder wealth. The Company’s annual financial performance and indicators of shareholder wealth for the current
financial period are listed below. As the Company listed in May 2017, these performance measures have not been
included for prior financial periods. However, these measures are not necessarily consistent with the measures used in
determining the variable amounts of remuneration to be awarded to KMP’s. As a consequence, there may not always
be a direct correlation between the statutory key performance measures and the variable remuneration awarded. It
should be noted that FY17 included a number of one-off technical accounting adjustments related to acquisitions and
IPO, which will not be evident in future years.
Figure 4: Statutory Performance Indicators
Adjusted NPATA
NPAT ($'000)
Dividends per share (cps)
Earnings per share (cps)
FY18
5,563
88
Nil
0.04
FY17
2,946
(11,020)
Nil
(9.38)
Net profit after tax excluding amortisation (NPATA) is the measure used for statutory performance since the Group
recognises computer software and customer contracts from acquisitions as intangible assets which are amortised to
the income statement. The adjustment to calculate NPATA reverses the amortisation charge to provide a normalised
view of the operations without the significant charge as a result of the acquired intangibles.
The Company’s share price on listing was $0.25 per share, and the share price as at 30 June 2018 was $0.195 per
share down from $0.325 per share as at 30 June 2017.
22
MPower MSL Annual Report 2018REMUNERATION REPORT i
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23
MPower MSL Annual Report 2018
6. CONTRACTUAL ARRANGEMENTS WITH EXECUTIVE KMP’S
COMPONENT
CEO & MANAGING DIRECTOR
OTHER KMP
Fixed
Remuneration
$300,000
Contract Duration Ongoing contract
3 months
Range between $160,000
and $250,000
Ongoing contract
3 months
Notice by the
individual/
Company
Termination of
employment
(without cause)
Termination of
employment
(with cause) or
by the individual
Entitlement to pro-rata STI for the year
The Board has discretion to award a greater or lower amount
STI is not awarded, and all unvested LTI will lapse
Vested and unexercised LTI can be exercised within a period of 10 days from termination
Different contractual terms apply to the following individuals:
Andrew Ritter
Services are provided under a Services Contract which incorporates both the Chief Financial
Officer and Company Secretary duties. The terms and conditions of that services contract for
the services provided to the company, are consistent with those outlined in the above table.
Kieran Branagan
STI payment for the period to 30 December 2017, included a component based on specific
KPI’s associated with the Executive’s temporary assignment during FY17 to assist with the
transition of UK based acquisition.
24
MPower MSL Annual Report 2018REMUNERATION REPORT 7. NON-EXECUTIVE DIRECTOR ARRANGEMENTS
Non-executive directors receive a fixed Board fee inclusive of superannuation and no additional fees for chairing
or participating on Board committees (refer to the table below). Options were granted to John Down, Ian Daly and
Richard Holzgrefe (785,714 options each) in previous financial years.
The Chairman does not receive additional fees for participating in or chairing committees, and Non-executive
directors do not receive performance-based pay or any other allowances.
Fees are reviewed annually by the Board taking into account comparable roles and market data provided by the
Board’s independent remuneration adviser. The current base fees were reviewed prior to the Company’s IPO and
remain in effect.
The maximum annual aggregate directors’ fee pool limit of $250,000 was approved by shareholders at the
Company’s annual general meeting on 30 November 2015, and has not increased.
BASE FEES
Chair
Other Non-executive Directors
ADDITIONAL FEES
Audit committee – Chair
Audit committee – Member
Remuneration committee – Chair
Remuneration committee – Member
$48,000
$48,000
Nil
Nil
Nil
Nil
All non-executive directors have entered into a service agreement with the Company in the form of a letter of
appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the
officeholding of director.
25
MPower MSL Annual Report 2018 %
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26
MPower MSL Annual Report 2018REMUNERATION REPORT
8. ADDITIONAL STATUTORY INFORMATION
8.1 PERFORMANCE BASED REMUNERATION GRANTED & FORFEITED DURING THE YEAR
Figure 7 shows for each KMP how much of their STI cash bonus was awarded and how much was forfeited.
It also shows the value of options that were granted and forfeited during FY18.
Figure 7: Performance based remuneration granted and forfeited during the year
NAME
TOTAL
OPPORTUNITY
FORFEITED
AWARDED
TOTAL
OPPORTUNITY
FORFEITED
AWARDED
SHORT TERM INCENTIVE
LONG TERM INCENTIVE
Craig Kinross - CEO
50,000
100%
James Aleman2 - KMP
120,000
Andrew Ritter - KMP
Greg Davies - KMP
Ashis Govind - KMP
Kieran Branagan1 - KMP
-
45,000
20,000
30,000
62%
0%
100%
100%
13%
0%
38%
0%
0%
0%
87%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
Kieran Branagan - STI payment for the period to 30 December 2017, included a component based on specific KPI’s associated with the
Executive’s temporary assignment during FY17 to assist with the transition of UK based acquisition
James Aleman – STI payment for the period from commencement was based on completion of specific KPI’s relating to the product of
sales and marketing materials. These KPI’s were achieved by 31 July 2017. For the remainder of FY18, the STI opportunity was in line with
other KMP.
8.2 TERMS AND CONDITIONS OF THE SHARE-BASED PAYMENT ARRANGEMENTS
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period
are as follows:
VESTING &
EXERCISE DATE
EXPIRY DATE
EXERCISE PRICE
VALUE PER OPTION
AT GRANT DATE
% VESTED
GRANT DATE
18-Dec-15
18-Dec-15
18-Dec-20
21-Oct-15
21-Oct-15
21-Oct-20
30-May-16
30-May-16
30-May-21
15-May-17
15-May-17
15-May-22
$0.220
$0.308
$0.308
$0.350
$0.096
$0.035
$0.035
$0.063
100%
100%
100%
100%
The number of options over ordinary shares in the Company provided as remuneration to key management personnel
is shown in figure 8 below. The options carry no dividend or voting rights until exercised.
When exercisable, each option is convertible into one ordinary share of MSL Solutions Limited.
The exercise price for options granted 18 December 2015, was approved by shareholders at the AGM held November
2015 and related to grants of options to Directors as reward for their significant financial support and contributions
over many years and as an incentive for future performance.
The exercise price of all other option grants to date, was based on a 40% uplift over the previous traded price at the
time of granting the option. The Board deemed that this was a reasonable estimate of achievable growth as an
unlisted entity.
8.3 RIGHTS TO DEFERRED SHARES
There are no rights to deferred shares for either Directors, key management personnel, or staff.
27
MPower MSL Annual Report 2018 8.4 RECONCILIATION OF OPTIONS, DEFERRED SHARES AND ORDINARY SHARES HELD BY KMP
The table below shows a reconciliation of options held by each KMP from the beginning to the end of FY2017.
All vested options were exercisable.
Figure 8: Options held by Directors and KMP
NAME
John Down
Richard Holzgrefe
Ian Daly
James Aleman
Kieran Branagan ^
Ashis Govind ^
Paul Shipley *
BALANCE
AT THE START
OF THE YEAR
OTHER CHANGES
DURING THE YEAR
BALANCE ON
RESIGNATION
BALANCE
AT THE END
OF THE YEAR
VESTED AND
EXERCISABLE
785,714
785,714
785,714
300,000
1,035,714
214,286
214,286
4,121,429
-
-
-
-
-
-
-
-
-
-
-
-
-
-
785,714
785,714
785,714
785,714
785,714
785,714
300,000
300,000
1,035,714
1,035,714
214,286
214,286
(214,286)
-
-
(214,286)
3,907,143
3,907,143
No amounts are unpaid on any shares issued on the exercise of options.
Figure 9: Shareholdings held by Directors and KMP
NAME
John Down
Richard Holzgrefe
Ian Daly
Kaylene Gaffney
David Trude
Craig Kinross
Greg Davies
James Aleman
Kieran Branagan ^
Ashis Govind ^
Paul Shipley *
OTHER CHANGES
DURING THE YEAR
BALANCE ON
RESIGNATION
BALANCE
AT THE START
OF THE YEAR
7,385,347
-
12,611,917
260,000
9,214,286
80,000
300,000
-
-
-
10,498,271
250,000
1,254,119
40,000
545,622
-
-
-
-
20,000
BALANCE
AT THE END
OF THE YEAR
HELD IN
ESCROW
7,385,347
7,385,347
12,871,917
12,561,917
9,214,286
8,821,429
80,000
-
300,000
250,000
10,748,271
10,498,271
1,254,119
40,000
545,622
20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
770,000
-
(770,000)
-
42,699,562
530,000
(770,000) 42,459,562
39,516,964
^ Key management personal not previously reported.
* Key management personal exiting from the Group during the year.
The above table includes consolidated holdings as held by the Directors and key management personnel. None of the
shares above are held nominally by the directors or any of the other key management personnel.
8.5 LOANS GIVEN TO/FROM KEY MANAGEMENT PERSONNEL
During the financial year there were no loans made to directors of MSL Solutions Limited and other key management
personnel of the group, including their close family members and entities related to them.
28
MPower MSL Annual Report 2018REMUNERATION REPORT 8.6 RELIANCE ON EXTERNAL REMUNERATION CONSULTANTS
During FY18, McCullough Robertson were engaged to provide advice on share based remuneration requirements.
Previously, McCullough Robertson had designed the company’s long-term incentive program for directors and key
management personnel.
8.7 VOTING OF SHAREHOLDERS AT LAST YEAR’S ANNUAL GENERAL MEETING
The Company’s annual general meeting was held on 27 November 2017. A resolution was put to shareholders to pass
the adoption of the Company’s remuneration report, which was passed. Proxy votes received were 91.72% in favour of
the resolution.
INDEMNIFYING DIRECTORS AND OFFICERS
During the financial year, the Company paid a premium of $65,600 to insure the Directors and Officers of the
Company. The terms of the insurance contract prevent additional disclosure.
In addition, the Company has entered into Deeds of Access, Insurance Indemnity which ensure the Directors and
Officers of the Company will incur, to the extent permitted by law, no monetary loss as a result of defending the
actions taken against them as Directors and Officers.
OPTIONS & PERFORMANCE RIGHTS
To assist in the attraction, retention and motivation of employees, the Company had operated an option plan up to 30
June 2018. From 1 July 2018 the Board intends to adopt a performance rights plan for long-term incentive purposes.
The number of options (which are fully vested and exercisable) over ordinary shares outstanding at 30 June 2018 are
as follows:
GRANT DATE
18-Dec-15
EXERCISE DATE
18-Dec-15
EXPIRY DATE
18-Dec-20
21-Oct-15
21-Oct-15
21-Oct-20
30-May-16
30-May-16
30-May-21
15-May-17
15-May-17
15-May-22
EXERCISE PRICE
$0.217
$0.308
$0.308
$0.350
NUMBER
2,357,142
1,250,000
1,071,430
300,000
No further employee performance rights have been issued up to the date of this report.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings. The Company was not a party to any such proceedings during the year.
NON-AUDIT SERVICES
The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of
non-audit services during the year is compatible with the general standard of independence for auditors imposed by
the Corporations Act (2001). No non-audit services were provided by the Company’s auditor during the financial year.
29
MPower MSL Annual Report 2018 During the year the following fees were paid or payable for services provided by the auditor of the parent entity and
its related practices:
PRICEWATERHOUSECOOPERS AUSTRALIA
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
A) PRICEWATERHOUSECOOPERS ("PwC") AUSTRALIA
i. Audit and other assurance services
Audit & review of financial statements
Due diligence services
B) NETWORK FIRMS OF PwC AUSTRALIA
i. Audit and other assurance services
Audit & review of financial statements
- PwC United Kingdom
- PwC Denmark
C) NON-PwC AUDIT FIRMS
i. Audit and other assurance services
Audit & review of financial statements
Audit & review fees capatilsed due to nexus with IPO
2018
2017
205,000
206,000
-
430,000
205,000
636,000
2018
2017
50,750
28,000
14,700
11,000
65,450
39,000
2018
2017
-
26,000
-
159,000
-
185,000
TOTAL AUDITOR REMUNERATION
270,450
860,000
It is the Group’s policy to engage PricewaterhouseCoopers on assignments additional to their statutory audit duties
where PricewaterhouseCoopers’s expertise and experience with the Group are important. These assignments are
principally taxation advice and other compliance services, or where PricewaterhouseCoopers is awarded assignments
on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.
30
MPower MSL Annual Report 2018REMUNERATION REPORT LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead Auditor’s independence declaration can be found on the page following this Directors’ report and forms part
of the Directors’ report for the year ended 30 June 2018.
ROUNDING
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that
Class Order, amounts in the financial report and Directors’ report have been rounded off to the nearest thousand
dollars, unless otherwise stated.
Signed in accordance with a resolution of the Directors:
Kenneth John Down
Chairman
Craig Kinross
Managing Director and Chief Executive Officer
Dated at Brisbane this 31st day of August 2018.
31
MPower MSL Annual Report 2018 AUDITOR’S INDEPENDENCE DECLARATION
32
MPower MSL Annual Report 2018
PricewaterhouseCoopers, ABN 52 780 433 757480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.auLiability limited by a scheme approved under Professional Standards Legislation.Auditor’s Independence DeclarationAs lead auditor for the audit of MSL Solutions Limited for the year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been: (a)no contraventions of the auditor independence requirements of the Corporations Act 2001in relation to the audit; and(b)no contraventions of any applicable code of professional conduct in relation to the audit.This declaration is in respect of MSL Solutions Limited and the entities it controlled during the period.Michael CroweBrisbanePartnerPricewaterhouseCoopers31 August 2018 2018
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
Revenue
Other income
Cost of sales
Sales and marketing expenses
Customer support and technical services
Research and development expenses
General and administration expenses
Other gains and expenses (net)
Depreciation expense
Amortisation expense
Transaction and restructuring costs
Finance costs (net)
Profit/(Loss) before income tax
Income tax benefit
Profit/(Loss) for the period
Other comprehensive income for the year
Total comprehensive income/(loss) for the period
Profit/(Loss) attributable to:
Owners of MSL Solutions Limited
Total comprehensive profit/(loss) for the period attributable to:
Owners of MSL Solutions Limited
NOTE
4
4
6
8(a)
8(b)
3(d)
6
JUN-18
$'000
33,600
1,461
(9,014)
(4,819)
(5,405)
(5,397)
(5,293)
(309)
(154)
(4,557)
(609)
(214)
(710)
798
88
2,147
2,235
JUN-17
$'000
RESTATED
23,409
707
(5,409)
(4,577)
(3,776)
(4,270)
(7,374)
(4,697)
(167)
(4,122)
(1,028)
(779)
(12,083)
1,063
(11,020)
235
(10,785)
88
88
(11,020)
(11,020)
2,235
2,235
(10,785)
(10,785)
EARNINGS PER SHARE FROM LOSS FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY
Basic earnings per share
Diluted earnings per share
21
21
CENTS
0.04
0.03
CENTS
(9.38)
(9.38)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
34
MPower MSL Annual Report 2018 CONSOLIDATED BALANCE SHEET
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Assets classified as held for sale
Other current assets
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Intangible assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Provisions
Income tax payable
Deferred revenue
Total current liabilities
Non-current liabilities
Trade and other payables
Deferred tax liabilty
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
The consolidated balance sheet should be read in conjunction with the accompanying notes.
NOTE
JUN-18
$'000
JUN-17
$'000
RESTATED
7(b)
7(a)
8(f)
7(a)
8(a)
8(b)
7(c)
7(d)
8(e)
7(c)
8 (c)
8(e)
6,647
6,272
1,881
801
15,601
2,171
249
43,327
208
45,955
61,556
5,327
39
4,099
773
5,958
16,196
-
2,305
305
2,610
18,806
11,897
6,336
2,212
573
21,018
888
306
41,856
185
43,235
64,253
5,852
225
5,296
461
5,899
17,733
988
3,522
1,398
5,908
23,641
42,750
40,612
9(a)
9(b)
9(c)
60,988
2,485
(20,723)
42,750
61,085
338
(20,811)
40,612
35
MPower MSL Annual Report 2018 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance as at 1 July 2016
CONTRIBUTED
EQUITY
$'000
21,629
RETAINED
EARNINGS
$'000
(9,791)
Total comprehensive income for the year
Profit/(loss) for the year - as reported
Impact of restatment
Other comprehensive income
Total comprehensive income for the year - restated
-
-
-
(10,764)
(256)
-
(11,020)
Transactions with owners in their capacity
as owners
Contributions of equity, net of transaction costs
39,306
Share-based payments expense
Total transactions for the year
150
39,456
-
-
-
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$'000
-
-
235
235
-
-
-
SHARE-BASED
PAYMENT
RESERVE
$'000
234
TOTAL
EQUITY-
RESTATED
$'000
12,072
-
-
-
(10,764)
(256)
235
(10,785)
(150)
19
(131)
39,156
169
39,325
Balance as at 30 June 2017 - restated
61,085
(20,811)
235
103
40,612
Total comprehensive income for the year
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity
as owners
Contributions of equity, net of transaction costs
Total transactions for the year
-
-
-
(97)
(97)
88
-
88
-
-
-
2,147
2,147
-
-
-
-
-
-
-
88
2,147
2,235
(97)
(97)
Balance as at 30 June 2018
60,988
(20,723)
2,382
103
42,750
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
36
MPower MSL Annual Report 2018 CONSOLIDATED STATEMENT OF CASH FLOWS
NOTE
JUN-18
$'000
JUN-17
$'000
Cash flows from operating activities
Receipts from customers
Research and development incentives received
Payments to suppliers, employees and others
Finance costs
Interest received
Income tax paid
Net cash flows from operating activities
10(a)
Cash flows from investing activities
Capital expenditure
Purchase of intangibles
37,486
22,067
-
721
(36,965)
(23,171)
(5)
74
(183)
407
(113)
-
-
3
(140)
(520)
(251)
(1,525)
Acquisition of subsidiaries, net of cash & cash equivalents
3
(5,979)
(18,724)
Proceeds from disposal of investment
Net cash flows from investing activities
Cash flows from financing activities
Issuance of share capital
Repayment of borrowings
Issuance of converting notes
Costs paid on issuance of share capital
Costs paid on issuance of converting notes
Net cash flows from financing activities
Net cash inflow/(outflow) for the period
Cash at beginning of the period
Effect of foreign exchange
Cash at end of the period
The above consolidated statement of cashflows should be read in conjunction with the accompanying notes.
957
35
(5,135)
(20,465)
-
(191)
-
(129)
-
15,975
(174)
17,000
(1,930)
(779)
(320)
30,092
(5,048)
11,741
(46)
6,647
9,107
2,634
-
11,741
37
MPower MSL Annual Report 2018 2. SEGMENT INFORMATION
A) DESCRIPTION OF SEGMENTS AND
PRINCIPAL ACTIVITIES
The Group’s executive management examines the
Group’s performance from a product perspective with
entities in similar markets grouped on an international
level. For the financial year the following are the
identified reportable segments:
1.
2.
3.
4.
MPower Venue: services the stadia, arena and
registered clubs (excluding golf clubs) on a
global basis.
MPower Golf: service the golf clubs and
associations market on a global basis.
MPower Media: Services the sports, leisure and
hospitality clients with loyalty/media member
engagement solutions and facilitates relationships
with media partners.
MPower BI: services the sports, leisure, and
hospitality clients with a business analytics service
providing historical, current, and predictive views of
business operations.
5.
Corporate: Group overheads and on costs that are
monitored on a global basis.
1.
SIGNIFICANT CHANGES IN THE CURRENT
REPORTING PERIOD
The financial position and performance of the Group was
affected by the following events and transactions during
the reporting year:
›
›
The acquisition of certain assets of Xcite Media Pty
Ltd on 9 January 2018 (see Note 3), which resulted in
the recognition of intangible assets (Note 8) and
goodwill (Note 8).
The acquisition of PriCap Services Pty Ltd on 1 May
2018 (see Note 3), which resulted in the recognition
of intangible assets (Note 8) and goodwill (Note 8).
Furthermore, during the financial year, the Company
recognised revenue from the following transactions:
› An accouting gain of $490k from the reversal of the
earnout provision for the Pallister acquisition. In the
prior year, a similar gain of $687k was recorded from
the reversal of the earnout provision for the
Marketown Media acquisition.
›
The Company sold 1,472,346 shares of its
shareholding in Zuuse Limited at a price of $0.65 per
share. Cash proceeds of $957k was received, and a
net gain on sale of $627k was included in other
income for the year.
RESTATEMENT OF PRIOR YEAR RESULTS
The prior year results have been restated for the
following reasons:
›
Following a review of the acquisition balance sheet of
Golfbox A/S the provisional deferred revenue was
adjusted to increase deferred revenue by $283k. As a
result of this adjustment prior period revenue has
been adjusted by $87k. Further details can be found
in Note 3.
› A review of the revenue recognised in relation to a
multi-element contract entered into in the prior year.
The impact of this adjustment was $169k.
› As a result of the above, goodwill was increased by
$470k (refer to Note 8(b)).
38
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Management primarily uses a measure of revenue and adjusted earnings before interest, tax, depreciation and
amortisation (Adjusted EBITDA) to assess the performance on a monthly basis. Information about segment revenue
and segment adjusted EBITDA is detailed below.
B) SEGMENT REVENUE AND SEGMENT ADJUSTED EBITDA
YEAR ENDED 30 JUNE 2018
MPower Venue
MPower Golf
MPower BI
MPower Media
Corporate
Total
YEAR ENDED 30 JUNE 2017
MPower Venue
MPower Golf
MPower BI
MPower Media
Corporate
Total
SEGMENT
REVENUE
$’000
20,657
9,706
1,909
1,328
-
33,600
SEGMENT
REVENUE
$’000
14,308
7,589
659
853
-
23,409
SEGMENT
ADJUSTED
EBITDA
$’000
2,757
3,092
1,099
700
(3,633)
4,015
SEGMENT
ADJUSTED
EBITDA
$’000
2,215
1,258
(113)
262
(2,258)
1,364
Segment Adjusted EBITDA excludes the effect of significant items which may have an impact on the quality of
earnings such as transaction costs and the net effect of foreign exchange and fair value movements through the
income statement (refer to Note 2(c)). The comparison for the prior year (FY17) has been restated in line with Note 1.
Other income is excluded from the segment results.
Geographical earnings
Revenue of Verteda Holdings Limited of $12,821k was primarily derived from the United Kingdom. The original
currency of pounds sterling has been converted to the presentation currency of the Group at 30 June 2018 as per the
company’s accounting policy detailed in Note 24.
Revenue of GolfBox A/S of $4,034k was primarily derived from Scandinavian and European countries. The original
currency of Danish krone has been converted to the presentation currency of the Group at 30 June 2018 as per the
company’s accounting policy detailed in Note 24.
The Group also derives small amounts of revenue from the United States and the Middle East.
39
MPower MSL Annual Report 2018 C) SEGMENT ADJUSTED EBITDA RECONCILIATION TO PROFIT/(LOSS) BEFORE TAX
RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO PROFIT / (LOSS) BEFORE INCOME TAX
Segment Adjusted EBITDA
Transaction and restructuring costs
Foreign exchange losses
Senior management bonus
Fair value movement on financial liability
Finance costs (net)
Depreciation & amortisation
Gain on reversal of earnout provisions
Gain on sale of investments (Zuuse)
(Loss) before income tax
JUN-18
$'000
4,015
(609)
(214)
-
(94)
(214)
JUN-17
$'000
1,364
(1,028)
(324)
(3,342)
(4,339)
(812)
(4,711)
(4,289)
490
627
687
-
(710)
(12,083)
Sales between segments are carried out at arm’s length and are eliminated on consolidation. The revenue from
external parties is measured in the same ways as in the consolidated statement of profit or loss and other
comprehensive income.
Refer to Note 5 for further details on the above significant items (excluding depreciation and amortisation).
40
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. BUSINESS COMBINATIONS
MSL’s growth strategy is based upon four key components: strong organic growth in existing sales segments,
cross-selling opportunities between sales segments, expansion of the business intelligence and analytics platform and
accelerated growth through acquisitions.
MSL uses acquisitions to grow the marketplace of clients, acquire new software capabilities and knowledge and to
enter new markets and geographies.
In January and May 2018, MSL expanded with the acquisition of Xcite Media Pty Ltd (assets) and the shares of Pricap
Services Pty Ltd.
Both acquisitions will be integrated into the MSL Group and the relevant operating segments.
The following table provides a breakdown of the consideration paid for each acquisition:
UPFRONT
CONSIDERATION
$'000
DEFERRED AND
CONTINGENT
CONSIDERATION
$'000
TOTAL CONSIDERA-
TION
$'000
CONSIDERATION
REMAINING AT 30
JUNE 2018
$'000
Xcite Media Pty Ltd
Pricap Services Pty Ltd
Total
375
1,600
1,975
100
900
1,000
475
2,500
2,975
The cash out flows for all acquisitions throughout the financial year (net of cash acquired) are detailed below:
ACQUISITION
Infogenesis Pty Ltd
Rockit Pty Ltd (GCS)
Verteda Holdings Ltd
GolfBox A/S
Xcite Media Pty Ltd *
Pricap Services Pty Ltd *
PAYMENTS MADE DURING FY18
UPFRONT
$'000
DEFERRED
$'000
CONTINGENT
$'000
-
-
-
-
375
1,575
1,950
38
75
339
1,468
-
-
-
25
2,084
-
-
-
1,920
2,109
100
900
1,000
TOTAL
$'000
38
100
2,423
1,468
375
1,575
5,979
*
Pricap Services Pty Ltd had $25k cash on hand as at the date of acquisition. The assets of Xcite Media Pty Ltd acquired by MSL did not
include cash.
The balance of acquisition payments owing as at the reporting date is as follows:
ACQUISITION
Rockit Pty Ltd (GCS)
Pallister Games
GolfBox A/S
Xcite Media Pty Ltd
Pricap Services Pty Ltd
BALANCE OF PAYMENTS OWING AS AT 30 JUNE 2018
UPFRONT
$'000
DEFERRED
$'000
NOTE 7(C)
CONTINGENT
$'000
NOTE 8(C)
-
-
-
-
-
-
50
-
541
-
450
1,041
12
660
1,989
100
450
3,211
TOTAL
$'000
62
660
2,530
100
900
4,252
Specifics in relation to each of these acquisitions and contingent considerations are discussed in further detail below.
41
MPower MSL Annual Report 2018 A) ACQUISITION OF XCITE MEDIA (“XCITE”)
Acquired receivables
i
Summary of acquisition
On 9 January 2018, MSL acquired the intellectual property
and the customer support contracted revenue from Xcite
Media Pty Ltd. Xcite is a music and member engagement
generating product that the Group is integrating into its
suite of products offered to customers. The acquisition
has provided significant growth opportunities that benefit
MSL in the following ways:
› Extending sales of the products outside NSW
through MSL’s existing customer base; and
› Cross-selling opportunities for MSL products into
Xcite Media clients by packaging the products with
other existing MSL member engagement products.
Details of the purchase consideration, the net assets
acquired, and goodwill are as follows:
The consideration paid to acquire Xcite Media includes
$475k in cash made up of the following:
›
›
$375k upon completion, paid on 9 January 2018;
$100k upon completion of a warranty period of 6
months, due 9 July 2018.
The assets and liabilities recognised as a result of the
acquisition are as follows:
SUMMARY OF ACQUIRED NET ASSETS -
PROVISIONAL AMOUNTS
Debtors
Deferred revenue
Intangible - Customer contracts and
relationships
Deferred tax liability
Fair value of net assets acquired
Purchase consideration
Cash paid
Contingent consideration
Goodwill
$'000
33
(33)
380
(114)
266
375
100
475
209
The goodwill is attributable to the expected continued
growth of the customer base and cross selling
opportunities to clients of other Group entities.
The fair value of trade and other receivables on
acquisition is deemed to be equal to the gross
contractual amounts, with the expectation that all
receivables are recoverable in full.
Revenue and profit contribution
Revenue of Xcite included in the Group revenue since the
acquisition date 9 January 2018 amounted to $239k.
Profits of Xcite included in the Group profit/(loss) since
the acquisition date amounted to $217k inclusive of
amortisation expense of $22k on the acquired Contracts
and Customer Relationships.
Had the results of Xcite been included for the full year
ending 30 June 2018, it would have contributed revenue
of $521k and profit of $473k.
ii Purchase consideration – cash outflow
As noted at the beginning of Note 3, an upfront
consideration payment of $375,000 was paid on 9
January 2018, and the assets of Xcite acquired by MSL
did not include cash.
Acquisition-related costs are included in ‘transaction
costs’ in profit or loss and discussed in further detail in
Note 3(d).
B) ACQUISITION OF PRICAP SERVICES PTY LTD
(“PRICAP”)
i
Summary of acquisition
On 1 May 2018, MSL acquired 100% of the issued
share capital of Pricap Services Pty Ltd (“Pricap”)
which operates in the golf management software
industry in Australia.
The acquisition has provided growth opportunities that
benefit MSL in the following ways:
› Enhanced MSL’s growth in the golf markets in
Australia;
›
Pricap’s solution set is complementary to the solution
set currently offered by MSL.
Details of the purchase consideration, the net assets
acquired and goodwill are as follows:
The consideration paid to acquire Pricap includes
$2,500,000 in cash and shares made up of the following:
›
›
›
$1,600,000 cash, paid upon completion 1 May 2018;
$450,000 deferred cash payment to be paid six
months after completion date, being 1 November 2018;
$450,000 in earnout ($340,000 in cash and $110,000
in shares) to be paid within 20 days of the completion
of the earnout period, being 1 November 2018.
42
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Revenue and profit contribution
Revenue of Pricap included in the Group revenue since the
acquisition date 1 May 2018 amounted to $162k. Profits of
Pricap included in the Group profit/(loss) since the
acquisition date amounted to $78k (prior to amortisation
expenses) and $51k inclusive of amortisation expenses of
$27k of the acquired Contracts and Customer
Relationships and Software.
Had the results of Pricap Services been included for the
full year ending 30 June 2018, it would have contributed
revenue of $972k and profit of $306k.
ii Purchase consideration – cash outflow
As noted at the beginning of Note 3, an upfront
consideration payment of $1,600,000 was paid on
1 May 2018, and the cash acquired was $25,437.
Acquisition-related costs are included in ‘transaction
costs’ in profit or loss and discussed in further detail in
Note 3(d)
The assets and liabilities recognised as a result of the
acquisition are as follows:
SUMMARY OF ACQUIRED NET ASSETS -
PROVISIONAL AMOUNTS
Cash
Customer monies
Accrued expenses
Intangible - Customer contracts and
relationships
Intangible - Software
Deferred tax liability
Fair value of net assets acquired
Purchase consideration
Cash paid
Deferred payment - cash
Holdback earnout - cash
Holdback earnout - shares
Goodwill
$'000
25
(24)
(9)
929
239
(292)
868
1,600
450
340
110
2,500
1,632
The goodwill is attributable to the expected continued
growth of the customer base and cross selling
opportunities to clients of other Group entities.
Significant estimate: Contingent consideration
On acquisition date, the fair value of the contingent
consideration of $450,000 was calculated using the
‘income approach’, based on the acquiree’s earnings
expectations.
Acquired receivables
The fair value of trade and other receivables on
acquisition is deemed to be equal to the gross
contractual amounts, with the expectation that all
receivables are recoverable in full.
Customer monies
Pricap collects monies from golf club members and
redistributes this to the golf clubs. As such, at any point
in time Pricap will hold customer monies prior to
distribution back to the golf clubs. As at the date of
acquisition, customer monies held was $24k.
Accrued expenses
As at the date of acquisition Pricap’s GST obligations are
recorded as part of the accrued expenses.
43
MPower MSL Annual Report 2018 L
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44
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Rockit Pty Ltd (“Rockit”)
D) TRANSACTION AND RESTRUCTURING COSTS
During the financial year ended 30 June 2018 the
Company incurred $534k (FY17 $991k) of transaction costs
that related to the acquisition of Xcite Media Pty Ltd and
Pricap Services Pty Ltd, along with other due diligence
costs for acquisitions that did not proceed or still in
progress. These costs included professional advisory fees,
additional salary costs and travel incurred to perform the
required due diligence and affect the completion of the
acquisitions. Restructuring costs of $75k (FY17: $37k) were
considered as one-off items following a review of the
Company’s operations.
During the prior year (FY17), the Group entered into a
deed of variation with the vendors which amended the
earnout liability from being a mixture of shares and cash
to a simple cash payment for earnout targets in calendar
years 2017 and 2018. During the year $25k of the earnout
provision for Rockit was paid for performance targets
met for the 2017 calendar year. The provision balance is
being added to monthly as the consideration is linked to
continued employment. This provision is expected to be
paid for the 2018 calendar year.
Verteda Holdings Limited (“Verteda”)
During the financial year the full value of the earnout
provision for Verteda was paid as performance targets
were met.
GolfBox A/S (“GolfBox”)
The performance targets for the GolfBox earnout is
assessed on the audited results for the financial years
ended 30 April 2017 and 30 April 2018. The Group
determined that based on these results an earnout
provision of DKK 9,385,903 (A$1,988,539) is payable,
which was paid to the vendors of GolfBox on 3 July 2018.
Ray Pallister Pty Ltd (“Pallister Games”)
The contingent consideration for Pallister Games of
$1,150k is assessed based on the EBITDA performance
for the financial years 2018, 2019 and 2020. The Group
determined that based on the results for the year ended
30 June 2018 the earnout target for 2018 of $300k had
been met and is payable. In addition, the Group entered
into a deed of variation with the vendor which amended
the earnout liability for the remaining years, such that the
vendor would become an employee of the Group to
promote growth in the Media segment, and the
contingent consideration for 2019 and 2020 be reduced
to $180k per year. As a result, a gain on reversal of the
earnout provision of $490k has been included in Other
income in the Consolidated Statement of Profit or Loss.
Pricap Services Pty Ltd (“Pricap”)
As discussed in Note 3b(i) part of the consideration for
the acquisition of Pricap is based on performance
targets. At 30 June 2018, the timeframe for the
completion of these conditions has not been met.
Xcite Media Pty Ltd (“Xcite”)
As discussed in Note 3a(i) part of the consideration for
the acquisition of Xcite is contingent on a warranty
period of six months, ending 9 July 2018. At 30 June
2018, the timeframe for the completion of these
conditions has not been met.
45
MPower MSL Annual Report 2018 4. REVENUE
The Company derives the following types of revenue:
Recurring Revenue
Customer contracts annuities
Subscription annuities
Total - Recurring revenue
Non-recurring revenue
Booking Fees
System Installations
Software Fees and Royalties
Hardware Fees
Advertising
Other
Total - Non-recurring revenue
JUN-18
$'000
JUN-17
$'000
9,248
6,577
15,825
209
3,565
6,799
6,259
822
121
17,775
7,416
4,662
12,078
250
2,693
2,324
3,964
1,825
275
11,331
Revenue from operating activities
33,600
23,409
Other Income
Gain on sale of an asset
Gain on reversal of earnout provision
Other income received
Interest received from financial institutions
Total other income
627
490
270
74
1,461
14
687
3
3
707
Revenue from operating activities is derived from the sale of software licences (on both a subscription and perpetual
basis), hosting and support fees, IT infrastructure and hardware and income from system installations and
implementations. In addition, commission is earned on bookings on sites such as iSeekGolf and merchant sales on the
Buying Club website.
MSL Solutions Limited is domiciled in Australia and has wholly-owned overseas subsidiaries in United Kingdom
and Denmark.
OTHER INCOME
The gain on sale of an asset of $627k arose from the sale of 1,472,346 shares in Zuuse Limited at $0.65 per share.
An accounting gain of $490k resulted from the reversal of the earnout provision for the Pallister Games acquisition.
Refer to Note 3(c) for further details.
In addition, during the financial year the Company received $220k from the settlement of a commercial dispute with
a supplier, and has accrued $50k of expected grant income for the Export Marketing & Development Grant (EMDG).
46
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Software fees and royalties
Timing of recognition: The Group sells a large range of
software applications. Sales are recognised when the
software applications are delivered to the customer.
Delivery has occurred when the end user has received
the software, the risks of obsolescence and loss have
been transferred to the customer and either the
customer has accepted the products in accordance with
the sales contract or the Group has objective evidence
that all criteria for acceptance have been satisfied.
Measurement of revenue: Revenue from sales is based
on the price specified in the sales contracts, net of any
discounts and returns at the time of sale. Accumulated
experience is used to estimate and provide for discounts
and returns.
Hardware fees
Timing of recognition: The Group sells a large range of
hardware applications. Sales are recognised when the
hardware applications are delivered to the wholesale
supplier of the products. Delivery has occurred when
wholesaler has notified the Group that the products are
on their premises and the risks of obsolescence and loss
have been transferred to the customer and either the
customer has accepted the products in accordance with
the sales contract or the Group has objective evidence
that all criteria for acceptance have been satisfied.
Measurement of revenue: Revenue from sales is based on
the price specified in the sales contracts, net of any
discounts and returns at the time of sale. Accumulated
experience is used to estimate and provide for discounts
and returns.
Advertising
Timing of recognition: The Group recognises revenue in
accordance with contract milestones and/or advert
impressions.
Measurement of revenue: Revenue is measured in line
with the executed insertion orders and is based on
market rates.
RECOGNISING REVENUE FROM MAJOR
BUSINESS ACTIVITIES
Revenue is recognised for the major business activities
using the methods outlined below.
Customer contracts annuities – (deferred revenue)
Timing of recognition: The Group recognises the
revenue from customer care and support contracts in
the period that the support is provided. Customers are
invoiced prior to the commencement of the support
period with this invoiced amount deferred until support
has been provided.
Measurement of revenue: Revenue is measured per
supported license module. Various modules have
differing support prices. The Group has a cancellation
policy of 90 days.
Subscription annuities – (deferred revenue)
Timing of recognition: The Group recognises the revenue
from SaaS or subscription contracts in the period that
the software and associated support is provided.
Customers are invoiced prior to the commencement of
the subscription period with this invoiced amount
deferred until the service has been provided.
Measurement of revenue: Revenue is measured per
subscription license module. Various modules have
differing subscription prices.
Booking fees
Timing of recognition: The Group accounts for booking
revenue when funds have been received by the Group
for rounds of golf booked through iSeek Golf product
offering to clubs and associations.
Measurement of revenue: Booking revenue is based on
commission charged to golf clubs for rounds booked
and paid for on the iSeek Golf platform. Revenue is
based on the booking made, net of the funds to be
remitted to the golf clubs upon the completion of the
round played.
System installations/professional services –
(deferred revenue)
Timing of recognition: Revenue from system installations is
recognised in the accounting period in which the services
are rendered. For fixed-price contracts, revenue is
recognised based on the actual service provided to the end
of the reporting period as proportion of the total services
to be provided (percentage of completion method).
Measurement of revenue: Estimates of revenues, cost or
extent of progress toward completion are revised if
circumstances change. Any resulting increases or
decreases in the estimated revenues or costs are
reflected in profit or loss in the period in which the
circumstances that give rise to the revision become
known by management.
47
MPower MSL Annual Report 2018 5. OTHER SIGNIFICANT INCOME AND EXPENSE ITEMS
The Group has identified the following items included in the Consolidated Statement of Profit or Loss, which are
material due to the significance of their nature and/or amount:
Accounting gains included in other income
Gain on reversal of earnout provisions
Gain on sale of investments (Zuuse)
Significant expense items
Transaction and restructuring costs
Foreign exchange losses
Senior management bonus
Fair value movement on financial liability
Finance costs
NOTE
4
4
3(d)
5(a)
JUN-18
$'000
JUN-17
$'000
490
627
1,117
(609)
(215)
-
(94)
(279)
687
-
687
(1,027)
(324)
(3,342)
(4,339)
(812)
(1,197)
(9,844)
Refer to Note 4 for further details on the accounting gains included in other income as noted above. Transaction and
restructuring costs are detailed under Note 3(d). The remaining significant expense items are explained further below:
A) FOREIGN EXCHANGE LOSSES
Included in the consideration for the acquisitions of Verteda and GolfBox are deferred acquisition payments (refer to
Note 7(c)) and contingent consideration based on performance targets (refer to Note(e)). As these provisions are
payable in the acquiree’s domicile currency (being Pound Sterling or Danish Krone), the Group applies its policy in
relation to foreign exchange currencies and revalues these provisions at the end of each reporting period with any
foreign exchange gain or loss recorded as an realised or unrealised depending on what amounts have been paid.
B) FAIR VALUE MOVEMENT ON FINANCIAL LIABILITY AT FAIR VALUE THROUGH PROFIT AND LOSS
During the reporting year, the contingent consideration for the GolfBox acquisition was revised and the provision was
increased by $94k to reflect an increased financial performance compared to when the contingent consideration
provision was accounted for on acquisition.
C) FINANCE COSTS
During the reporting year, the Company sold a perpetual licence to an Australian based customer, and provided a
financing arrangement whereby the customer will pay for the licence over an 86 month period. As a result, a discount
has been applied to represent the present value of the receivable, which has resulted in a $173k charge to the income
statement. This amount will be unwound over the 86 month period.
The Company also sold a perpetual licence to a UK based customer, and provided a financing arrangement whereby
the customer will pay for the licence over a 36 month period. As a result, a discount has been applied to represent
the present value of the receivable, which has resulted in a $106k charge to the income statement. This amount will
be unwound over the 36 month period.
The total finance charges of $279k are disclosed under Note 7(a) for other receivables.
The finance costs on the prior period primarily relate to the costs associated with the capital raising via convertible
notes which took place in FY17.
48
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6. INCOME TAX EXPENSE/(BENEFIT)
A) INCOME TAX EXPENSE/(BENEFIT)
Income tax expense/(benefit)
Current tax
Deferred tax
Adjustments for deferred tax expense of prior period
Total income tax expense/(benefit)
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Total deferred tax expense/(benefit)
NOTE
Below
6(b)
8(c)
8(c)
JUN-18
$'000
698
(1,496)
-
JUN-17
$'000
256
(1,513)
194
(798)
(1,063)
(285)
(1,212)
(1,497)
(292)
(1,027)
(1,319)
B) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE
Profit/(loss) from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2017: 30%)
Adjust for tax effect of:
- Fair value movement on financial liability through profit and loss
- Share based payments
- Transaction costs
- Gain on reversal of earnout provision
- R&D tax incentive
- Other (deductibe)/non-allowable items
- Adjustments for income tax expense at prior period
- Derecognition of previously recognised tax losses
- Difference in tax rate of foreign jurisdictions
Total income tax expense/(benefit)
Amounts charged to equity
JUN-18
$'000
(710)
(213)
28
-
77
(147)
(279)
3
-
-
(267)
(798)
JUN-17
$'000
(12,083)
(3,625)
1,302
756
338
(206)
(67)
(90)
271
288
(30)
(1,063)
- Deferred tax asset arising from equity raising costs
(37)
(521)
In the prior year (FY17), the Group de-recognised $288k of carry forward tax losses. While the Group may still be able
to utilise these losses in the future it is deemed unlikely due to the significant changes in ownership and business
since the losses were incurred.
49
MPower MSL Annual Report 2018 i Recognition and measurement
ii Estimates and judgements
The Group is subject to income taxes in Australia and
jurisdictions where it has foreign operations. Significant
judgement is required in determining the provision for
income taxes. There are certain transactions and
calculations undertaken during the ordinary course of
business for which the ultimate tax determination is
uncertain at the time of the transaction/calculation. The
Group estimates its tax liabilities based on the Group’s
understanding of the taxation legislation in each
jurisdiction it operates, and where the final tax outcome
of these matters is different from the amounts that were
initially recorded, any difference will impact the current
and/or deferred income tax assets and liabilities in the
period the initial determination was made.
In addition, the Group recognises deferred tax assets
relating to carried forward tax losses to the extent there
are sufficient taxable temporary differences relating to
the same taxation authority and the same subsidiary
against which the unused tax losses can be utilised.
However, utilisation of the tax losses also depends on the
ability of the entity to satisfy the necessary tests relating
to utilisation of tax losses.
For the incentives and deductions available for eligible
research and development expenditure, the Group has
exercised judgement and calculated an estimate of the
eligible expenditure in both Australia and the United
Kingdom, and included the estimated tax credit and
additional tax deduction in its tax calculations for the
reporting period.
MSL Solutions Limited and its wholly-owned Australian
subsidiaries have formed a tax consolidated group, and
accordingly these entities are taxed as a single entity and
the deferred tax assets and liabilities of these entities are
set off in the consolidated financial statements.
The income tax expense or benefit for the year
represents the current year’s taxable income based on
the applicable income tax rate for each jurisdiction
adjusted for permanent differences, and any net
movements in deferred tax assets and liabilities
attributable to temporary differences and unused
tax losses.
The current income tax benefit is calculated on the basis
of the tax laws enacted at the end of the reporting
period in the countries where the Company’s subsidiaries
operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid
to the tax authorities.
Deferred tax assets are recognised only if it is probable
that the future taxable amounts will be available to utilise
those temporary differences and losses. As such the
Group has de-recognised $288k of carry forward tax
losses for the year ending 30 June 2017. While the Group
may still be able to utilise these losses in the future it is
deemed unlikely due the age of the losses and the
significant changes in ownership and business since the
losses were incurred.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
tax bases of investments in foreign operations where the
Company is able to control the timing of the reversal of
the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current and deferred tax is recognised in the profit or
loss, except to the extent that it relates to items
recognised in other comprehensive income, or directly in
equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity respectively.
Companies within the Group may be entitled to claim tax
incentives and/or deductions for investments in
qualifying assets or in relation to eligible expenditure.
Research and Development expenditure for the Group
was $5.7 million, which was offset by a tax credit of
$279k for the incentive in Australia. In the United
Kingdom an increased tax deduction of 225% is available
for eligible expenditure, which has been factored in to
the tax position for the Group.
50
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7. FINANCIAL ASSETS AND LIABILITIES
The Group holds the following financial assets and liabilities:
FINANCIAL ASSETS
2018
Trade and other receivables
Cash and cash equivalents
2017
Trade and other receivables
Cash and cash equivalents
FINANCIAL LIABILITIES
2018
Trade and other payables
Borrowings
Contingent Consideration - Earnout provision
2017
Trade and other payables
Borrowings
Contingent Consideration - Earnout provision
ASSETS AT
FAIR VALUE
THROUGH
PROFIT AND
LOSS
$’000
-
-
-
-
FINANCIALS
ASSETS AT
AMORTISED
COST
$’000
8,443
6,647
TOTAL
$’000
8,443
6,647
7,224
11,897
7,224
11,897
ASSETS AT
FAIR VALUE
THROUGH
PROFIT AND
LOSS
$’000
FINANCIALS
ASSETS AT
AMORTISED
COST
$’000
-
-
3,211
-
-
5,222
5,327
39
-
6,840
225
-
TOTAL
$’000
5,327
39
3,211
6,840
225
5,222
NOTES
7(a)
7(b)
7(a)
7(b)
NOTES
7(c)
7(d)
7(e)
7(c)
7(d)
7(e)
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 12. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets
mentioned above.
51
MPower MSL Annual Report 2018 A) TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Allowance for doubtful debts
Other receivables
Accrued revenue for contracted work
Accrued revenue for licences
Less: discount to present value
Total
Non-Current
Trade receivables
Loan receivable - related party
Other receivables
Accrued revenue for licences
Less: Finance costs
NOTE
5(c)
NOTE
18
5(c)
JUN-18
$'000
4,218
(106)
4,112
1,235
988
(63)
2,160
JUN-17
$'000
5,436
(114)
5,322
1,014
-
-
1,014
6,272
6,336
JUN-18
$'000
39
872
911
1,476
(216)
1,260
JUN-17
$'000
41
847
888
-
-
-
Total
2,171
888
Further information relating to loans to related parties is set out in Note 18.
i Classification as trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. Loans and other receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as
current assets. If not, they are presented as non-current assets. In general, trade receivables are due for settlement
within 30 days, however in some circumstances the Group has granted extended terms of up to 90 days and for one
particular customer a six month term has been granted. Accordingly, all trade receivables are all classified as current,
with the exception of a receivable of $39k which is deemed to be non-current due to the payment arrangement. The
Group’s accounting policies in relation to trade receivables are outlined in Note 24.
ii Other receivables
Other receivables represents accrued revenue for long-term projects as at the reporting date, whereby a portion of
the revenue has been recognised, and the invoicing and subsequent cash collection is deferred until later periods. As
noted in the table above, in relation to the licence software revenue, these amounts have been discounted to their
present value and the Group is confident these amounts are fully recoverable.
iii Fair value of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their
fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their
carrying amounts.
iv
Impairment and risk exposure
The Group routinely assesses the collectability of its receivables, and has included an allowance for doubtful debts of
$106k for the reporting period. Information about the impairment of trade and other receivables, their credit quality
and the Group’s exposure to credit risk, foreign currency risk and interest rate risk can be found in Note 12(b) and 12(c).
52
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS B) CASH AND CASH EQUIVALENTS
i Reconciliation to cash flow statement
The figures in the table shown below reconcile to the amount of cash shown in the statement of cash flows at the end
of the financial year, as follows:
Deposits on call
Cash at bank
Bank overdraft - classified as borrowings
NOTE
7(d)
JUN-18
$'000
2,648
3,999
-
6,647
JUN-17
$'000
8,037
3,860
(156)
11,741
ii Classification as cash equivalents
Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of
acquisition, and are repayable with 24 hours’ notice with no loss of interest. Refer to Note 24 for the Group’s other
accounting policies on cash and cash equivalents.
C) TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables
Deferred consideration on business combinations
3
Non-Current
Deferred consideration on business combinations
NOTE
JUN-18
$'000
JUN-17
$'000
1,795
2,491
1,041
5,327
-
-
1,966
2,538
1,348
5,852
988
988
Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade and
other payables are considered to the same as their fair values, due to the short-term nature.
53
MPower MSL Annual Report 2018 D) BORROWINGS
Secured
Bank overdraft - secured
Lease liabilities - secured (refer below)
Total secured current borrowings
Total current borrowings
Lease liabilities - secured
Payable:
- Within one year
- Later than one year but not later than 5 years
Total future minmum lease payments
Less: future finance charges
NOTE
7(b)
JUN-18
$'000
JUN-17
$'000
-
39
39
39
31
11
42
(3)
39
156
69
225
225
29
49
78
(9)
69
i
Finance leases
The Group leases various plant and equipment with a carrying value of $42k (2017 – $69k) under finance leases
expiring in less than 12 months as at the reporting date.
ii Fair value
For all borrowings, the fair value is not materially different to their carrying amounts since the interest payable on
those borrowings is either close to current market rates or the borrowings are of a short-term nature.
iii Risk exposures
Details of the Groups exposure to risks arising for current and non-current borrowings are set out in Note 12.
54
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS E) RECOGNISED FAIR VALUE MEASUREMENTS
i
Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments
that are recognised and measured at fair value in the financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three
levels prescribed under the accounting standards. An explanation of each level follows underneath the table.
Financial liabilities
Contingent consideration - Earnout provision
Total Financial liabilities
Financial liabilities
Contingent consideration - Earnout provision
Total Financial liabilities
NOTE
8(e)
NOTE
8(e)
30 JUN 18
LEVEL 1
$'000
LEVEL 2
$'000
LEVEL 3
$'000
TOTAL
$'000
-
-
(3,211)
(3,211)
(3,211)
(3,211)
-
-
30 JUN 17
LEVEL 1
$'000
LEVEL 2
$'000
LEVEL 3
$'000
TOTAL
$'000
-
-
-
-
(5,222)
(5,222)
(5,222)
(5,222)
There were no transfers between levels for recurring fair value measurements during the year. The Group’s policy is to
recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1 – The fair value of financial instruments traded in active markets (such as publicly traded derivatives and
trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The
quoted market price used for financial assets held by the Group is the current bid price. These instruments are
included in level 1.
Level 2 – The fair value of financial instruments that are not traded in an active market (for example, over the counter
derivatives) is determined using valuation techniques which maximize the use of observable market date and rely as
little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are
observable, the instrument ins included in level 2.
Level 3 – If one or more of the significant inputs is not based on observable market data, the instrument is included in
level 3. This is the case for unlisted equity securities.
ii Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
›
The fair value of remaining financial liabilities is determined using discounted cash flow analysis.
All fair value estimates are included in level 3 as they are contingent consideration payable where the fair values
have been determined based on present values and the discount rates used were adjusted for counterparty or own
credit risk.
iii Valuation processes
The finance department of the Group includes employees that perform the valuations of non-property items required
for financial reporting purposes, including level 3 fair values. This team reports directly to the Chief Financial Officer
(CFO), who in turn reports to the Chief Executive Officer and the Audit and Risk Committee (ARC). Discussions of
valuation processes and results are held between the CFO and the Company’s auditor at least once every six months,
in line with the Groups half-yearly reporting period.
The inputs used to evaluate the main level 3 financial liability (being contingent consideration) are based on the
expected cash inflows from the terms of the sale contract and the entity’s knowledge of the business and how the
current economic environment is likely to impact it.
55
MPower MSL Annual Report 2018 8. NON-FINANCIAL ASSETS AND LIABILITIES
A) PROPERTY, PLANT AND EQUIPMENT
LEASEHOLD
IMPROVE-
MENTS
$’000
PLANT AND
EQUIPMENT
$’000
FIXTURES &
FITTINGS
$’000
MOTOR
VEHICLE
$’000
13
(6)
7
7
-
-
(1)
6
14
(8)
6
6
-
1
46
(7)
46
60
(14)
46
913
(744)
169
169
33
133
(143)
192
1,079
(887)
192
192
(22)
16
27
(97)
116
202
(146)
56
56
7
63
(22)
104
272
(168)
104
104
1
2
26
(49)
84
1,462
(1,346)
116
364
(280)
84
24
(19)
5
5
-
-
(1)
4
24
(20)
4
4
-
-
-
(1)
3
24
(21)
3
TOTAL
$’000
1,152
(915)
237
237
40
196
(167)
306
1,387
(1,081)
306
306
(21)
19
99
(154)
249
1,910
(1,661)
249
As at 1 July 2016
Cost or fair value
Accumulated depreciation
Net book amount
Year ending 30 June 2017
Opening net book amount
Exchange differences
Additions
Depreciation charge
Closing net book amount
As at 1 July 2017
Cost or fair value
Accumulated depreciation
Net book amount
Year ending 30 June 2018
Opening net book amount
Reclassification
Exchange differences
Additions
Depreciation charge
Closing net book amount
At 30 June 2018
Cost or fair value
Accumulated depreciation
Net book amount
56
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS i
Leased assets.
Furniture, fittings and equipment includes the following amounts where the Group is a lessee is under a finance lease
(refer to Note 7d for further details):
LEASED ASSETS
Laptops & peripherals
PURCHASE
PRICE
$’000
79
DEPRECIA-
TION
$’000
(37)
BOOK VALUE
$’000
42
ii Revaluation, depreciation methods and useful lives.
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually 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 assets employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
The depreciable amount of all fixed assets and capitalised leased assets is depreciated on a diminishing value basis
over their useful lives to the 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
›
›
›
Plant and equipment
27% - 50%
Furniture, fixtures and fittings
20% - 30%
Leasehold improvements
7.5% - 30%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Refer to Note 24 for all other accounting policies relevant to property, plant and equipment.
57
MPower MSL Annual Report 2018
B) INTANGIBLE ASSETS
As at 1 July 2016
Cost or fair value
Accumulated depreciation
Net book amount
Year ending 30 June 2017
Opening net book amount
Exchange differences
Additions
Additions - Business combinations
(restated)
Depreciation charge
Closing net book amount
As at 1 July 2017
Cost or fair value
Accumulated amortisation
Net book amount
Period ending 30 June 2018
Opening net book amount
Reclass
Disposals
Exchange differences
Additions - Business combinations
3
Amortisation charge
Closing net book amount
As at 1 July 2018
Cost or fair value
Accumulated amortisation
Net book amount
NOTE
GOODWILL
$’000
COMPUTER
SOFTWARE,
OTHER
$’000
FORMATION
EXPENSES
$’000
CONTRACTS
AND CUSTOMER
RELATIONSHIPS
$’000
4,320
-
4,320
4,320
-
13,796
470
-
18,586
18,586
-
18,586
5,249
(2,191)
3,058
3,058
(3)
4,151
-
(1,669)
5,537
9,397
(3,860)
5,537
18,586
5,537
-
-
1,362
1,841
-
21,789
21,789
-
21,789
(21)
(45)
340
239
(1,285)
4,765
9,910
(5,145)
4,765
2
-
2
2
-
-
-
-
2
2
-
2
2
-
-
-
-
-
2
2
-
2
TOTAL
$’000
19,600
(3,751)
15,849
15,849
(3)
29,662
470
(4,122)
41,856
49,729
(7,873)
41,856
10,029
(1,560)
8,469
8,469
-
11,715
-
(2,453)
17,731
21,744
(4,013)
17,731
17,731
41,856
-
-
1,003
1,309
(3,272)
16,771
24,132
(7,361)
16,771
(21)
(45)
2,705
3,389
(4,557)
43,327
55,833
(12,506)
43,327
Comparatives have been restated to align with current year presentation.
i Amortisation methods and useful lives.
The Group amortises intangible assets with a limited useful life using the straight-line method over the following
period/rates:
›
Software – 2.5 to 6 years
› Customer contracts – 3 to 11 years
See Note 24 for the other accounting policies relevant to intangible assets and Note 24 for the Group’s policy
regarding impairments.
ii Customer contracts
The customer contracts were acquired as part of a business combination (see Note 3 for details). They are recognised
at their fair value at the date of acquisition and are subsequently amortised on a straight-line based on the timing of
projected cash flows of the contracts over their estimated useful lives.
58
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS iii Significant estimate: useful life of Software acquired
Software was acquired as part of a business combination (see Note 14 for details). They are recognised at their fair
value at the date of acquisition and are subsequently amortised on a straight-line basis over an eight year period from
date of acquisition. This has been estimated as the weighted average of the expected obsolescence of the acquired
software.
iv Significant estimate: adjustment to Goodwill due to finalisation of acquisition accounting base
As part of the consolidated financial statements for the year ended 30 June 2017, the Group provisionally reported
acquired net assets for both Golfbox A/s and Verteda Holdings Limited. These provisional amounts were prepared
with information available at the time.
Golfbox A/S
The acquisition balance sheet was adjusted to reflect an increase in deferred revenue of $283k following the review of
the deferred revenue previously reported as a provisional amount. This has resulted in an associated increase in
goodwill for the same value.
Verteda Holdings Limited
The acquisition balance sheet was adjusted to reflect an increase in provisions of $187k. This has resulted in an
associated increase in goodwill for the same value.
v
Impairment tests for goodwill
Goodwill is monitored by management at the segment level of the Group.
A segment-level summary of the goodwill allocation is presented below:
SEGMENT
MPower Golf
MPower Venue
MPower Media
Total
JUN-18
$'000
8,273
11,448
2,068
21,789
JUN-17
RESTATED
$'000
6,302
10,421
1,863
18,586
There is no goodwill in relation to the MPower BI segment.
vi Significant estimate: key assumptions used for value-in-use calculations
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses
on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
The recoverable amount of a subsidiary is determined based on value-in-use calculations which require the use of
assumptions. The calculations use cash flow projections based on a one year budget approved by the Board and five
year projections by management. Cash flows beyond the five-year period are extrapolated using the estimated
growth rates stated below.
59
MPower MSL Annual Report 2018 The following table sets out the key assumptions for those segments that have significant goodwill allocated to them:
Revenue (% annual growth rate)
EBITDA (%)
Annual capital expenditure - in line with subsidiary depreciation
Long term growth rate (%)
Post tax discount rate
2018
RANGE
2017
RANGE
2.50%
2.50%
0.50%
13.00%
3.80%
3.80%
2.50%
13.20%
2.50%
2.50%
2.50%
13.00%
3.80%
3.80%
2.50%
13.20%
All segments have the same key assumptions at the high end of the above range, with the exception of the Golf
segment, for which the assumptions of the low end of the range have been applied to the European cash flow
forecasts to reflect the macro-economic environment.
Management has determined the values assigned to each of the above key assumptions as follows:
ASSUMPTION
Revenue
APPROACH USED TO DETERMINE VALUES
Average annual growth rate over the five-year forecast period; based on past
performance and management’s expectations of market development.
EBITDA
Based on past performance and management’s expectations for the future.
Annual capital expenditure
Expected cash costs in the CGU’s. This is based on the historical experience of
management. No incremental revenue or cost savings are assumed in the value-in
-use model as a result of this expenditure.
Long-term growth rate
In line with forecast inflation in each of the countries the Group operates.
Post-tax discount rates
Reflect specific risks relating to the relevant segments and the countries in which
they operate.
As at the reporting date, the Group, based on the information available, does not consider that any reasonably
change in the key assumptions (growth rates and discount rates), after allowing for any consequential impacts on
other key assumptions of any such change, would cause the carrying value of the segments to exceed their
recoverable amounts.
60
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS C) DEFERRED TAX BALANCES
i Deferred tax assets
The balance comprise temporary differences attributable to:
NOTE
Tax losses & offsets
Employee benefits
Property, plant & equipment
IPO and transaction related expenditure
Other
Total deferred tax asset
JUN-18
$'000
1,553
289
-
491
209
JUN-17
$'000
844
325
-
604
114
2,542
1,887
Set off against deferred tax liability
8c(ii)
(2,542)
(1,887)
Net deferred tax asset
-
-
MOVEMENTS
At 1 July 2016
(Charged)/Credited
To profit or loss as deferred tax
benefit/(expenses)
To profit or loss as research and
development expenses
To equity
True up as prior period deferred tax
As at 30 June 2017
TAX LOSSES
& OFFSETS
$’000
473
EMPLOYEE
BENEFITS
$’000
250
PROPERTY,
PLANT &
EQUIPMENT
$’000
22
IPO AND
TRANSACTION
RELATED
EXPENDITURE
$’000
11
386
170
-
(185)
844
75
(22)
-
-
-
325
-
-
-
0
72
-
521
-
604
MOVEMENTS
As at 1 July 2017
(Charged)/Credited
To profit or loss as deferred tax
benefit/(expenses)
To profit or loss as research and
development expenses
To equity
True up as prior period deferred tax
TAX LOSSES
& OFFSETS
$’000
EMPLOYEE
BENEFITS
$’000
844
325
392
333
-
(16)
(36)
-
-
-
As at 30 June 2018
1,553
289
PROPERTY,
PLANT &
EQUIPMENT
$’000
-
-
-
-
-
0
IPO AND
TRANSACTION
RELATED
EXPENDITURE
$’000
604
-
37
16
491
(166)
95
OTHER
$’000
148
TOTAL
$’000
904
(24)
-
-
(10)
114
487
170
521
(195)
1,887
OTHER
$’000
114
TOTAL
$’000
1,887
285
333
37
-
-
-
-
209
2,542
61
MPower MSL Annual Report 2018
ii Deferred tax liabilities
THE BALANCE COMPRISES TEMPORARY DIFFERENCES ATTRIBUTABLE TO:
NOTE
Intangible assets
Financial assets
Property, plant & equipment
Other
Total deferred tax liability
JUN-18
$'000
4,212
569
63
3
JUN-17
$'000
4,657
663
86
3
4,847
5,409
Set off from deferred tax asset
8c(i)
(2,542)
(1,887)
Net deferred tax liability
2,305
3,522
MOVEMENTS
At 1 July 2016
(Charged)/Credited
To profit or loss
True up as prior period deferred tax
Acquistion
As at 30 June 2017
MOVEMENTS
As at 1 July 2017
(Charged)/Credited
To profit or loss
Foreign currency translation
Acquistion
As at 30 June 2018
INTANGIBLES
$’000
2,772
FINANCIAL
ASSETS
$’000
670
(1,096)
-
2,981
4,657
(7)
-
-
663
INTANGIBLES
$’000
4,657
FINANCIAL
ASSETS
$’000
663
(1,091)
240
406
4,212
(94)
-
-
569
PROPERY,
PLANT &
EQUIPMENT
$’000
OTHER
$’000
-
74
(1)
13
86
1
2
-
-
3
PROPERY,
PLANT &
EQUIPMENT
$’000
OTHER
$’000
86
(27)
4
-
63
3
-
-
-
3
TOTAL
$’000
3,443
(1,027)
(1)
2,994
5,409
TOTAL
$’000
5,409
(1,212)
244
406
4,847
Offsetting within tax consolidated group
MSL Solutions Limited and its wholly-owned Australian subsidiaries form a consolidated tax group, whereby the
entities are taxed as a single entity. Accordingly, the deferred tax assets and deferred tax liabilities have been offset in
the consolidated financial statements.
62
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS D) EMPLOYEE BENEFIT OBLIGATIONS
Employee benefit obligations
30 JUN 18
Annual leave obligations
Long-service leave
30 JUN 17
Annual leave obligations
Long-service leave
CURRENT
$’000
801
267
1,068
CURRENT
$’000
1,052
172
1,224
NON-
CURRENT
$’000
-
125
125
NON-
CURRENT
$’000
248
248
TOTAL
$’000
801
392
1,193
TOTAL
$’000
1,052
420
1,472
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly
within 12 months after the end of the reporting period, are recognised in other liabilities in respect of employees’
services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at
the actual rates paid or payable.
Employee benefit obligations are disclosed on the statement of financial position through inclusion of the annual
leave obligation within the trade and other payables liability (Note 7c) and the long service leave obligation is
included within the provisions liability (Note 8e).
Other employee benefit obligations
Liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end
of the reporting period. They are recognised as part of the provision for employee benefits and measured at the
present value of expected future payments to be made in respect of services provided by employees to the end of
the reporting period using the projected unit credit method. Consideration is given to expected future salaries and
wages levels, experience of employee departures and periods of service. Expected future payments are discounted
using national government bond rates at the end of the reporting period with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
E) PROVISIONS
Current
Annual leave
Long service leave
Earnout Provision
Non-Current
Long service leave
Earnout Provision
NOTE
8(d)
8(d)
3(c)
8(d)
3(c)
JUN-18
$’000
JUN-17
$’000
801
267
3,031
4,099
125
180
305
1,052
172
4,072
5,296
248
1,150
1,398
i
Information about individual provisions and significant estimates
Provision for contingent consideration
Provisions for contingent consideration based on earnout targets have been recognised by the Group for the acquisitions
made. Further information and performance conditions regarding the earnout provision can be found in Note 3.
63
MPower MSL Annual Report 2018 F) ASSETS HELD FOR SALE
Securities held in Zuuse Limited
JUN-18
$’000
1,881
JUN-17
$’000
2,212
During the financial year, Zuuse Pty Ltd completed a merger with Progressclaim.com Limited (Progressclaim), and
became the merged entity Zuuse Limited. The merger was completed under the terms of a Scrip for Scrip deed
executed on 18 September 2017.
As at 30 June 2017, the Company had a 30% interest in Zuuse Pty Ltd, and as a result of the merger, the Company’s
relative interest was consolidated to 11.7% (9,776,056 shares) in the new merged entity (Zuuse Limited).
During the financial year, the Company sold 1,472,346 shares of its shareholding in Zuuse Limited at a price of $0.65
per share. Cash proceeds of $957k was received, and a net gain on sale of $627k was included in other income for the
period.
At reporting date, the asset continues to remain as held for sale, based on the following information:
› MSL does not have direct or indirect control over Zuuse Limited; and
›
The Board having determined that Zuuse Limited was a “non-core” investment and has commenced a sell down
program.
In the month of July 2018, the Company sold a further 65,000 shares of its shareholding in Zuuse Limited, and
received $39k of cash proceeds.
9. EQUITY
A) SHARE CAPITAL
Share capital
Fully paid
JUN-18
SHARES
JUN-18
$'000
JUN-17
SHARES
JUN-17
$'000
249,248,965
60,988
249,248,965
249,248,965
60,988
249,248,965
61,085
61,085
As part of the acquisition of Pricap Services Pty Ltd and based on the Company’s share price as at 30 June 2018
($0.195 per share), a further 564,103 shares are estimated to be issued on the basis of the earnout targets being met.
i Movements in ordinary shares
DATE
1 July 2016
24 July 2016
24 July 2016
DETAILS
Opening Balance
Shares issued via capital raising
Shares issued to owners of Verteda
27 October 2016
Shares issued as part of acquistion of Golfbox
14 November 2016
Shares issued - contingent consideration of Rockit
17 March 2017
Share consolidation (1.4 for 1)
21 March 2017
Converting Note allocation
4 May 2017
4 May 2017
4 May 2017
IPO Bonus allocation
Shares issued on IPO
Less: transaction costs arising on shares issued
Deferred tax recognised directly in equity
30 June 2017
Closing Balance
Less: transaction costs arising on shares issued
30 June 2018
Closing Balance
NUMBER OF
SHARES
122,793,561
967,742
3,747,728
2,272,727
1,367,236
(37,471,142)
85,000,000
10,571,113
60,000,000
249,248,965
249,248,965
ISSUE
PRICE
0.155
0.22
0.22
0.22
0.25
0.25
0.25
$’000
21,629
150
825
500
301
21,250
2,643
15,000
(1,734)
521
61,085
(97)
60,988
64
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ii Ordinary shares
Ordinary shareholders are entitled to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. Every ordinary shareholder present at a meeting
in person or by proxy is entitled to one vote on a show of hands or by poll.
iii Options
Information relating to the MSL Solutions Limited Option Plan, including details of options issued, exercised and
lapsed during the financial year and options outstanding at the end of the reporting period is set out in Note 19.
iv Transaction costs arising on shares issued
Transaction costs arising on shares issued represent additional legal fees incurred in the year for the Company’s IPO,
less deferred tax asset attributable to the expense.
B) OTHER RESERVES
The following table shows a breakdown of the balance sheet line item ‘other reserves’ and the movements in these
reserves during the year. A description of the nature and purpose of each reserve is provided below the table.
Share based payment reserve
Foreign currency translation reserve
JUN-18
$’000
103
2,382
2,485
JUN-17
$’000
103
235
338
Share-based payments
The share-based payments reserve is used to recognise:
›
›
The grant date fair value of options issued to employees but not exercised
The grant date fair value of shares issued to employees
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entities are recognised in other comprehensive
income as described in Note 24 and accumulated in a separate reserve with equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
C) RETAINED EARNINGS/(ACCUMULATED LOSSES)
Movement in retained earnings were as follows:
Balance as at 1 July 2017
Total comprehensive income for the period
Profit/(loss) for the year
Total comprehensive income for the period
As at 30 June 2018
$’000
(20,811)
88
88
(20,723)
65
MPower MSL Annual Report 2018 10. CASH FLOW INFORMATION
A) RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES
JUN-18
$’000
88
4,711
(490)
282
(67)
214
609
-
(798)
94
1,210
(228)
(22)
(1,146)
JUN-17
$’000
(11,020)
4,289
(687)
324
33
779
1,027
3,361
(1,063)
4,339
(3,351)
(329)
(57)
(721)
(1,283)
-
(525)
(1,322)
297
(1,217)
1,019
(5,611)
2,465
4,683
407
(520)
Profit/(loss) after tax
Adjustments for:
Depreciation and amortisation
Gain on reversal of earnout provision
Unrealised FX (loss)/gain
Realised FX (loss)/gain
Finance costs
Transaction and restructuring costs
Share based payment
Income tax benefit
Fair value expense
Change in operating assets and liabilities
Movement in current assets
(Increase)/ decrease in trade receivables
(Increase)/ decrease in prepayments
(Increase)/ decrease in bonds
(Increase)/decrease in other receivables
Movement in non-current assets
(Increase)/ decrease in other receivables
Movement in current liabilities
Increase/(decrease) in trade payables
Increase/(decrease) in other payables
Increase/(decrease) in deferred revenue
Increase/(decrease) in deferred tax assets
Net cash from operating activities
66
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS RISK
This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the
Group’s financial position and performance.
11. CRITICAL ESTIMATES, JUDGEMENTS AND ERRORS
The preparation of financial statement requires the use of accounting estimates which, by definition, will seldom equal
the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items
which are more likely to be materially adjusted due to estimates and assumptions that may be incorrect. Detailed
information about each of these estimates and judgments is included in notes 1 to 10 together with information about
the basis of calculation for each affected line item in the financial statements. In addition, this note also explains
where there has been actual adjustment this year as a result of an error and of changes to previous estimates.
A) SIGNIFICANT ESTIMATES AND ADJUSTMENTS
The areas involving significant estimates or judgements are:
› Recognition of revenue
› Collection of long-term receivables
› Estimation of current tax payable and current tax expense
› Estimation of research and development tax credits
› Estimated goodwill impairment
› Estimated useful life of intangible asset
› Estimation of contingent purchase consideration in a business combination
› Recognition of deferred tax asset for carried forward tax losses
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
B) SOURCES OF ESTIMATION UNCERTAINTY
Revenue recognition
Multiple element contracts entered into by the Group require judgement in the identification and separation of
contract components related to software licence fees, post sales customer support and other services. The Group
assesses each customer contract individually into its components and considers if any components should be
aggregated where they cannot be separately determined. Revenue is assigned to each component based upon the
stand-alone fair value of the component relevant to the total contract value.
The Group uses the percentage-of-completion method in accounting for its fixed-price contacts to deliver installation
and consultancy services. Use of the percentage-of-completion method requires the Group to estimate the services
performed to date as a proportion of the total services to be performed. Were the proportion of services performed
to total services to be performed to differ by 10% from managements estimates, the amount of revenue recognised in
the year would be increased by $357k if the proportion performed was increased, or would be decreased by $357k if
the proportion performed was decreased.
67
MPower MSL Annual Report 2018 12. FINANCIAL RISK MANAGEMENT
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial
performance. Current year profit and loss information has been included where relevant to add further context.
RISK
EXPOSURE ARISING FROM
MEASUREMENT
MANAGEMENT
Market risk –
foreign exchange
Recognised financial assets
and liabilities not denominated
in the functional currency
Sensitivity analysis
Credit risk
Cash and cash equivalents,
trade receivables
Ageing analysis
Credit ratings
Liquidity risk
Borrowings and other
liabilities
Rolling cash flow forecasts
Monitoring the foreign
exchange rates for any
material movements
Diversification of bank
deposits, credit limits
Availability of credit and
borrowing facilities
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group’s finance function.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting
the Group’s competitiveness and flexibility.
The Group’s finance function has been delegated responsibility by the Board for among other issues, managing
financial risk exposure within the Group. The Groups’ risk management policies and objectives are therefore designed
to minimise the potential impacts of these risks on the results of the Group where such impacts may be material.
A) MARKET RISK
i. Foreign exchange risk
The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency
with cash generated from their own operations in that currency. Where group entities have liabilities denominated in a
currency other than their functional currency (and have insufficient reserves of that currency to settle them) cash
already denominated in that currency will, where possible, be transferred from elsewhere within the Group.
With the acquisition of both GolfBox and Verteda, there are now multiple customers and suppliers in the
following currencies:
›
Pound Sterling (Verteda’s functional currency)
› Danish Krone (GolfBox’s functional currency)
The Group’s remaining subsidiaries outlined in Note 14(a) have a functional currency of Australian dollars. The Group’s
presentation currency is Australian dollars.
As suppliers in any of the above currencies are expected to be repaid in the respective entities functional currencies
from local sales, the foreign currency exposure of these suppliers the Group is not exposed to foreign currency risk.
68
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Exposure
The Groups exposure to foreign currency risk is only relation to transactions in foreign currency that differ from the
respective entities functional currencies. The Group’s exposure to foreign currency risk at the end of the reporting
period is expressed in Australian dollar, was as follows:
2018
Trade payables
Contingent and deferred consideration
Net exposure
2017
Trade payables
Contingent and deferred consideration
Net exposure
GBP
$’000
-
-
-
GBP
$’000
-
2,487
2,487
DKK
$’000
-
1,989
1,989
DKK
$’000
-
3,745
3,745
USD
$’000
(207)
-
(207)
USD
$’000
160
-
160
Amounts recognised in profit or loss and other comprehensive income
During the year, the following foreign-exchange related amounts were recognised in profit or loss and other
comprehensive income:
Realised FX loss
Unrealised FX loss
Sensitivity
JUN-18
$’000
67
(282)
JUN-17
$’000
(33)
(324)
As at the reporting date, the Group is primarily exposed to changes in Danish Krone due to the deferred and
contingent consideration owed to the vendors of GolfBox A/S.
KRR/$ exchange rate - increase 5%
KRR/$ exchange rate - decrease 5%
IMPACT ON POST TAX PROFIT
IMPACT ON OTHER
COMPONENTS OF EQUITY
JUN-18
$’000
(70)
70
JUN-17
$’000
27
(30)
JUN-18
$’000
(70)
70
JUN-17
$’000
27
(30)
The Group’s exposure to other foreign exchange movements is not material.
ii Price risk
The Group does not have exposure to equity securities price risk arising from investments held by the Group and
classified in the balance sheet as held-for-sale.
69
MPower MSL Annual Report 2018 B) CREDIT RISK
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions as well as credit
exposures to customers including outstanding receivables.
i. Risk management
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such as processes for the approval of customers and
regular monitoring of counterparty financial stability), ensuring to the extent possible that customers and
counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for
impairment. Depending on the cash generating unit within the Group, credit terms are generally immediate payment
to 30 days from invoice date.
The maximum exposure to credit risks by class of recognised financial asset at the end of the reporting period is
equivalent to the carrying amount and classification of those financial assets as presented in the financial statements.
The Group holds no collateral nor has any significant concentrations of credit risk with any single counterparty or
Group of counterparties.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality.
Aggregates of such amounts are detailed in Note 7(a).
Credit risk related to balance with banks and other financial institutions is managed by the finance function. Current
policy is that surplus funds are only invested with counterparties with a rating of A. The following table provides
information regarding the credit risk relating to cash holdings:
CASH AT BANK AND SHORT-TERM BANK DEPOSITS
AAA
AA
A
BBB
Total Cash
ii. Credit quality
JUN-18
$’000
-
5,731
913
3
JUN-17
$’000
-
9,881
2,012
4
6,647
11,897
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty default rates.
TRADE RECEIVABLES
COUNTERPARTIES WITHOUT EXTERNAL CREDIT RATING
Group 1
Group 2
Total trade receivables
JUN-18
$’000
3,607
611
4,218
JUN-17
$’000
4,986
450
5,436
Group 1 – new and existing customers (more than 6 months) with no defaults in the past
Group 2 – new and existing customers (more than 6 months) with some defaults in the past. All defaults were
fully recovered.
70
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS iii. Impaired trade receivables
Individual receivables which are known to be uncollectable are written off by reducing the carrying amount directly.
The other receivables are assessed collectively to determine whether there is objective evidence that an impairment
has been incurred but not yet identified. For these receivables, the estimated impairment losses are recognised in a
separate provision for impairment. The Group considers that there is evidence of impairment if any of the following
indicators are present:
›
›
Significant financial difficulties of the debtor
Probability that the debtor will enter bankruptcy or financial reorganization, and
› Default or delinquency in payments (more than 60 days overdue)
Receivables for which an impairment provision was recognised are written off against the provision when there is no
expectation of recovering additional cash.
Impairment losses are recognised in profit or loss within other expenses. Subsequent recoveries of amounts previously
written off are credited against other expenses. See Note 24 for information about how impairment is calculated.
Movements in the provision for impairment of trade receivables that are assessed for impairment collectively are as follows:
At the beginning of period
Provision acquired
Doubtful debts written off
Provision for doubtful receivables
iv. Past due but not impaired
JUN-18
$’000
114
-
(8)
-
106
JUN-17
$’000
52
62
-
-
114
As of 30 June 2018, trade receivables of $690k (2017 – $490k) were past due but not impaired. These relate to a
number of independent customers for whom there is no recent history of default. The ageing analysis of these trade
receivables is as follows:
Up to 3 months
3 to 6 months
JUN-18
$’000
451
239
690
JUN-17
$’000
294
156
450
The other classes with trade receivables do not contain impaired assets and are not past due. Based on the credit
history of these other classes, it is expected that these amounts will be received when due. The Group does not hold
any collateral in relation to these receivables.
C) LIQUIDITY RISK
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of
fund through an adequate amount of committed credit facilities to meet obligations when due and to close out
market positions.
Management monitors rolling forecasts of the Group’s liquidity reserve as well as cash and cash equivalents
(Note 7(c)) on the basis of expected cash flows. This is generally carried out at the local level in the operating
companies of the Group in accordance with practice set by the Group. In addition, the Group’s liquidity management
policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet
these, monitoring balance sheet liquidity ratios against internal requirements and maintaining debt financing plans.
71
MPower MSL Annual Report 2018 i. Maturities of financial liabilities
The tables below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal
their carrying balances as the impact of discounting is not significant.
LESS THAN
6 MONTHS
$’000
6-12
MONTHS
$’000
BETWEEN
1 AND 3
YEARS
$’000
BETWEEN
2 AND 5
YEARS
$’000
OVER
5 YEARS
$’000
TOTAL
CONTRACTUAL
CASH FLOWS
$’000
1,795
-
2,482
1,041
5,318
1,966
-
2,351
1,348
5,665
-
36
-
-
36
-
29
-
-
29
-
11
-
-
11
-
49
-
988
1,037
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,795
46
2,482
1,041
5,364
1,966
78
2,351
2,336
6,731
LESS THAN
6 MONTHS
$’000
6-12
MONTHS
$’000
BETWEEN
1 AND 3
YEARS
$’000
BETWEEN
2 AND 5
YEARS
$’000
OVER
5 YEARS
$’000
TOTAL
CONTRACTUAL
CASH FLOWS
$’000
CONTRACTUAL
MATURITIES OF
FINANCIAL LIABILITIES
As at 30 June 2018
Non-derivatives
Trade payables
Finance lease liabilities
Other payables
Deferred consideration
Total
As at 30 June 2017
Non-derivatives
Trade payables
Finance lease liabilities
Other payables
Deferred consideration
Total
CONTRACTUAL
MATURITIES OF
FINANCIAL ASSETS
As at 30 June 2018
Non-derivatives
Trade debtors
Other receivables
Loan to related parties
-
-
-
-
-
-
-
-
4,258
2,587
872
7,717
5,477
1,014
847
7,338
4,218
-
-
40
1,327
-
-
210
872
-
1,050
-
Total
4,218
1,367
1,082
1,050
Non-derivatives
Trade debtors
Other receivables
Loan to related parties
5,437
-
-
-
1,014
-
Total
5,437
1,014
40
-
847
887
-
-
-
-
72
CARRYING
AMOUNT
(ASSETS) /
LIABILITIES
$’000
1,795
37
2,482
1,041
5,355
1,966
68
2,351
2,336
6,721
CARRYING
AMOUNT
(ASSETS) /
LIABILITIES
$’000
4,258
2,307
872
7,437
5,477
1,014
847
7,338
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 13. CAPITAL MANAGEMENT
A) RISK MANAGEMENT
The Group’s objectives when managing capital are to:
›
Safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders, and
› Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group does not currently have any loan covenants that it is required to meet. However, review of the current ratio
is performed monthly to ensure that it is managed and remains at a reasonable level. This current ratio is assessed as
per normal accounting practices with an adjustment made to take into account the large deferred revenue balance
that the Group carries on an on-going basis.
73
MPower MSL Annual Report 2018 GROUP STRUCTURE
This section provides information which will help users understand how the group structure affects the financial
position and performance of the group as a whole.
A list of significant subsidiaries is provided in Note 14(a).
14. INTERESTS IN OTHER ENTITIES
A) SUBSIDIARIES
The Group’s principal subsidiaries at 30 June 2018 are set out below. Unless otherwise stated they have share capital
consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests
held equals the voting rights held by the Group. The country of incorporation or registration is also their principal
place of business.
NAME
Parent Entity:
MSL Solutions Limited
Subsidiaries of parent entity:
Micropower Pty Ltd
Atra South Pty Ltd
iSeekgolf Pty Ltd
Simbient Golflink Pty Ltd
Golflink Partners Pty Ltd
GolfTime International Pty Ltd
MarkeTown Media Pty Ltd
Rockit Pty Ltd
InfoGenesis Pty Ltd
Golf Group International
Verteda Holdings Limited
Verteda Limited
Rebel Thinking Limited
GolfBox A/S
PriCap Services Pty Ltd
B) INTERESTS IN ASSOCIATES
NAME
Unlisted
Zuuse Pty Ltd *
COUNTRY OF INCORPORATION
EQUITY HOLDING
30-JUN-18
%
30-JUN-17
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
United Kingdom
United Kingdom
Denmark
Australia
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
COUNTRY OF INCORPORATION
EQUITY HOLDING
30-JUN-18
%
30-JUN-17
%
Australia
9.9%
30%
*
The percentage of equity held in Zuuse in the prior year was prior to the merger with Progressclaim.com Limited. From an accounting
perspective, the Group is still considered to have significant influence over Zuuse despite the decrease in equity holding.
74
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNRECOGNISED ITEMS
This section of the notes provides information about items that are not recognised in the financial statements as they
do not (yet) satisfy the recognition criteria.
In addition to the items and transactions disclosed below, there are also:
a) Unrecognised tax amounts – see Note 6
b) Non-cash investing and financing transactions – see Note 10(b))
15. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The Group does not have any unrecognised contingent liabilities or assets.
16. COMMITMENTS
A) NON-CANCELLABLE OPERATING LEASES
The Group various offices under non-cancellable operating leases expiring within 6 months to five years. The leases
have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to
non-cancellable operation lease are as follows:
Within one year
Later than one year but not later than five years
Later than five years
JUN-18
$’000
JUN-17
$’000
331
1,163
301
1,795
213
297
-
510
B) HOSTING AND BACK UP
As part of its operations GolfBox have an operating agreement for hosting and back-up. The minimum payment in
the termination period of six months is kr250.
C) BANK GUARANTEE
The Group hold a number of bank guarantees in relation to office bond for GolfLink Pty Ltd and MSL Solutions Limited.
Bank guarantee - MSL Solutions Limited
Bank guarantee - Golflink Partners Pty Ltd
Bank guarantee - Marketown Pty Ltd
JUN-18
$’000
209
90
-
299
JUN-17
$’000
-
90
10
100
17. EVENTS OCCURRING AFTER THE REPORTING PERIOD
As at the date of this report, no matters or circumstances have arisen since the end of the financial year which
significantly affected or may significantly affect the operations of the Group or the state of affairs of the Group in
future financial years.
75
MPower MSL Annual Report 2018 OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards
and other pronouncements, but that is not immediately related to individual line items in the financial statements.
18. RELATED PARTY TRANSACTIONS
A) KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Other long-term benefits
Superannuation
Share based payments
Total
JUN-18
$’000
1,606
31
97
-
1,735
JUN-17
$’000
1,552
37
75
2,381
4,045
Detailed remuneration disclosures are provided in the remuneration report on pages 17 to 31.
B) TRANSACTIONS WITH OTHER RELATED PARTIES - LOANS
i. Loans payable to related parties
As at 30 June 2018, the Company has a loan receivable of $872k from Zuuse Limited. The loan is classified as non-
current, consistent with the arms-length term the Company has entered into. The movement in the loan receivable for
the financial year represents interest that has accrued on the balance outstanding.
Loan receivable - Zuuse Limited
JUN-18
$’000
872
872
JUN-17
$’000
847
847
Under the terms of the loan, no repayment is required until 31 December 2019, unless a there a trigger event occurs
by way of asset sale, share sale or other capital raising by Zuuse Limited.
In addition to his role as directors of MSL Solutions Limited, Mr Ian Daly is also a director on the Zuuse Limited and a
significant shareholder. Craig Kinross was previously a director of Zuuse Limited (representing MSL as a
shareholder), however Mr Kinross resigned as director of Zuuse Limited on 3 October 2017 post the merger with
Progressclaim.com Limited.
John Down, Craig Kinross, Ian Daly and Richard Holzgrefe all hold shares of Zuuse Limited in their personal capacity.
C) TRANSACTIONS WITH OTHER RELATED PARTIES – SALE OF ASSET HELD FOR SALE
Ian Daly and Richard Holzgrefe purchased shares from MSL ($35k and $65k respectively) that were held for sale in
their personal capacity as current shareholders of Zuuse Limited.
D) TRANSACTIONS WITH OTHER RELATED PARTIES – SERVICES PROVIDED
Prior to MSL’s acquisition of GolfBox A/S, Golf Link Partners Pty Ltd had an existing reseller agreement whereby
Golf Link acted as a reseller in Australia and New Zealand for GolfBox products. For the period post acquisition and
through to completion of all earn-out provisions associated with the acquisition, GolfBox has continued to invoice
Golf Link, and Golf Link has continued to pay GolfBox, fees arising from the reseller agreement. The fees charged by
GolfBox to Golflink for the financial year ended 30 June 2018 were $41k (FY17: $52k).
76
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 19. SHARE-BASED PAYMENTS
EMPLOYEE OPTION PLAN
No options were issued or expired during the period ending 30 June 2018.
The following table summarises the share options outstanding at the end of the year:
OPTION CLASS
OPA_CLASS_TOTAL
OPB_CLASS_TOTAL
OPC_CLASS_TOTAL
OPD_CLASS_TOTAL
INITIAL GRANT
2,357,142
1,250,000
1,071,430
300,000
GRANT DATE
18-Dec-15
22-Oct-15
30-May-16
15-May-17
TERM
5 years
5 years
5 years
5 years
EXERCISE PRICE
$0.217
$0.308
$0.308
$0.350
20. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
A) PRICEWATERHOUSECOOPERS ("PwC") AUSTRALIA
i. Audit and other assurance services
Audit & review of financial statements
Due diligence services
B) NETWORK FIRMS OF PwC AUSTRALIA
i. Audit and other assurance services
Audit & review of financial statements
- PwC United Kingdom
- PwC Denmark
C) NON-PwC AUDIT FIRMS
i. Audit and other assurance services
Audit & review of financial statements
Audit & review fees capatilsed due to nexus with IPO
2018
2017
205,000
206,000
-
430,000
205,000
636,000
2018
2017
50,750
14,700
28,000
11,000
65,450
39,000
2018
2017
-
-
-
26,000
159,000
185,000
TOTAL AUDITOR REMUNERATION
270,450
860,000
It is the Group’s policy to engage PricewaterhouseCoopers on assignments additional to their statutory audit duties
where PricewaterhouseCoopers’s expertise and experience with the Group are important. These assignments are
principally taxation advice and other compliance services, or where PricewaterhouseCoopers is awarded assignments
on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.
77
MPower MSL Annual Report 2018 21. EARNINGS PER SHARE
A) BASIC EARNINGS PER SHARE
Basic earnings per share attributable to the ordinary equity (cents)
B) DILUTED EARNINGS PER SHARE
Diluted earnings per share attributable to the ordinary equity (cents)
C) RECONCILIATIONS OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Basic earnings per share
Profit attributable to the ordinary equity holders of the company
from continuing operations
Diluted earnings per share
JUN-18
0.04
JUN-17
(9.38)
JUN-18
0.03
JUN-17
(9.38)
JUN-18
$’000
JUN-17
$’000
88
(11,019)
Profit attributable to the ordinary equity holders of the company used in
calculating diluted earnings per share
88
(11,019)
D) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
Weighted average number of ordinary shares used in calculating basic earnings per share
249,248,965
117,521,862
Adjustments for calculation of diluted earnings per share: *
- Options
- Potential shares to be issued (Pricap contingent consideration)
Weighted average number of ordinary shares and potential ordinary shares used in
calculating diluted earnings per share
4,703,572
564,103
-
-
254,516,640
117,521,862
JUN-18
JUN-17
*Information concerning the classification of securities
Options
Options granted to employees under the MSL Solutions Employee Option Plan are considered to be potential
ordinary shares, and have been included in the determination of diluted earnings per share.
Potential shares to be issued (Pricap contingent consideration)
As described under Note 3(b), the acquisition of Pricap includes a contingent consideration of $450,000, and of this
amount $110,000 will be issued in the Company’s shares. Accordingly, these potential shares are considered to be
potential ordinary shares. The number of shares noted above has been calculated using the Company’s share price at
30 June 2018 of $0.195.
78
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22. DEED OF CROSS GUARANTEE
MSL Solutions Limited and its subsidiaries are not party to a deed of cross guarantee under which each company
guarantees the debts of the others. At this time the Australian subsidiaries of MSL Solutions Limited are not required
to lodge separate financial accounts as they are below the threshold for reporting requirements.
23. PARENT ENTITY FINANCIAL INFORMATION
A) SUMMARY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Retained losses
Reserves
Total Equity
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
2018
$’000
9,323
38,785
48,108
3,444
-
3,444
60,988
(16,278)
(46)
2017
$’000
14,823
37,140
51,963
4,133
4,120
8,253
61,085
(17,459)
84
44,664
43,710
1,180
(9,199)
1,180
(9,199)
B) DETERMINING THE PARENT ENTITY FINANCIAL INFORMATION
The financial information for the parent entity has been prepared on the same basis as the consolidated financial
statements, except as set out below.
i.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries are accounted for at cost in the financial statements of MSL Solutions Limited.
ii. Tax consolidation legislation
MSL Solutions Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation.
The head entity, MSL Solutions Limited, and the controlled entities in the tax consolidated group account for tax on
a consolidated basis.
MSL Solutions Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from
unused tax losses and unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
79
MPower MSL Annual Report 2018 24. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated
financial statements to the extent they have not already been disclosed in the other notes above. These polices have
been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
group consisting of MSL Solutions Limited and its subsidiaries.
A) CORPORATE INFORMATION
The consolidated financial statements of MSL Solutions Limited and is subsidiaries (collectively, the Group) for
the-year ended 30 June 2018 were authorised for issue in accordance with a resolution of the directors on 31 August
2018.
MSL Solutions Limited (the Company) is a for profit company limited by shares, incorporated and domiciled in
Australia, whose shares are privately owned. The principal activities of the Group during the financial year were the
investment in development, sale and support of software in the provision of integrated solutions for membership
organisations.
MSL Solutions Limited is a for-profit entity for the purposes of preparing these financial statements.
The financial statements are presented in the Australian currency.
B) BASIS OF PREPARATION
The financial statements are general purpose financial statements which have been prepared in accordance with the
Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards
Boards and the Corporations Act 2001.
iii. Compliance with IFRS
The financial statements also comply with international financial reporting standards (IFRS) as issued by the
International Accounting Standards Board.
iv. Historical cost convention
Except for cash flow information, the financial statements have been prepared on and accruals basis and are based
on historical costs except where stated.
80
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS v. New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017
reporting period and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is set out below:
TITLE OF STANDARD
AASB 15: REVENUE FROM CONTRACTS WITH CUSTOMERS
Nature of change
The AASB has issued a new standard for the recognition of revenue. This will replace
AASB 118 which covers revenue arising from the sale of goods and the rendering of
services.
The new standard is based on the principle that revenue is recognised when control of a good
or service transfers to a customer.
The standard permits either a full retrospective or a modified retrospective approach for the
adoption.
Impact
Management is currently assessing the effects of applying the new standard on the Group’s
financial statements and has identified the following areas that are likely to be affected:
›
IT consulting services – the application of AASB 15 may result in the identification of
separate performance obligations which could affect the timing of the recognition of
revenue;
› Accounting for certain costs incurred in fulfilling a contract – certain costs which are
currently expensed may need to be recognised as an asset under AASB 15; and
› Rights of return – AASB 15 requires separate presentation on the balance sheet of the right
to recover the goods from customer and the refund obligation.
The Group is currently assessing the impact of implementing AASB15 on the Group’s financial
accounts and while areas such as system installation and professional services will be affected
the Group does not expect those impacts to be material.
Other impacts may be identified once the Group completes its detailed analysis. The Group
will have a choice of full retrospective application, or prospective application with additional
disclosures.
Mandatory
application date/
date of adoption
by Group
Mandatory for financial years commenting commencing on or after 1 January 2018, but
available for early adoption.
The Group does not intend to adopt AASB 15 before it is mandatory.
TITLE OF STANDARD
AASB 16 LEASES
Nature of change AASB 16 was issued in February 2016. It will result in almost all the leases being recognised on
the balance sheet, as the distinction between operating and finance leases is removed. Under
the new standard, an asset (the right to use the leased item) and a financial liability to pay
rentals are recognised. The only exceptions are short-term and low -value leases.
Impact
Mandatory
application date/
date of adoption
by Group
The standard will affect primarily the accounting for the Group’s operating leases. As at the
reporting date, the Group has non-cancellable operating lease commitments of $510k see Note
16. However, the Group has not yet determined to what extent these commitments will result in
the recognition of an asset and a liability for future payments and how will this affect the
Group’s profit and classification of cash flows.
Some of the commitments may be covered by exception for short-term and low value leases
and some commitments may relate to arrangements that will not qualify as leases under
AASB 16.
Mandatory for financial years commencing on or after 1 January 2019. At this stage, the Group
does not intend to adopt the standard before its effective date.
81
MPower MSL Annual Report 2018 TITLE OF STANDARD
AASB 9: FINANCIAL INSTRUMENTS
Nature of change
The AASB has issued a new standard for the classification, measurement and derecognition of
financial assets and financial liabilities, introduces an expected “expected loss’ impairment
model and a revised approach to micro-hedge accounting, replacing the guidance in AASB139.
Impact
Management is currently assessing the effects of applying the standard to the liabilities carried
at fair value through profit or loss. These liabilities relate to contingent consideration due on
acquisition payments in financial years ending 30 June 2017, 2018 and 2019.
The Group is not expecting this standard to have a material impact on the Group’s assessment
on impairment of trade receivables.
The standard is applicable for reporting periods after 1 January 2018 but is available for early
adoption.
Mandatory
application date/
date of adoption
by Group
There are no other standards that are not yet effective and that would be expected to have a material impact on the
entity in the current or future reporting periods and on foreseeable future transactions.
82
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS C) PRINCIPLES OF CONSOLIDATION AND
iii. Joint ventures
Interests in joint ventures are accounted for in the
consolidated financial statements using the equity
method. Under the equity method of accounting, the
group’s share of profits or losses of joint ventures are
recognised in consolidated profit or loss and the group’s
share of the movements in other comprehensive income
of joint ventures are recognised in consolidated other
comprehensive income. The cumulative movements are
adjusted against the carrying amount of the investment.
iv. Equity method
Under the equity method of accounting, the investments
are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition
profits or losses of the investee in profit or loss, and the
Group’s share of movements in other comprehensive
income of the investee in other comprehensive income.
Dividends received or receivable from associates and
joint ventures are recognised as a reduction in the
carrying amount of the investment.
When the Group’s share of losses in an equity-accounted
investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the
Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the
other entity.
Unrealised gains on transactions between the Group and
its associates and joint ventures are eliminated to the
extent of the Group’s interest in these entities. Unrealised
losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of equity accounted investees have
been changed where necessary to ensure consistency
with the policies adopted by the Group.
The Group did not have any equity accounted
investments for the financial year ended 30 June 2017,
however MSL Solutions Limited accounted for its
investment in Zuuse Pty Ltd under the equity method in
the financial year ended 30 June 2016.
EQUITY ACCOUNTING
i. Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is
transferred to the Group. They are deconsolidated from
the date that control ceases.
The acquisition method of accounting is used to
account for business combinations by the Group
(refer to Note 3).
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated
statement of profit or loss, statement of comprehensive
income, statement of changes in equity and balance
sheet respectively.
ii. Associates
An associate is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the entity but is not control or joint control of these
policies. Investments in associates are accounted for in
the consolidated financial statements by applying the
equity method of accounting, whereby the investment is
initially recognised at cost (including transaction costs)
and adjusted thereafter for post-acquisition change in
the Group’s share of net assets of the associate. In
addition, the Group’s share of the profit or loss of the
associate is recognised in the profit or loss in the period
in which the investment is acquired.
Profits and losses resulting from the transactions
between the Group and the associate are eliminated to
the extent of the Groups interest in the associate.
When the Groups share of losses in an associate equals
or exceeds its interest in the associate, the Group
discontinues recognising its share of further losses unless
it has incurred legal or constructive obligations or mad
payments on behalf of the associate, When the associate
subsequently makes profits, the Group will resume
recognising its share of those profits once its share of the
profits equals the share for the losses not recognised
83
MPower MSL Annual Report 2018 D) SEGMENT REPORTING
iii. Group companies
On consolidation, the assets and liabilities of foreign
operations are translated into Australian dollars at the
rate of exchange prevailing at the reporting date and
their statements of profit or loss are translated at
exchange rates averaged over the reporting period. The
exchange differences arising on translation for
consolidation are recognised in OCI. On disposal of a
foreign operation, the component of OCI relating to that
foreign operation is reclassified to profit or loss.
Any goodwill arising on the acquisitions of a foreign
operation and any fair value adjustments to the carrying
amounts of assets or liabilities arising on the acquisition
are treated as assets and liabilities of the foreign
operation and translated at the spot rate of exchange at
the reporting date
F) REVENUE RECOGNITION
Revenue is measured at the fair value of the
consideration received or receivable.
Revenue from the sale of goods is recognised when the
significant risks and rewards of ownership have passed
to the buyer and can be measured reliably.
Interest revenue is recognised on a proportional basis
taking into account the interest rates applicable to the
financial assets.
Dividend revenue is recognised when the right to receive
a dividend has been established. Dividends received
from associates and joint venture entities are accounted
for in accordance with the equity method of accounting.
Revenue from the rendering of services is recognised
upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and
services tax.
Refer to Note 4 for further details on the Group’s specific
revenue products.
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief
operating decision maker.
The Board of Directors monitor the business have
identified 5 reportable segments, based on the type of
customer serviced and products sold to those customer
bases. Refer Note 2.
E) FOREIGN CURRENCY TRANSLATION
i. Function and presentation currency
The Group’s consolidated financial statements are
presented in Australian dollars, which is also the parent
company’s functional currency. For each entity, the
Group determines the functional currency and items
included in the financial statements of each entity are
measured using functional currency. The consolidated
financial statements are presented in Australia dollar ($),
which is MSL Solutions Limited functional and
presentation currency.
ii. Transactions and balances
Transactions in foreign currencies are initially recorded
by the Group’s entities at their respective functional
currency spot rates at the date the transaction first
qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot
rates of exchange at the reporting date.
Differences arising on settlement or translation of
monetary items are recognised in profit and loss with the
exception of monetary items that are designated as part
of the hedge of the Group’s net investment in a foreign
operation. These are recognised in OCI until the net
investment is disposed of, at which time, the cumulative
amount is reclassified to profit or loss. Tax charges and
credits attributable to exchange differences on those
monetary items are also recorded in Other
Comprehensive Income (OCI).
Non-monetary items that are measured at historical cost
in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-
monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the
date when the fair value is determined. The gain or loss
arising on translation of non-monetary items measured
at fair value is treated in line with the recognition of the
gain or loss on the change in fair value of the item (i.e.
translation differences on items whose fair value gain or
loss is recognised in OCI or profit or loss are also
recognised in OCI or profit or loss, respectively).
84
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS G) INCOME TAX
The income tax expense (revenue) for the year
comprises current income tax expense (income) and
deferred tax expense (income).
Current income tax expense charged to profit or loss is
the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially
enacted, as at reporting date. Current tax liabilities
(assets) are therefore 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 (income) is
charged or credited directly to equity instead of profit or
loss when the tax relates to items that are credited or
charged directly to equity.
Deferred tax assets and liabilities are ascertained based
on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
financial statements. Deferred tax assets also result
where amounts have been fully expensed but future tax
deductions are available. No deferred income tax will be
recognised from the initial recognition of an asset or
liability, excluding a business combination, 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, based on tax
rates enacted or substantively enacted at reporting date.
Their measurement also reflects the manner in which
management expects to recover or settle the carrying
amount of the related asset or liability.
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 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 legally enforceable
right of set off exists, 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.
MSL Solutions Limited and its wholly owned Australian
subsidiaries have formed an income tax consolidated
group under the tax consolidation legislation. Each entity
in the group recognises its own current and deferred tax
assets and liabilities. Such taxes are measured using the
‘stand alone taxpayer’ approach to allocation. Current
tax liabilities (assets) and deferred tax assets arising
from unused tax losses and tax credits in the subsidiaries
are immediately transferred to the parent entity.
The tax consolidated group has a tax funding
arrangement whereby each company in the group
contributes to the income tax payable by the group in
proportion to their contribution to the group’s taxable
income. Differences between the amounts of net tax
assets and liabilities derecognised and
The net amounts recognised pursuant to the funding
arrangement are recognised as either a contribution by,
or distribution to the parent entity.
i. Research and Development Tax Incentive
Companies with the Group may be entitled to claim
special tax deductions for investments in qualifying
assets or in relation to qualifying expenditure. At each
reporting period, the Group accounts for such
allowances as tax credits. The benefit in excess of the
Australian Corporate tax rate of 30% has been
recognised as a reduction to research and development
expenses. A deferred tax asset is recognised for
unclaimed tax credits that are carried forward as
deferred tax assets.
85
MPower MSL Annual Report 2018 H) 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 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.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in business combinations
are, with limited exceptions, initially measured at their
fair values at acquisition date. Goodwill represents the
excess of the consideration transferred and the amount
of the non-controlling interest in the acquiree over fair
value of the identifiable net assets acquired. If the
consideration and non-controlling interest of the
acquiree is less than the fair value of the net identifiable
assets acquired, the difference is recognised in profit or
loss as a bargain purchase price, but only after a
reassessment of the identification and measurement of
the net assets acquired.
Leased assets are depreciated at the rate applicable to
the class of fixed assets that the asset has been added
to. This is done over the shorter of their estimated useful
life and the lease term.
For each business combination, the group measures
non-controlling interests at either fair value or at the non-
controlling interest’s proportionate share of the
acquiree’s identifiable.
Leases that are classified as 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.
I) BUSINESS COMBINATIONS
The acquisition method of accounting is used to account
for all business combinations. Consideration is measured
at the fair value of the assets transferred, liabilities
incurred and equity interests issued by the group on
acquisition date.
Consideration also includes the acquisition date fair
values of any contingent consideration arrangements,
any pre-existing equity interests in the acquiree and
share-based payment awards of the acquiree that are
required to be replaced in a business combination. The
acquisition date is the date on which the group obtains
control of the acquiree. Where equity instruments are
issued as part of the consideration, the value of the
equity instruments is their published market price at the
acquisition date unless, in rare circumstances it can be
demonstrated that the published price at acquisition
date is not fair value and that other evidence and
valuation methods provide a more reliable measure of
fair value. Contingent consideration classified as an asset
or liability is remeasured in each reporting period to fair
value, recognising any change to fair value in profit or
loss, unless the change in value van be identified as
existing at acquisition date.
Acquisition-related costs are expensed when incurred
Where the group obtains control of a subsidiary that was
previously accounted for as an equity accounted
investment in associate or joint venture, the group
remeasures its previously held equity interest in the
acquiree at its acquisition date fair value and the
resulting gain or loss is recognised in profit or loss.
Where the group obtains control of a subsidiary that was
previously accounted for as an available-for-sale
investment, any balance on the available-for-sale reserve
related to that investment is recognised in profit or loss
as if the group had disposed directly of the previously
held interest.
Where settlement of any part of the cash consideration
is deferred, the amounts payable in future are discounted
to present value at the date of exchange using the
entity’s incremental borrowing rate as the discount rate.
Contingent consideration is classified as equity or
financial liabilities. Amounts classified as financial
liabilities are subsequently remeasured to fair value at
the end of each reporting period, with changes in fair
value recognised in profit or loss.
Assets and liabilities from business combinations
involving entities or businesses under common control
are accounted for at the carrying amounts recognised in
the group’s controlling shareholder’s consolidated
financial statements.
86
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS J)
IMPAIRMENT OF ASSETS
L)
INVESTMENTS AND OTHER FINANCIAL 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, including
dividends received from subsidiaries, associates or joint
ventures deemed to be out of pre-acquistion profits. 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 of disposal and value in use, to the asset’s
carrying amount. An excess of the asset’s carrying
amount is written off immediately to its recoverable
amount if the assets carrying amount if the assets
carrying amount is greater than its recoverable amount,
unless the asset is carried at a revalued amount in
accordance with another Standard (eg in accordance
with the revaluation model in AASB 116: Property, Plant
and Equipment). An impairment loss or 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 goodwill,
intangible assets with indefinite lives and intangible
assets not yet available for use.
K) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand,
deposits held at call with banks, other short term highly
liquid investments with original maturities of three
months or less, and bank overdrafts. Bank overdrafts are
shown within short term borrowings in current liabilities
on the balance sheet.
i. Recognition and Initial Measurement
Financial instruments, incorporating financial assets and
financial liabilities, are recognised when the entity
becomes a party to contractual provisions of the
instruments. Trade date accounting is adopted for
financial assets that are delivered within timeframes
established by marketplace convention.
Financial instruments are initially measured at cost on
trade date, which includes transaction costs, when the
related contractual rights or obligations exist.
Subsequent to initial recognition these instruments are
measured as set out below.
ii. Financial assets at fair value through profit and loss
A financial asset is classified at fair value through profit
and loss when they are held for trading for the purpose
of short term profit taking, where they are derivatives
not held for hedging purposes, or designated as such to
avoid an accounting mismatch or to enable performance
evaluation where a group of financial assets is managed
by key management personnel on a fair value basis in
accordance with a documented risk management or
investment strategy. Realised and unrealised gains and
losses arising from changes in fair value are included in
profit or loss in the period in which they arise
iii. Loans and receivables
Loans and receivables are non derivative financial assets
with fixed or determinable payments that are not quoted
in an active market and are stated at amortised cost
using the effective interest rate method.
iv. Held to maturity investments
Held to maturity investments are non derivative financial
assets that have fixed maturities and fixed or
determinable payments, and it is the group’s intention to
hold these investments to maturity. They are
subsequently measured at amortised cost using the
effective interest rate method.
v. Available for sale financial assets
Available for sale financial assets are non derivative
financial assets that are either designated as such or that
are not classified in any of the other categories. They
comprise investments in the equity of other entities
where there is neither a fixed maturity nor fixed or
determinable payment.
87
MPower MSL Annual Report 2018 M) PROPERTY, PLANT AND EQUIPMENT
N) INTANGIBLE ASSETS
Each class of property, plant and equipment is carried at
cost or fair value less, where applicable, any accumulated
depreciation and impairment losses.
i. Plant and equipment
Plant and equipment are measured on the cost basis less
depreciation and impairment losses.
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 assets
employment and subsequent disposal. The expected net
cash flows have been discounted to their present values
in determining recoverable amounts
ii. Depreciation
The depreciable amount of all fixed assets including
buildings and capitalised leased assets is depreciated on
a diminishing value basis over their useful lives to the
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.
iii. Depreciation rates
i. Goodwill
Goodwill and goodwill on consolidation are initially
recorded at the amount by which the purchase price for
a business or for an ownership interest in a controlled
entity exceeds the fair value attributed to its net assets
at date of acquisition. Goodwill on acquisition of
subsidiaries is included in intangible assets. Goodwill on
acquisition of associates is included in investment in
associates. Goodwill is tested annually for impairment
and carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
ii. Software
Software used in the business and that is not integral to
the computer hardware owned by the group, is carried at
cost less, where applicable, any accumulated
depreciation and impairment losses. The depreciable
amount of software is depreciated on a straight-line
basis at a rate between 12.5% and 40%.
Cost includes the direct costs of acquiring the software.
Internal costs incurred in further developing the software
are expensed.
Amortisation of intangibles is included in the line
‘amortisation’ in the profit or loss.
The depreciation rates used for each class of depreciable
assets are:
iii. Customer Contracts
CLASS OF FIXED ASSET
Plant and Equipment
Furniture, Fixtures and Fittings
Leasehold Improvements
27%
20%
7.5%
50%
30%
30%
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance sheet date.
Customer contracts recognised on acquisition are
amortised on a straight line basis over the life of the
contract, being between 3-11 years. Where a contract
holds multiple extension periods, MSL Solutions
recognises these only to the extent where MSL
Solutions has the control over whether the contract is
extended and it is more than probable that the
extension will be utilised.
Amortisation of customer contracts is included in the line
‘depreciation and amortisation’ in the profit or loss.
iv. Amortisation
Refer to Note 8(b) for details about amortisation methods
and periods used by the Group for intangible assets.
88
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS O) TRADE AND OTHER PAYABLES
Q) BORROWING COSTS
Trade and other payables represent the liabilities for
goods and services received by the entity remain unpaid
at the end of the reporting period. The balance is
recognised as a current liability with the amounts
normally paid within terms of payment as detailed on
invoices received.
P) BORROWINGS
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measure at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of
the borrowings using the effect interest method. Fees
paid on the establishment of loan facilities are
recognised as transaction costs of the loan to the extent
that it is possible that some or all the facility will be
drawn down. In this case, the fee is deferred until the
draw down occurs. To the extent there is no evidence
that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period the
facility to which it relates.
Borrowings are removed from the balance sheet when
the obligation specified in the contract is discharged,
cancelled or expired. The difference between the
carrying amount of a financial liability that has been
extinguished or transferred to another party and the
consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Where terms of a financial liability are renegotiated and
the entity issues equity instruments to a creditor to
extinguish all or part of the liability (debt for equity
swap), a gain or loss is recognised in profit or loss, which
is measured as the difference between the carrying
amount of the financial liability and the fair value of the
equity instruments issued.
Borrowings are classified as current liabilities unless
the Group has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period.
General and specific borrowing costs that are directly
attributable to the acquisition, construction or
production or a qualifying asset are capitalised during
the period of time that is required to complete and
prepare the asset for its intended use or sale. Qualifying
assets are assets that necessarily take a substantial
period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalization.
Other borrowing costs are expensed in the period in
which they are incurred.
R) 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.
S) EMPLOYEE BENEFITS
i. Short-term employee benefit obligations
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave
expected to be settled wholly within 12 months after the
end of the reporting period are recognised in other
liabilities in respect of employees’ services rendered up
to the end of the reporting period and are measured at
amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are
recognised when leave is taken and measured at the
actual rates paid or payable.
ii. Other long-term employee benefit obligations
Liabilities for long service leave and annual leave are not
expected to be settled wholly within 12 months after the
end of the reporting period. They are recognised as part
of the provision for employee benefits and measured as
the present value of expected future payments to be
made in respect of services provided by employees to
the end of the reporting period using the projected unit
credit method. Consideration is given to expected future
salaries and wages levels, experience of employee
departures and periods of service. Expected future
payments are discounted using national government
bond rates at the end of the reporting period with terms
to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
89
MPower MSL Annual Report 2018 iii. Equity-settled compensation
W) ROUNDING
Amounts in the financial report and directors’ report
have been rounded off to the nearest thousand dollar,
unless otherwise stated.
X) GOODS AND SERVICES TAX (GST) AND
VALUE ADD TAX (VAT)
Revenues, expenses and assets are recognised net of the
amount of GST and VAT, except where the amount of
GST and VAT incurred is not recoverable from the
Australian Taxation Office. In these circumstances the
GST and VAT is recognised as part of the cost of
acquisition of the asset or as part of an item of the
expense. Receivables and payables are shown inclusive
of GST.
Cash flows are presented in the statement of cashflow
on a gross basis, except for the GST and VAT component
of investing and financing activities, which are disclosed
as operating cash flows.
Y) COMPARATIVES
When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial year.
The Group operates an employee share and option plan.
Share-based payments to employees are measured at
the fair value of the instruments issued and amortised
over the vesting period. Share-based payments to
non-employees are measured at the fair value of the
instruments issued, and are recorded at the date the
goods or services are received.
The corresponding amount is recorded to the option
reserve. The fair value of options is determined using the
Black-Scholes pricing model. The number of shares and
options expected to vest is reviewed and adjusted at the
end of each reporting period such that the amount
recognised for services received as consideration for the
equity instruments granted is based on the number of
equity instruments that eventually vest.
T) CONTRIBUTED EQUITY
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
U) DIVIDENDS
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of the
reporting period but not distributed at the end of the
reporting period.
V EARNINGS PER SHARE
i. Basic earnings per share
Basic earnings per share is calculated by dividing:
›
The profit attributable to owners of the Company,
excluding any costs of servicing equity other than
ordinary shares
› By the weighted average number of ordinary shares
outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the
year and excluding treasury shares (Note 21).
ii. Diluted earning per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:
›
›
The after-income tax effect of interest and other
financing costs associated with dilutive potential
ordinary shares, and
The weighted average number of additional ordinary
shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares
90
MPower MSL Annual Report 2018NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS' DECLARATION
In the directors’ opinion:
a) the financial statements and notes set out on pages 38 to 90 are in accordance with the
Corporations Act 2001, including:
i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its
performance for the financial year ended on that date, and
b)
c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable, and
at the date of this declaration, there are reasonable ground to believe that the members of the extended closed
group identified in Note 14(a) will be able to meet any obligation or liabilities.
Note 24(b) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The directors have been given the declaration by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Kenneth John Down
Chairman
Craig Kinross
Managing Director and Chief Executive Officer
Dated at Brisbane this 31st day of August 2018.
91
MPower MSL Annual Report 2018
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
To the members of MSL Solutions Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of MSL Solutions Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2018 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated balance sheet as at 30 June 2018
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the 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.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
92
MPower MSL Annual Report 2018 93
MPower MSL Annual Report 2018Our audit approachAn audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates.Materiality•For the purpose of our audit we used overall Group materiality of $0.3million, which represents approximately 1% of the Group’s revenue.•We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.•We chose Group revenuebecause, in our view, it is the benchmark against which the performance of the Group is most commonly measured. •We utiliseda1% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds.Audit Scope•Our audit focused on where the Groupmade subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.•The Group has materialoperations in the United Kingdom and Denmark and these territories combined, contributeto approximately 52% of the Group’s revenue.•Our audit procedures were mostly performed at the Group's corporate head office in Brisbane. In establishing the overall approach to the Group audit, we determined the type of audit work thatneeded to be performed by us, as the Group engagement team, and by auditors in theUK and Denmark operating under our instructions.•We performed risk focused audit procedures over the Australian businesses, in addition to auditing the consolidation of the Group's overseas entities that form part of the Group's financial report. •
For the work performed by the component auditors in the UK and Denmark, we determined the
level of involvement required from us as Group auditors to be able to conclude that sufficient
appropriate audit evidence has been obtained as a basis for our opinion on the Group financial
report as a whole. This included active dialogue throughout the year through discussions, issuing
written instructions, receiving formal interoffice reporting, as well as discussing audit findings
meetings with local management.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current year. The key audit 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. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition
(Refer to note 3)
The Group's revenue is based on a significant volume of
transactions across a number of major revenue
streams.
The revenue recognition process differs for each
revenue stream depending on the nature of the
products and services provided to the customer.
The recognition of revenue from these sources is largely
dependent on the terms of the underlying contracts
with the customer. Contracts can be complex and
bespoke. In particular, judgement and estimation is
required by the Group in determining the amount of
revenue recognised in perpetual licences and other
multiple obligation customer contracts, and the timing
for when this revenue is recognised.
We considered the recognition of revenue to be a key
audit matter due to the high volume of revenue
transactions, and the different revenue recognition
criteria for each of the Group’s revenue streams, and in
the case of software and hardware sales, the bespoke
nature of the customer contracts and the judgement
involved in accurately recognising revenue.
Our procedures included, amongst others:
• Assessing the design and operating effectiveness of
the relevant key controls over the recording and
recognition of the revenue.
• Through discussions with management, developing
an understanding of the various revenue streams
and the Group’s revenue recognition policies for
each stream.
• For each of the Group’s revenue streams, agreeing a
sample of revenue transactions recorded in the
general ledger to supporting documentation such
as purchase orders, sales invoices, customer
contracts and the receipts in the bank statements.
• Reading the contract terms for a sample of
customer contracts with multiple obligations (e.g.
hardware, software, support and services), to
determine whether revenue was recognised in
accordance with the Group’s accounting policies
and the requirements of Australian Accounting
Standards.
• Utilising data analytics techniques across all
revenue streams to identify revenue transactions
recognised through manual journal entries, to
assess whether the related revenue was recognised
in accordance with the Group’s accounting policies
and the requirements of Australian Accounting
Standards.
94
MPower MSL Annual Report 2018INDEPENDENT AUDITOR’S REPORT Key audit matter
How our audit addressed the key audit matter
Recoverability of the Group's goodwill and
intangible assets
(Refer to note 8(b)) [$43.3m]
The Group recorded intangible assets of $43.3m at
30 June 2018 comprising:
•
•
•
Goodwill of $21.8m
Contracts and customer relationships of $16.8m
Computer software and other of $4.7m
The Group is required by Australian Accounting
Standards to perform an annual impairment
assessment over goodwill and non-amortising
intangible assets, and also any amortised intangible
assets for which indicators of impairment have been
identified.
This impairment assessment is performed by
determining the recoverable amounts of each Cash
Generating Unit (CGU) using 'value in use' discounted
cash flow models (the 'models').
The CGUs used to assess the Group's goodwill,
customer contracts, relationships and software are
consistent with the Group's operating segments, being
M Power Venue, M Power Golf and M Power Media.
We considered this a key audit matter due to the size of
the goodwill and intangible assets balances and because
significant judgement is required by the Group in
estimating future cash flows, particularly with respect
to determining appropriate growth and discount rates
adopted in each of the models.
No impairment charge was recorded by the Group in
the current financial year.
Our procedures included, amongst others:
• Assessing whether the division of the Group’s
activities in to segments/ CGUs was consistent with
our knowledge of the Group’s operations, internal
Group reporting and the requirements of
Australian Accounting Standards.
• Testing the mathematical accuracy of the
underlying calculations in the models.
• Comparing the cash flow forecasts for FY 19 used in
the models to the Board approved budget for FY 19.
• Comparing historical reported results to the
corresponding budgets to assess the historical
accuracy of the Group’s forecasting processes.
• Together with the PwC valuation experts,
comparing the growth rates and discount rates
used in the models to independent market data and
industry research.
• Performing sensitivity analysis to determine the
impact of reasonably possible changes in the
discount rates, growth rates, EBITDA margin and
FY 19 forecasts used in the models. We found that
headroom remained between the carrying value of
each CGU’s intangible assets and the calculated
value in use recoverable amount after adjusting the
models for these sensitivities.
• Comparing the Group’s net assets ($42.9m) to its
market capitalisation ($51.4m) at 30 June 2018.
We found that there was headroom in the
comparison.
Accounting for business combinations
(Refer to note 3)
During the year ended 30 June 2018, the Group made
the following acquisitions:
•
•
Certain assets of Xcite Media Pty Limited, an
Australian entity, on 9 January 2018 for total
consideration of approximately $0.5m.
The shares of Pricap Services Pty Limited, an
Australian entity, on 1 May 2018 for total
consideration of $2.5m.
We considered the acquisition accounting for the
business combinations to be a key audit matter due to
Our procedures undertaken in relation to the
acquisition accounting for these business combinations
included, amongst others:
• Assessing whether each of the transactions should
be treated as an asset acquisition or business
combination, in accordance with the requirements
of Australian Accounting Standards.
• Agreeing the initial consideration paid for each
acquisition to the relevant bank statements and
sale and purchase agreements.
• Agreeing a sample of related transaction costs,
including stamp duty and legal fees, to relevant
invoices and bank statements, to assess whether
95
MPower MSL Annual Report 2018 Key audit matter
How our audit addressed the key audit matter
the financial significance of the purchase consideration,
net identifiable assets acquired and resultant goodwill
arising on the acquisitions, as well as the level of
judgement required by the Group in performing the
Purchase Price Allocation ("PPA") calculations.
The key areas of judgement exercised by the Group
included:
Assessing the likelihood of earn out targets being
achieved in the calculation of the deferred and
contingent consideration liabilities recognised at
acquisition date.
Identifying and assessing the fair value of the net
identifiable assets acquired.
Determining the value of the customer contract
and relationship intangible assets by performing a
discounted cash flow analysis, and then assessing
the appropriate useful life for amortisation
purposes.
these costs were recognised in accordance with the
requirements of Australian Accounting Standards.
• Reading the relevant purchase agreements to
assess whether the deferred consideration for each
acquisition is contingent upon future events.
• Assessing whether the calculation of the deferred
consideration for each acquisition was in
accordance with the relevant purchase agreements
and the requirements of Australian Accounting
Standards.
• Testing the calculation of contingent consideration
liabilities recognised at acquisition date and the
measurement and disclosure of related ‘earn out’
criteria by assessing the likelihood of financial
performance earn out targets being achieved.
• Considering whether all intangible assets were
recognised by the Group by evaluating the assets
purchased on acquisition.
Determining the adequacy of the acquisition
information disclosed in the financial report.
• Agreeing a sample of the tangible net identifiable
assets acquired to supporting information.
• Assessing the discounted cash flow valuation
models used by the Group for recognising customer
contracts and customer relationship intangible
assets acquired with a particular focus on the key
assumptions therein, including forecast future
financial performance, growth rates and discount
rates.
• Assisted by PwC valuations experts, performing
sensitivity analysis on the above mentioned key
assumptions, with reference to market data and
industry research.
• Assessing the accuracy of the resulting goodwill
arising from the purchase price allocation for each
acquisition.
• Assessing the allocation of goodwill arising in each
of the acquisitions to the relevant CGU, which are
based upon the Group’s operating segments.
• Assessing the adequacy of the acquisition
disclosures made in note 3 in light of the
requirements of Australian Accounting Standards.
•
•
•
•
96
MPower MSL Annual Report 2018INDEPENDENT AUDITOR’S REPORT Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2018, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor’s report, the other
information we obtained included the Chairman and Managing Directors' Messages, Board of
Directors, Directors’ Report, Shareholder Information and Corporate Directory. We expect the
remaining other information to be made available to us after the date of this auditor’s report, including
the Corporate Governance Statement.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above 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 that we 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.
When we read the other information not yet received as identified above, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to the directors and use
our professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group 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 the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
97
MPower MSL Annual Report 2018 98
MPower MSL Annual Report 2018INDEPENDENT AUDITOR’S REPORTA further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Boardwebsite at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor's report. Report on the remuneration reportOur opinionon theremuneration reportWe have audited the remuneration report included inpages16 to 31 of theDirectors’ Report forthe year ended 30June2018.In our opinion, the remuneration report of MSL Solutions Limited for the yearended 30 June 2018 complies withsection 300A of theCorporations Act 2001.ResponsibilitiesThe 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. PricewaterhouseCoopersMichael CroweBrisbanePartner31August 2018 Intentionally left blank
99
MPower MSL Annual Report 2018 SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 22 August 2018.
DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
RANGE
1-1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
TOTAL HOLDERS
11
28
44
407
218
708
ORDINARY
SHARES
745
98,397
375,626
18,770,876
230,003,521
249,248,965
%
0.00
0.04
0.15
7.53
92.28
100.00
There were 19 holders of less than a marketable parcel of ordinary shares, totaling 17,129 shares.
EQUITY SECURITY HOLDERS
The names of the twenty largest holders of quoted equity securities are listed below:
NAME
J P MORGAN NOMINEES AUSTRALIA LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HOLZGREFE HOLDINGS PTY LTD
CRAIG GLEN KINROSS
LOVAT PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
RUPERT DALY
JAMBET DOWNS PTY LTD
WALLIS-MANCE PTY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
INVIA CUSTODIAN PTY LIMITED
ONE MANAGED INVESTMENT FUNDS LIMITED
GLG HOLDINGS PTY LTD
NATIONAL NOMINEES LIMITED
BROOKFIELD SUPERANNUATION PTY LTD
BOND STREET CUSTODIANS LIMITED
GOANNA SUPER PTY LTD
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
VP INVESTMENTS PTY LTD
ORDINARY
SHARES
24,548,484
14,101,891
12,739,941
10,913,566
10,498,271
8,754,131
7,925,000
7,278,982
6,206,044
6,153,554
5,821,696
5,093,750
5,000,000
3,600,000
3,428,571
2,946,776
2,821,429
2,051,282
1,857,143
1,857,143
143,597,654
%
9.85
5.66
5.11
4.38
4.21
3.51
3.18
2.92
2.49
2.47
2.34
2.04
2.01
1.44
1.38
1.18
1.13
0.82
0.75
0.75
57.61
100
MPower MSL Annual Report 2018 RESTRICTED EQUITY SECURITIES
39,561,965 ordinary fully paid shares, are subject to voluntary escrow and will be released upon finalisation of the
Company’s financial results for the year ended 30 June 2018.
UNQUOTED EQUITY SECURITIES
11 holders with total accumulated holdings of 4,978,572 options over ordinary fully paid shares.
SUBSTANTIAL HOLDERS
Substantial holders in the Company are set out below:
NAME
FORAGER FUNS MANAGEMENT PTY LTD
ELLERSTON CAPITAL LIMITED
DR RICHARD HOLZGREFE
1
2
3
ORDINARY
SHARES
24,726,794
18,173,343
12,871,917
%
9.92%
7.29%
5.16%
VOTING RIGHTS
The voting rights attaching to each class of equity securities are as follows:
Ordinary shares: on a show of hands every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
Options: No voting rights
OTHER INFORMATION
There is currently no on-market buy-back of the Company’s securities.
The Company has used its cash (and assets in a form readily convertible to cash) that it had at the time of listing
in a way consistent with its stated business objectives.
101
MPower MSL Annual Report 2018 CORPORATE DIRECTORY
COMPANY’S REGISTERED ADDRESS
MSL SOLUTIONS LTD
ACN 120 815 778
Level 1, 307 Queen Street
Brisbane, QLD 4000
MSL INFORMATION LINE
1800 679 701 (Within Australia)
+61 7 3512 3510 (Outside Australia)
http://www.mpowermsl.com
DIRECTORS
Kenneth John Down
Craig Kinross
Ian Daly
Kaylene Gaffney
Dr Richard Holzgrefe
David Trude
COMPANY SECRETARY
Andrew Ritter
LEGAL ADVISOR
McCullough Robertson
ABN 42 721 345 951
Level 11, Central Plaza Two
66 Eagle Street
Brisbane, QLD 4000
AUDITOR
Pricewaterhouse Coopers
ABN 52 780 433 575
480 Queen Street
Brisbane, QLD 4000
GPO Box 150 Brisbane, Australia
T: +61 7 3257 5000
F: +61 7 3257 5999
SHARE REGISTRY
Computershare
GPO Box 2975, Melbourne Vic 3001
T: 1300 552 270
F: +61 3 9473 2500
https://www-au.computershare.com/Investor
102
MPower MSL Annual Report 2018 103
MPower MSL Annual Report 2018 MSL Solutions Limited ACN 120 815 778
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MPOWERMSL.COM
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