2018 A NNUAL REP ORT
Corporate Information
SenSen Networks Limited
Registered Office and Principal Place of Business
ACN 121257412
Directors
Mr Subhash Challa
Executive Chairman
(Appointed 13 October 2017)
Mr Zenon Pasieczny
Non-Executive Director
(Appointed 13 October 2017)
Mr David Smith
Executive Director
Mr Jason Ko
Non-Executive Director
(Appointed 13 October 2017)
Mr Wayne Mitchell
Executive Chairman
(Resigned 13 October 2017)
Mr Wesley Harder
Executive Director
(Resigned 13 October 2017)
Mr Mike Rhodes
Non-Executive Director
(Resigned 13 October 2017)
Ms Heather Scheibenstock
(appointed 7 September 2018)
Company Secretary
Mr David Smith
Chief Financial Officer
Mr Tony Lynch
Unit 4, 71 Victoria Crescent,
Abbotsford, Melbourne, VIC 3067
Telephone:
+61 3 9417 5368
Share Register
Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
Sydney NSW 2000
1300 850 505
Australia:
Overseas callers: +61 3 9415 4000
+61 3 9473 2500
Facsimile:
www.computershare.com.au
Internet:
Stock Exchange Listing
SenSen Networks Limited shares are listed on the
Australian Securities Exchange (ASX Code: SNS).
Solicitors
HWL Ebsworth
Level 19
480 Queen Street
Brisbane Qld 4000
Auditors
BDO Audit Pty Ltd
Level 10/12 Creek St,
Brisbane City
QLD 4000
Bankers
Commonwealth Bank of Australia
727 Collins Street
Melbourne VIC 3000
Website
www.sensennetworks.com
Contents
Chairman’s Letter
Review of Operations and Activities
Corporate Governance Statement
Directors’ Report
Remuneration Report (Audited)
Auditors Independence Declaration
Independent Auditor’s Reports
Directors’ Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
ASX Additional Information
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SenSen’s patented video analytics software
enhances business processes in city operations,
yielding tangible RoI for customers and strong
recurrent revenues for investors.
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Chairman’s letter
Dear Fellow Shareholders
The Company has embraced many development
It gives me great pleasure to present the 2018 Annual Report
for SenSen Networks Limited (ASX: SNS) (formerly Orpheus
Energy Limited), less than a year after we recommenced
trading on the Australian Securities Exchange. SenSen
Networks Limited successfully raised $6.5 million through
our Initial Public Offer and completed the reverse takeover
of SenSen Networks Group Pty Ltd prior to listing on the ASX
in October 2017.
SenSen Networks Limited (“the Company”) uses world-
leading Artificial Intelligence technology to make cities
smarter and businesses more efficient. We have deployed
our AI enhanced process automation solutions in a range of
valuable use cases, including Intelligent Transport Systems
(ITS), where it can be used to enhance parking, traffic
engineering, security and safety operations. We have also
developed technology for use in Retail & Leisure that is
gaining momentum, as seen through our collaboration with
Crown Casino in Melbourne.
Growing demand for our services was demonstrated in
our strong results for the 2018 financial year, in which we
achieved record revenue, growing by close to 100% year-
on-year to more than $4 million.
The Company grew in FY18 through a combination of both
new client contracts and existing recurring revenue from
customers in Australia and overseas, with the biggest relative
contribution occurring in the June quarter. Major contract
wins over the financial year included City of Calgary, Canada
($1.2 million), Crown Casino, Melbourne ($1.0 million),
City of Edmonton, Canada ($552k), Brisbane City Council
($348k), Changi Airport, Singapore ($226k), and NSW Roads
& Maritime Services ($252k).
opportunities over the past year. We established a presence
in the USA through a Teaming Agreement signed with
Silicon Harlem LLC, partnering on a proposed Smart
Corridor development at 116th Street in New York City.
This will use the Company’s SenSIGN solution to provide a
digital asset register of the corridor, delivering the Borough
of Manhattan an up-to-date database of all street, traffic
and parking signs as well as other city assets. In addition,
US artificial intelligence chip maker NVIDIA selected the
Company as a foundation company for its global Metropolis
Software Partner Program.
In terms of Retail & Leisure, we are working to make
casinos’ table game operations smarter and address several
long-standing issues in operation and management. Our
key gaming product, SenGAME 3.0 which we launched
in December 2017, revolutionises table game operations
in casinos, allowing managers to accurately monitor and
match demand and supply of various table games offered
by them and optimise yield per table, per game played
and per player in real time. We have developed a strategic
partnership with Crown Casino to bring this product to
market, progressively rolling it out on all card games in
Crown’s Melbourne casino. Through this, we are delivering
unprecedented levels of accuracy in bet detection and
recognition without casinos having to change layouts, chips,
tables, or retraining dealers. We are continuing to market
SenGAME 3.0 to accelerate its adoption by casinos globally
and gained a positive response at the G2E event in Macau in
May 2018, with prospective customers in Australia, Macau,
UK and the Philippines choosing to evaluate our software on
their live gaming floor.
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The new Changi Airport
contract follows the multi-year
parking and traffic contract
with Changi announced in
October 2017, supporting
Singapore’s world-leading drive
to become a ‘smart city’.
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Chairman’s letter
We continued to expand our reach into local governments,
In May 2018, we completed an oversubscribed $5 million
as they tend to be long-term customers, and each new
share placement to domestic and offshore institutions and
client helps our recurrent revenue to grow. Our existing
existing sophisticated investor shareholders. These funds
contracts with Brisbane City Council, the City of Calgary and
will assist in business development and marketing activities
the City of Edmonton expanded during the year and we also
domestically and overseas, as well as project development,
worked with Australian and international local governments
and allow the Company to fulfil higher-revenue ITS and
including the City of Copenhagen, Maribyrnong City
Casino contracts more quickly. I thank our new and existing
Council, Logan City Council, the City of Subiaco, the Town
shareholders for your support in this, as we continue to
of Victoria Park, Trondheim Municipality in Norway and
work to achieve our goals and create shareholder value.
Frederiksberg Kommune in Denmark. We are targeting more
than 200 smart cities in a highly prospective pipeline of
As we reflect on this year of positive growth for the
potential customers.
Company, I would like to thank my fellow Board members
We also worked hard to grow our brand and profile within
as our management and staff at all levels who have worked
the industry, giving a keynote address at the Cities 4.0
so hard to deliver on our growing list of contracts.
for their leadership and collaboration through 2018 as well
Summit, Australia’s most innovative smart cities event, in
Melbourne in March 2018. We received industry recognition,
I anticipate this momentum will continue to build in the
winning a 2018 Smart 50 Award for our Intelligent Video
2019 financial year and I look forward to sharing our success
Analytics in Singapore and at Changi Airport.
with you.
The Smart 50 Awards recognise the most
innovative and influential smart projects
globally each year, and it was a great
Subhash Challa
honour to receive this accolade.
Executive Chairman and CEO
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We are leading the industry with video and sensor
analytics, as well as data-fusion of GPS and video
imaging sensors to deliver end-to-end automation
for civic compliance, parking management, and
speed / toll enforcement.
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Review of Operations and Activities
Acquisition of SenSen Networks Group Pty Ltd
(“SenSen P/L”)
On 12 April 2017, SenSen Networks Limited (formerly
Orpheus Energy Limited) (“the Company”) entered into a
Share Purchase Agreement with all of the shareholders
of SenSen Networks Group Pty Ltd (“SenSen P/L”). The
Company acquired 100% of SenSen P/L by the purchase of
all the shares in SenSen P/L from the shareholders of SenSen
P/L, in exchange for the issue of shares in the Company. On
1 September 2017, a Prospectus was issued for the offer of
15,000,000 New Shares to eligible Company shareholders
under a Share Purchase Plan, up to 50,000,000 New Shares
to eligible investors under a General Offer, and 273,764,706
Consideration Shares to the Vendors in consideration for the
acquisition of all of the shares in SenSen P/L. Subsequently, a
supplementary prospectus was issued on 14 September 2017
with an update on 25 September 2017.
The acquisition of SenSen P/L was completed on 18 October
2017 and included a capital raising of $6.5 million.
Placement of Shares
In May 2018, the Company completed a share placement of
34.48 million shares to raise A$5 million. The Placement was
conducted at an issue price of A$0.145, representing a 9.4%
discount to the Company’s last closing price of A$0.16, and a
13.3% discount to the 5-day volume weighted average price
(“VWAP”) of A$0.1673.
The Placement was oversubscribed and supported by
domestic and offshore institutions and existing sophisticated
investor shareholders. BW Equities acted as Lead Manager to
the Placement.
The Company is deploying funds from the Placement to
assist in business development and marketing activities
domestically and overseas, toward up-front and ongoing
project development costs, and to facilitate faster deployment
of higher-revenue ITS and Casino contracts.
SenSen Networks Limited (formerly Orpheus Energy Limited)
(“the Company”) and the Board are committed to achieving
and demonstrating the highest standards of corporate
governance. The Company has reviewed its corporate
governance practices against the Corporate Governance
(CGPR)
Principles and Recommendations
published by the ASX Corporate Governance Council.
(3rd edition)
SenSen Networks Highlights
Proven, patented,
world-leading
technology operating
in exciting sectors:
IoT
Video Analytics
Artificial Intelligence
A differentiated
product and service,
offering high-
accuracy solutions
that deliver
significant and
demonstrable return
on investment
Generating healthy
recurrent revenues
with an attractive
pipeline of blue
chip customers and
strong momentum
heading into 2018
Expanding global
footprint with a
proven and focused
growth strategy
Highly experienced
management team
with significant
expertise across
innovation,
commercialisation
and capital markets
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Our key gaming product,
SenGAME 3.0 which we
launched in December 2017,
revolutionises table game
operations in casinos.
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Corporate Governance Statement
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approving and monitoring the progress of major capital
expenditure, capital management and significant
acquisitions and divestitures;
approving and monitoring the budget and the adequacy
and integrity of financial and other reporting;
approving the annual, half-yearly and quarterly accounts;
approving significant changes to the organisational
structure;
approving the issue of any shares, options, equity
instruments or other securities in the Company;
ensuring a high standard of corporate governance
practice and regulatory compliance and promoting
ethical and responsible decision-making;
• monitoring progress in relation to the Company’s
diversity objectives and compliance with its diversity
policy;
•
recommending to shareholders the appointment of the
external auditor as and when their appointment or re-
appointment is required to be approved by them; and
• meeting with the external auditor, at their request,
without management being present.
The Board has delegated to the Executive Chairman/Chief
Executive Officer, and through that officer to other Senior
Management, the authority and responsibility for managing
the everyday affairs of the Company.
Recommendation 1.2
A listed entity should:
(a) undertake appropriate checks before appointing
a person, or putting forward to security holders a
candidate for election, as a director; and
(b) provide security holders with all material information
in its possession relevant to a decision on whether
or not to elect or re-elect a director.
The 2018 corporate governance statement is dated as at 30
June 2018 and reflects the corporate governance practices in
place throughout the financial year ending 30 June 2018. The
corporate governance statement was approved by the Board
on 18 September 2018. A description of the group’s current
corporate governance practices is set out in the group’s
Corporate Governance statement which can be viewed at
(www.sensenentworks.com).
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT
AND OVERSIGHT
A listed entity should establish and disclose the respective
roles and responsibilities of the Board and management and
how their performance is monitored and evaluated.
Recommendation 1.1
A listed entity should disclose
(a)
the respective roles and responsibilities of its Board
and management; and
(b) those matters expressly reserved to the Board and
those delegated to management.
Disclosure
The relationship between the Board and senior management
is critical to the Group’s longterm success. The Directors
are responsible to the shareholders for the performance of
the Group in both the short and the longer term and seek
to balance sometimes competing objectives in the best
interests of the Group as a whole. Their focus is to enhance
the interests of shareholders and other key stakeholders and
to ensure the Group is properly managed.
The Company has a Board Charter approved by Directors
which sets out the specific responsibilities of the Board which
are:
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appointment of the Chief Executive Officer/Managing
Director and other senior executives and
the
determination of their terms and conditions including
remuneration and termination;
driving the strategic direction of the Company, ensuring
appropriate resources are available to meet objectives
and monitoring management’s performance;
reviewing and ratifying systems of risk management and
internal compliance and control, codes of conduct and
legal compliance;
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Corporate Governance Statement
Disclosure
Disclosure
Appropriate checks are undertaken prior to appointing a
person as a Director and recommending that person for
election. These include checks as to the person’s character,
experience, education, criminal record and bankruptcy
history.
for
Candidates who the Board consider are suitable
appointment as Directors are appointed and stand for election
at the next AGM, in accordance with the Constitution. The
Company includes in the Notice of Meeting for the AGM all
material information known to the Company which is relevant
to a decision whether or not to elect or re-elect a Director.
This information includes biographical information, details of
other material directorships currently held by the candidate,
any adverse information revealed by the checks performed, a
statement as to whether in the Board’s opinion the candidate
will qualify as an independent director and a statement by the
Board as to whether it supports the election or re-election of
the candidate.
It is noted that each of Subhash Challa, Zenon Pasieczny
and Jason Ko were appointed as new Directors of the
Company on completion of the acquisition of SenSen on
13 October2017. . The appointments were approved by the
Company’s shareholders on 29 August 2017. As part of this
approval process, all such material information was provided
to Shareholders.
Heather Scheibenstock was appointed as a new director on
7 September 2018.
Recommendation 1.3
A listed entity should have a written agreement with each
director and senior executive setting out the terms of their
appointment.
Disclosure
The Company has written agreements with each of the
Directors and senior executives setting out the terms of their
appointment.
As part of their appointment process, the Company has
entered into a written agreement with each of Subhash Challa,
Zenon Pasieczny, Jason Ko and Heather Scheibenstock
setting out the terms of their appointment.
Recommendation 1.4
The Company Secretary of a listed Company should be
accountable directly to the Board, through the chair, on all
matters to do with the proper functioning of the Board.
The Company Secretary is accountable directly to the Board
through the chair, on all matters to do with the proper
functioning of the Board.
The Company Secretary is responsible for facilitating good
information flows within the Board and its committees and
between senior executives and Directors, as well as the
induction of new Directors and the ongoing professional
development of all Directors.
The Company Secretary
is responsible for monitoring
compliance with the Board’s procedures and for advising
the Board, through the chairman, on all governance matters.
All Directors have access to the advice and services of the
Company Secretary, whose appointment and removal is a
matter for the Board.
It is noted that following completion of the acquisition of
SenSen P/L, David Smith remains the Company Secretary.
Recommendation 1.5
A listed entity should:
(a) have a diversity policy which includes requirements
for the Board or a relevant committee of the Board
to set measurable objectives for achieving gender
diversity and to assess annually both the objectives
and the entity’s progress in achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period the
measurable objectives for achieving gender diversity
set by the Board or a relevant committee of the
Board in accordance with the entity’s diversity policy
and its progress towards achieving them, and either:
(1)
the respective proportions of men and women
on the Board, in senior executive positions and
across the whole organisation (including how
the entity has defined “senior executive” for
these purposes); or
(2)
if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
Disclosure and Departure
While the Company values diversity and recognises the
benefits, it can bring to the organisation’s ability to achieve its
goals, no decision has been made by the Board at this time to
formulate a diversity policy.
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Corporate Governance Statement
The Board has not yet established objectives in relation to
gender diversity but is committed to a continuation of current
employment practices where employees are selected on
merit. The aim is to achieve greater gender diversity in director
and senior executive positions as they become vacant and
appropriately skilled candidates become available.
Recommendation 1.6
A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the Board,
its
committees and individual Directors; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was undertaken
in the reporting period in accordance with that
process
Disclosure and Departure
The Board currently has no formal procedure for evaluation
of its Board, committee and Directors. The Board considers
that it is functioning effectively given its composition and a
formal procedure is not required at this stage. While no formal
performance evaluation was undertaken during the reporting
period, the Chairman continually monitors the performance
of the Board.
Selection and re-appointment of Directors candidates for the
Board are considered and selected by reference to a number
of factors, which include, but are not limited to, their relevant
experience and achievements, compatibility with other Board
members, credibility within the Company’s scope of activities,
and intellectual and physical ability to undertake board duties
and responsibilities. Directors are initially appointed by the full
Board subject to election by shareholders at the following
general meeting.
The Board recognises that Board renewal is critical to
performance and the impact of Board tenure on succession
planning. Each Director, other than the Executive Chairman,
must not hold office (without re-election) past the third annual
general meeting of the Company following the Director’s
appointment, or three years following that Director’s last
election or appointment (whichever is the longer). However,
a Director appointed to fill a casual vacancy or as an addition
to the Board must not hold office (without re-election) past
the next annual general meeting of the Company.
At each annual general meeting a minimum of one Director,
or a third of the total number of Directors, must resign. A
Director who retires at an annual general meeting is eligible
for re-election at that meeting.
Recommendation 1.7
A listed entity should:
(a) have and disclose a process for periodically evaluating the
performance of its senior executives; and
(b) disclose, in relation to each reporting period, whether
a performance evaluation was undertaken in the reporting
period in accordance with that process.
Disclosure and Departure
The Company does not have a formal process for periodically
evaluating the performance of its Senior Executives. However, the
Chief Executive monitors the performance of senior executives.
PRINCIPLE 2: STRUCTURE OF THE BOARD TO ADD VALUE
Recommendation 2.1
The Board of a listed entity should:
(a) have a nomination committee which:
(1) has at least three members, a majority of whom
are independent Directors; and
(2)
is chaired by an independent director and
disclose
(3)
the charter of the committee;
(4)
the members of the committee; and
(5) as at the end of each reporting period, the
number of times the committee met throughout
the period and the individual attendances of
the members at those meetings; or
(b)
If it does not have a nomination committee,
disclose that fact and the processes it employs to
address Board succession issues and to ensure
that the Board has the appropriate balance of skills,
knowledge, experience, independence and diversity
to enable it to discharge its duties and responsibilities
effectively.
Disclosure and Departure
The Company does not have a Nomination Committee as the
Directors believe that the size of the Company and the Board
does not warrant the formation of such committee. All Board
nomination matters are considered by the whole Board.
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Corporate Governance Statement
The Board oversees the appointment and induction process
for Directors and committee members, and the selection,
appointment and succession planning process of the
Company’s executive management team. The appropriate
skill mix, personal qualities, expertise and diversity are factors
taken into account in each case. When a vacancy exists or
there is a need for particular skills, the Board determines the
selection criteria based on the required skills.
Recommendation 2.2
A listed entity should have and disclose a Board skills matrix
setting out the mix of skills and diversity that the Board
currently has or is looking to achieve in its membership.
Disclosure and Departure
The Company currently does not have a Board “skills matrix”.
Given the size and scope of the Company’s operations, and
its exploration and development stage, the Board considers
that it is appropriately structured, with a suitable mix of skills
and expertise, relevant to the Company’s current business.
However, the Board is cognisant that, as the Company
expands and develops its activities, the Board will be required
to review and restructure its composition to meet the specific
expertise and skill requirements to progress the Company to
meet its objectives moving forward.
A profile of each Director containing their skills, experience,
expertise and term of office is set out in the Directors’ Report
of this Annual Report.
Recommendation 2.3
A listed entity should disclose:
(a)
(b)
the names of the Directors considered by the Board
to be independent Directors;
if a director has an interest, position, association or
relationship of the type described in Box 2.3 but the
Board is of the opinion that it does not compromise
the independence of the director, the nature of
the interest, position, association or relationship in
question and an explanation of why the Board is of
that opinion; and
Disclosure and Departure
As at 30 June 2018 the Board comprised two executive
Directors including the Chairman and two non-executive
directors, none of whom are independent as disclosed
below.
Director
Reason for Non-IndependentClassification
Subhash Challa
Engaged as Chief Executive Officer
of the Company from 13/10/2017-present
David Smith
A substantial shareholder and a director
of the Company from 18/8/2011-present
Zenon Pasieczny A substantial shareholder and a director
of the Company from 13/10/2017-present
Jason Ko
A representative of a shareholder
and a director of the Company from
13/10/2017-present
Even though the members of the Board are not independent,
the persons on the Board can and do make independent
judgements in the best interests of the Company at all times.
An independent director, Ms Heather Scheibenstock, was
appointed to the Board on 7 September 2018.
Statement concerning availability of independent
professional advice
To assist Directors with independent judgement, it is the
Board’s policy that if a Director considers it necessary to
obtain independent professional advice to properly discharge
the responsibility of their office as a Director then, provided
the Director first obtains approval from the Chairman for
incurring such an expense, the Company will pay the
reasonable expenses associated with obtaining such advice.
The length of service of each Director is as follows:
Dates
Board Members
18/8/2011-current
David Smith
13/10/2017-current
Subash Challa
13/10/2017-current
Jason Ko
Independent/
Non-Independent
Non-Independent
Non-Independent
Non-Independent
(c)
the length of service of each director.
13/10/2017-current Zenon Pasieczny
Non-Independent
07/09/2018-current Heather Scheibenstock
Independent
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Corporate Governance Statement
The Board supports the appointment of Directors who bring a
wide range of business and professional skills and experience
to the Company. Directors are appointed in accordance with
the constitution of the Company and are appointed for a
period of three years or until the third annual general meeting
following their appointment (whichever is longer).
Recommendation 2.4
A majority of the Board of a listed entity should be independent
Directors.
Disclosure and Departure
As at 30 June 2018, no members of the Board were
Independent Directors. However, an independent director,
Ms Heather Scheibenstock, was appointed to the Board on
7 September 2018.
Recommendation 2.5
The chair of the Board of a listed entity should be an
independent director and, in particular, should not be the
same person as the CEO of the entity.
Disclosure and Departure
The previous Executive Chairman of the Company, Mr
Wayne Mitchell, was not an Independent Director and was
the CEO until 13 October 2017. He contributed to a culture
of openness and constructive challenge that allowed for a
diversity of views to be considered by the Board.
Following completion of the acquisition of SenSen P/L on
18 October,2017, the new Executive Chairman and CEO of
the Company, Subhash Challa, is also not an Independent
Director.
Recommendation 2.6
A listed entity should have a program for inducting new
Directors and provide appropriate professional development
opportunities for Directors to develop and maintain the skills
and knowledge needed to perform their role as Directors
effectively.
Disclosure and Departure
An induction program for new Directors of the Company
is being considered but does not currently exist. Each
Director of the Company has the right to seek independent
professional advice at the expense of the Company, and the
Company provides appropriate professional development
opportunities for Directors to develop and maintain the skills
and knowledge needed to perform their role as Directors
effectively. Prior approval of the Chairman is required, and this
will not be unreasonably withheld.
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PRINCIPLE 3 - ACT ETHICALLY AND RESPONSIBLY
A listed entity should act ethically and responsibly.
Recommendation 3.1
A listed entity should:
(a) have a code of conduct for its Directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
Disclosure and Departure
The consolidated entity recognises the need for Directors and
employees to observe the highest standards of behaviour and
business ethics. All Directors and employees are required to
act in accordance with the law and with the highest standard
of propriety.
The Company does not yet have a formal Code of Conduct
setting out its core values. However, the Company requires
that each director and officer of the Company must comply
with all laws and regulations. This includes understanding the
laws and regulations relevant to their work and complying
with the legal requirements of the jurisdiction in which the
Company operates.
Contractors and others employed by the Company should
not engage in activities or hold or trade assets that involve,
or could appear to involve, a conflict between their personal
interests and the interests of the Company.
The practices of the Board are aimed at promoting ethical
and responsible decision making. The Board strives for
good corporate governance and industry best practice. It
specifically requires Directors and employees to:
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avoid situations which may give rise to a conflict of
interest;
avoid situations where they may gain any benefit
which competes with the Company’s business;
read and confirm
Company’s policies;
that
they understand
the
comply with laws and regulations;
properly use the Company’s assets for legitimate
business purposes; and
- maintain confidentiality in both the Company’s
business and the information of its clients and
shareholders.
Corporate Governance Statement
Each director is required to disclose any interest which might
create a potential conflict of interest with his or her duties as
a director or which might affect their independence.
There must be no conflict, or perception of a conflict, between
the interests of any Company director, officer or employee
and the responsibility of that person to the stakeholders. All
Directors, officers and employees may never improperly use
their position for personal or private gain to themselves, a
family member, or other associated person. Where a potential
conflict exists, this should be disclosed to the Chairman prior
to any dealings taking place.
PRINCIPLE 4 - SAFEGUARD INTEGRITY IN CORPORATE
REPORTING
A listed entity should have formal and rigorous processes
that independently verify and safeguard the integrity of its
corporate reporting.
Recommendation 4.1
The Board of a listed entity should:
(a) have an audit committee, which:
(1) has at least three members, all of whom are
non-executive Directors and a majority of
whom are independent Directors: and
(2)
(3)
(4)
(5)
is chaired by an independent director, who is
not the chair of the Board and disclose:
the charter of the committee;
the relevant qualifications and experience of
the members of the committee; and
in relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or
(b)
if it does not have an audit committee, disclose
that fact and the processes
it employs that
independently verify and safeguard the integrity of
its corporate reporting, including the processing for
the appointment and removal of the external auditor
and the rotation of the audit engagement partner.
Disclosure and Departure
The Company is not fully compliant with this principle. The
audit and risk committee has a non-independent chairman
Jason Ko, two executive Directors, Subhash Challa and David
Smith, and a non-executive director, Zenon Pasieczny. The
Details of these Directors’ qualifications and attendance at
audit committee meetings are set out in the Directors’ Report
of the Annual Report under the heading “Directors’ Meetings”.
Members of the Committee have relevant qualifications and
experience in financial matters and have a good understanding
of the industry in which the Company operates.
The Audit & Risk Committee plays a key role in assisting the
Board with its responsibilities relating to accounting, internal
control systems, reporting practices and risk management,
and ensuring the independence of the Company auditor.
The terms of reference for the committee incorporate
policies and procedures to ensure an effective focus from an
independent perspective.
The Audit & Risk Committee oversees and appraises
the quality of the audits conducted by the auditors and
emphasises areas where the Committee believes special
attention is required. The external auditor is BDO. BDO’s
appointment will be reviewed periodically in line with industry
best practice. The Board believes in the ongoing assessment
of our audit arrangements and will comply with any regulatory
requirements to rotate the Company’s external audit partner.
The Audit & Risk Committee also reviews the effectiveness of
administrative, operating and accounting controls.
Recommendation 4.2
The Board of a listed entity should, before it approves the entity’s
financial statements for the financial period, receive from its
CEO and CFO a declaration that, in their opinion, the financial
records of the entity have been properly maintained and that the
financial statements comply with the appropriate accounting
standards and give a true and fair view of the financial position
and performance of the entity and that the opinion has been
formed on the basis of a sound system of risk management and
internal control which is operating effectively.
Disclosure
Before it approves the Company’s financial statements for a
financial period, the Board receives from its Managing Director
and CFO a declaration that, in their opinion, the financial
records of the Company have been properly maintained
and that the financial statements comply with appropriate
accounting standards. The declaration also states that the
financial records give a true and fair view of the financial
position and performance of the entity, and that their opinion
has been formed on the basis of a sound system of risk
management and internal control that is operating effectively.
12
13
Corporate Governance Statement
Recommendation 4.3
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
A listed entity that has an AGM should ensure that its external
auditor attends its AGM and is available to answer questions
from security holders relevant to the audit.
A listed entity should respect the rights of its security holders
by providing them with appropriate information and facilities
to allow them to exercise those rights effectively.
Disclosure
Recommendation 6.1
The Company makes sure that its external auditor, BDO, is
invited to and attends its Annual General Meeting (AGM) each
year and is available to answer questions that are relevant to
the audit. At the Company’s last AGM held on 30 November
2017, a Partner from Hall Chadwick Chartered Accountants
(the company’s previous auditor) attended and was available
to answer questions.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
A listed entity should make timely and balanced disclosure
of all matters concerning it that a reasonable person would
expect to have a material effect on the price or value of its
securities.
Recommendation 5.1
A listed entity should:
(a) have a written policy for complying with its
continuous disclosure obligations under the Listing
Rules; and
A listed entity should provide information about itself and its
governance to investors via its website.
Disclosure
The Company provides information about itself and its
governance to investors via its website www.sensennetworks.
com. The names and brief biographical information for each
of the Company’s Directors and senior executives can be
found under the ”Learn More” section of the website.
The Company has included in the “Investor Centre” section of
its website links to copies of its ASX announcements, Financial
Reports, Research Reports, Analyst Briefings and Shareholder
Information.
Procedures have also been established
for reviewing
whether any material price-sensitive information has been
inadvertently disclosed, and if so, this information is also
immediately released to the market.
The Company’s contact details can also be found on the
website.
(b) disclose that policy or a summary of it.
Recommendation 6.2
Disclosure
The Company has established written policies designed
to ensure compliance with ASX Listing Rule disclosure and
accountability at a senior executive level.
The Board is committed to complying with continuous
disclosure requirements and
issues announcements to
the ASX on matters that may have a material effect on the
Company’s securities.
The Company’s continuous disclosure policy is designed to
meet market best practice, ensuring that all interested parties
have an equal opportunity to obtain information which is
issued by the Company.
SenSen Networks’ ASX announcements are also posted
on the Company’s website and emailed to shareholders
who have subscribed to the Company’s email alerts.
A listed entity should design and implement an investor
relations
two-way
program
communication with investors.
effective
facilitate
to
Disclosure
The Company has an investor relations program and actively
engages with security holders, meets with them upon request
and responds to any enquiries. Communication channels
for investors include two-way interaction via the SenSen
Networks websites, a diarised investor roadshow program
at least twice a year and an outsourced investor relations
function through a professional agency. The Company also
has ad hoc interaction with brokers, institutional investors,
analysts and financial media when required.
Recommendation 6.3
A listed entity should disclose the policies and processes it has
in place to facilitate and encourage participation at meetings
of security holders.
14
Corporate Governance Statement
Disclosure and Departure
Disclosure and Departure
The Company has no formal process in place to facilitate
and encourage participation at meeting of security holders.
Shareholders are, however, encouraged to participate at
general meetings.
Recommendation 6.4
A listed entity should give security holders the option to
receive communications from, and send communications to,
the entity and its security registry electronically.
Disclosure
Security holders can email or otherwise contact the
Company by visiting the “Contact” section of the website.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
A listed entity should establish a sound risk management
framework and periodically review the effectiveness of that
framework.
Recommendation 7.1
The Board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
The Company has a combined audit and risk committee,
the membership of which is not fully compliant with
this principle. The audit and risk committee has a non-
independent chairman, and two executive directors. Heather
Scheibenstock joined the Board as an independent director
on 7 September 2018 and will be a member of the audit and
risk committee.
The members of the committee have the necessary technical
knowledge and understanding of the industry in which the
entity operates to be able to discharge the committee’s
mandate effectively.
The details of these directors’ qualifications and attendance at
audit committee meetings are set out in the Directors’ Report
of the Annual Report under the heading “Directors’ Meetings”.
The Board has disclosed the Charter of the Committee, which
may be found on the Company’s website in the section titled
“ Investor Centre/Corporate Governance’”. A summary of the
Company’s Risk Management objectives can also be found
in this section. The members of the Committee are Messrs
Ko, Challa, Smith and Pasieczny. The Committee held two
meetings during the Reporting Year.
The table set out in the Directors’ Report of this Annual Report
under the heading “Directors’ Meetings” shows the members’
attendance at Committee meetings.
(1) has at least three members, a majority of
whom are independent directors; and
Recommendation 7.2
(2)
is chaired by an independent director, and
disclose:
(3)
the charter of the committee;
(4)
the members of the committee; and
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of
those
meetings; or
the members at
(b)
if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk
management framework.
The Board or a committee of the Board should:
(a)
review the entity’s risk management framework at
least annually to satisfy itself that it continues to be
sound; and
(b) disclose, in relation to each reporting period,
whether such a review has taken place.
Disclosure
The Board, and the Audit and Risk Management Committee,
reviews the Company’s risk management framework at least
annually to satisfy itself that it continues to be sound, and
such a review was carried in the past financial year.
The Board has required management to implement and
maintain risk management and internal control systems to
manage the Company’s material business risks. The Board
also requires management to report to it confirming that
those risks are being managed effectively.
14
15
Corporate Governance Statement
Recommendation 7.3
Recommendation 8.1
A listed entity should disclose:
The Board of a listed entity should:
(a)
(b)
if it has an internal audit function, how the function
is structured and what role it performs; or
if it does not have an internal audit function, that
fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk
management and internal control processes.
Disclosure and Departure
The Company does not have an internal audit function.
The processes the Company employs for evaluating and
continually improving the effectiveness of its risk management
and internal control processes include the fact that individual
Directors’ claims for expenses are approved by the Board.
It is proposed that a member of the Audit and Risk
Management Committee periodically review the Company’s
controls and spot-checks that the necessary procedures have
been followed.
Recommendation 7.4
A listed entity should disclose whether it has any material
exposure to economic, environmental and social sustainability
risks and, if it does, how it manages or intends to manage
those risks.
Disclosure
The Company discloses its material exposure to economic,
environmental and social sustainability risks, and how it
manages those risks in ASX announcements and in its Annual
Report.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
A listed entity should pay director remuneration sufficient
to attract and retain high quality directors and design its
executive remuneration to attract retain and motivate high
quality senior executives and to align their interests with the
creation of value for security holders.
(a) have a remuneration committee which:
(1) has at least three members, a majority of
whom are independent Directors; and
(2)
is chaired by an independent Director, and
disclose:
(3)
the charter of the committee;
(4)
the members of the committee; and
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
those
attendances of
meetings; or
the members at
(b)
if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for Directors and senior executives and ensuring
that such remuneration is appropriate and not
excessive.
Disclosure and Departure
The Company has not established a separate Remuneration
Committee with
the Board considering Remuneration
matters. Given the current size and composition of the
Company, the Board is unable to meet the requirement that a
separate Remuneration Committee is established consisting
of a majority of Independent Directors and chaired by an
independent Chair.
The Board believes that there would be no efficiencies
gained by establishing a separate Remuneration Committee
and accordingly, the remuneration functions have been
delegated to the Board. The Board deals with any conflicts
of interest that may occur when acting in the capacity of the
Remuneration Committee by ensuring that the Director with
conflicting interests is not party to the relevant discussions.
The processes the Company employs for setting the level
and composition of remuneration for Directors and senior
executives and ensuring that such remuneration is appropriate
and not excessive, are disclosed in the Remuneration Report
in the Company’s Annual Report.
16
Corporate Governance Statement
Recommendation 8.2
Recommendation 8.3
A listed entity should separately disclose its policies and
practices regarding the remuneration of non executive
Directors and the remuneration of executive Directors and
other senior executives.
Disclosure
Non-Executive Directors are remunerated at a fixed fee
for time, commitment and responsibilities. Remuneration
for Non-Executive Directors is not linked to individual
performance. From time to time the Company may grant
options to Non-Executive Directors. The grant of options
is designed to recognise and reward efforts, as well as to
provide Non-Executive Directors with additional incentive to
continue those efforts for the benefit of the Company.
Remuneration and bonuses for Executive Directors and
Senior Executives consist of a base salary and performance
incentives. Long-term performance incentives may include
options granted at the discretion of the Board and subject
to obtaining the relevant approvals. Executives are offered
competitive base salaries at market rates, which are reviewed
to ensure market competitiveness.
A listed entity which has an equity-based remuneration
scheme should:
(a) have a policy on whether participants are permitted
to enter into transactions (whether through the
use of derivatives or otherwise) which limit the
economic risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
Disclosure
As at 30 June 2018, the Company had an equity-based
remuneration scheme (Long Term Incentive Plan) and details
of incentives on issue in the Long-Term Incentive Plan can be
found in the Remuneration Report.
On 25 October 2017, the Board approved the Company’s
Long-Term Incentive Plan Rules and details are posted on
the company’s website. Long-term incentive awards to key
management personnel and staff were approved at the
company’s AGM on 30 November 2017 and at subsequent
board meetings during the year.
Throughout the period the Company Long Term Incentive
Scheme was in effect, the Company also had a policy that
provided that participants are not permitted to enter into
transactions (whether through the use of derivatives or
otherwise) that limit the economic risk of participating in the
scheme.
16
17
Directors’ Report
The directors present their report with the consolidated financial report of SenSen Networks Limited (formerly Orpheus Energy
Limited) (“the Company”) and the entities it controlled (‘the group”) at the end of, or during, the year ended 30 June 2018.
Directors and Company Secretary
The following persons were directors of SenSen Networks Limited during the whole financial year and up to the date of this
report:
Mr Subhash Challa, Executive Director (Appointed 13 October 2017)
Mr Zenon Pasieczny, Non-Executive Director (Appointed 13 October 2017)
Mr David Smith, Executive Director and Company Secretary
Mr Jason Ko, Non-Executive Director (Appointed 13 October 2017)
Mr Wayne Mitchell, Executive Chairman (Resigned 13 October 2017)
Mr Wesley Harder, Executive Director (Resigned 13 October 2017)
Mr Mike Rhodes, Non-Executive Director (Resigned 13 October 2017)
Ms Heather Scheibenstock, Non-Executive Director (Appointed 7 September 2018)
Mr Subhash Challa
Executive Chairman, CEO and Managing Director
Qualifications:
B. Tech (Electrical and Electronics Engineering), JNTU College of Engineering, Hyderabad, India. PhD (Aerospace and Electronic
Systems, Signal Processing), Queensland University of Technology
Experience:
Mr Challa founded SenSen Networks Group Pty Ltd (“SenSen P/L”) in 2007 as a spin-off from the University of Technology
Sydney where he was Professor of Computer Systems. Mr Challa is a world-leading authority in data science specialising in the
analysis of video and sensor data with a focus on solving everyday business problems.
Born and raised in Hyderabad, India, Mr Challa was a visiting scholar at Harvard University (1997) and Tan-Chin Tau fellow at
Nanyang Technological University in Singapore (2003). Between 2007-2011, he was a Senior Principal Researcher at National
ICT Australia and Adjunct Professor at University of Melbourne. He co-authored over 150 research papers and the reference text
“Fundamentals of Object Tracking” published by Cambridge University Press in 2011.
Mr Challa left his successful career in academia to join SenSen P/L full-time as CEO in January 2012. He has led the development
of the company’s Video-IoT data analytics platform SenDISA and pioneered applications in diverse market segments. Under his
leadership, the company has grown to over 60 engineers and marketing/sales executives with customers in overseas markets
including Singapore, India, Europe, UAE and Canada.
Mr Challa has no other current or previous listed company directorships in the last three years.
Special responsibilities:
Member of the Audit and Risk Committee
Interest in shares and options:
78,539,256 ordinary shares and 6,600,000 options over ordinary shares
18
Directors’ Report
Mr David Smith
Executive Director and Company Secretary
Qualifications:
B Econ, Dip Mgmt – Exec MBA
Experience:
Mr Smith was previously an investment banker with more than 15 years’ experience, working in both the capital markets and
M&A globally, having worked at JPMorgan Chase, Ord Minnett and BBY Limited. Mr Smith was regularly ranked as one of the Top
10 Australian Investment Bankers in annual surveys and raised more than $4 billion for corporate clients.
With an extensive background in advising companies across all sectors, including technology, industrials and resources, Mr
Smith has been integrally involved in the evolution of numerous emerging companies into multi-billion-dollar enterprises.
Mr Smith is a Non-Executive Director of RAW Capital Partners Holdings Limited, a UK based, international asset management
business.
Mr Smith has no other current or previous listed company directorships in the last three years.
Special responsibilities:
Company Secretary
Interest in shares and options:
9,336,278 ordinary shares and 4,500,000 options over ordinary shares
Mr Zenon Pasieczny
Non-Executive Director
Qualifications:
MBA, Maastricht School of Management, The Netherlands
Experience:
Mr Pasieczny is an experienced venture capital investor screening 300+ deals annually and investing in only a handful. He
backed SenSen for its outstanding potential as an Australian technology company with innovative and IP-driven solutions,
helping it grow from an R&D focused start-up to a globally respected industry leader.
Mr Pasieczny is Director of venture capital firm Saphet Capital Management and Managing Director of The House Family Office
providing strategic and commercial advice to a select global client list.
Mr Pasieczny completed his MBA from Maastricht School of Management, The Netherlands with a distinction in International
Business.
Mr Pasieczny has no other current or previous listed company directorships in the last three years.
Special responsibilities:
Member of the Audit and Risk Committee
Interest in shares and options:
46,376,259 ordinary shares and nil options over ordinary shares
18
19
Directors’ Report
Mr Jason Ko
Non-Executive Director
Qualifications:
Bachelor of Computer Science (Dean’s Scholar program), Monash University
Experience:
Mr Ko is the CEO of Moduware Pty Ltd, an IoT platform and consumer device business, and a Company Director and former
CEO of Speedshield Technologies. As a CEO, Mr Ko led Speedshield from a loss-making business into a consistent $1M EBIT
performer. Mr Ko is a Dean’s scholar of Computer Science at Monash University with a keen sense and passion for IoT and
businesses with a unique data proposition.
He brings a unique blend of high technical skill and business acumen with proven experience in setting up and operating
businesses in Australia, China and the US.
Mr Ko has no current or previous listed company directorships in the last three years.
Special Responsibilities:
Member of the Audit and Risk Committee
Interest in shares and options:
Nil
Mr Wayne Mitchell
Ex-Executive Director (Resigned 13 October 2018)
Qualifications:
AASA, AAIM
Experience:
Mr Mitchell is a qualified accountant with over 30 years of extensive senior management experience in the natural resource
sector; in Australia and Southeast Asia. In the early 1970’s, Mr Mitchell and two partners were the initial promoters and developers
of Thailand’s major zinc deposit located at Mae Sot, Northern Thailand. This resource is now owned and operated by a Thai
public company, Padaeng Industry Company Ltd. Mr Mitchell specialises in the areas of financial planning, fund raising and
project evaluation.
He is also a past Chairman of listed company Central Victorian Gold Mines NL and a past director of Diversified Mineral Resources
NL where he initiated and led the project team for the Burton Downs Coal project taken over by Portman Mining before being
sold for more than $200 million. Mr Mitchell was a co-founder and chairman of Coalworks, which was acquired by Whitehaven
Coal.
Mr Mitchell has no other current or previous listed company directorships in the last three years.
Special responsibilities:
Past member of the Audit and Risk Committee
Interest in shares and options*:
5,158,356 ordinary shares and nil options over ordinary shares
20
Directors’ Report
Mr Wesley Harder
Ex-Executive Director (resigned 13 October 2017)
Qualifications:
B Sc, Dip SIA, M Aus IMM
Experience:
Mr Harder is a former coal analyst with Jackson Ltd, stockbrokers, and has also worked with a number of other stockbrokers,
including Ord Minnett and Frank Renouf. He has also worked as a field exploration geologist for 15years in Australia and its near
neighbours including Sumatra and Irian Jaya in Indonesia, mainland Papua New Guinea and New Britain Island, many parts of
the Solomon Islands and Fiji.
In Australia he worked in New South Wales, Queensland, The Northern Territory and Tasmania. He has worked in tropical and
arid environments searching for a range of mineral commodities including coal, gold, copper and uranium for companies
including Newmont Mining Inc., Placer Prospecting Ltd, Pancontinental Mining Limited and Gujarat NRE Coking Coal Ltd. Mr
Harder was a Founding Director & CEO of Zinico Resources NL and its successors for 5 years and was a founding shareholder
of Coalworks.
Mr Harder has no other current or previous listed company directorships in the last three years.
Special responsibilities:
Past member of the Audit and Risk Committee.
Interest in shares and options*:
1,954,992 ordinary shares and nil options over ordinary shares
Mr Michael Rhodes (deceased 16 June 2018)
Ex Non-Executive Director (resigned 13 October 2017)
Qualifications:
Experience:
Mr Rhodes was a highly experienced drilling engineer having worked around the world including South East Asia and the Middle
East. Mr Rhodes lived and worked in Indonesia for over 20 years and previously established a successful infrastructure and
logistics company in Balikpapan.
Mr Rhodes had no other current or previous listed company directorships in the last three years.
Special responsibilities:
Past Chairman of the Audit and Risk Committee
Interest in shares and options*:
1,426,563 ordinary shares and nil options over ordinary shares
*interest in shares and option at date of resignation
20
21
Directors’ Report
Ms Heather Scheibenstock
Non-Executive Director (appointed 7 September 2018)
Qualifications:
GAICD
Experience:
Ms Scheibenstock has over 25 years’ experience within the gaming and hospitality industries specialising in strategic planning,
business development, stakeholder engagement and offshore growth.
From 2014-2016, Ms Scheibenstock was Senior Vice-President of Table Games at Bloomberry Resorts Corporation (PN:BLOOM),
based in the Philippines at the Solaire Resort and Casino. Reporting to the President and COO, she managed a team of 2000 and
was responsible for the planning and execution of Gaming strategy to drive growth, efficiencies/productivity, and excellence
in customer service whilst ensuring the integrity of gaming and maintaining strict compliance with regulatory policies and
procedures.
Prior to that, Ms Scheibenstock held numerous roles while working as a senior executive at Echo Entertainment Group/The Star
(ASX:SGR) from 1995-2013. From 2010-2013, she was General Manager of Gaming and Member of the Executive Leadership
Team, where she developed the strategy and overall direction of the Gaming and VIP services division. As General Manager
EGM, Sales and Customer Relations at The Star Gold Coast before that, Ms Scheibenstock was responsible for strategies and
business development in Electronic Gaming, VIP International Sales, customer relations and the Star loyalty/rewards program.
Ms Scheibenstock is currently a Non-Executive Director of ASX-listed global gaming company, Ainsworth Game Technology
(ASX:AGI).
Special responsibilities:
Member of the Audit and Risk Committee.
Interest in shares and options:
Nil
22
Directors’ Report
Principal Activities
The principal activities of the group during the year were to develop and sell SenDISA platform-based products and services into
2 major market segments:
•
•
Intelligent Transportation Systems: civic compliance, traffic data and law enforcement solutions to city councils,
national parks, road authorities and transit agencies across the globe.
Retail & Leisure: delivering accurate actionable insights about casino table game occupancy, hands per hour, bet type
and value for every bet placed on the gaming floor.
Dividends – SenSen Networks Limited
No dividends have been declared in the 2018 financial year (2017: no dividend declared).
Review of Operations
Information on the operations of the groups, its business strategies and prospects is set out in the Review of Operations and
Activities on page 6 and in the Chairman’s Letter on page 2.
Operating Results
The Group’s net loss after tax was $9,220,416 (2017: Loss of $1,163,673). The loss for the year included an income tax credit of
$66,892, notional corporate restructure expense of $5,229,773 (non-cash expense), non-cash share-based payment expense of
$2,019099 and one-off transaction costs of the reverse takeover of $886,076.
Shares
The following shares were issued during the year:
Shares as at 30 June 2017
Number of Shares on issue (pre-Consolidation)
Number of Shares on issue (post-Consolidation)
SPP Offer at 18 October 2017
183,476,469
18,347,952
Number of New Shares issued under the SPP Offer (SPP Offer Subscription Amount)
15,000,000 Shares
Cash proceeds of the SPP Offer
$1,500,000
General Offer at 18 October 2017
Maximum number of New Shares issued under the General Offer (General Offer Maximum Subscription)
50,000,000
Maximum cash proceeds of the General Offer (General Offer Maximum Subscription)
$5,000,000
22
23
Directors’ Report
Vendor Offer at 18 October 2017
Total number of Consideration Shares issued under the Vendor Offer
Cash proceeds of the Vendor Offer
273,764,706
Nil
Other Share issues at 18 October 2017
Number of Shares issued on conversion of 50% of the Director Loans and CFO Loan
9,822,420 Shares
Total number of Shares issued to the SenSen Corporate Advisor and Joint Lead Manager by
way of the Introduction and Advisory Fee
Number of Shares issued on conversion of Notes
Placement Shares issued on 24 May 2018
Total number of Shares issued by way of placement
(This is the sum of all Shares detailed above)
Shares
3,209,201 Shares
6,689,850 Shares
34,481,766
Cash proceeds of the placement
$4,700,000 (net of $300,000 capital raising fee)
Total Shares as at 30 June 2018
Total number of Shares on issue (post-Consolidation)
(This is the sum of all Shares detailed above)
Shares under option
411,315,895
Unissued ordinary shares of SenSen Networks Limited under option at the date of this report are as follows:
Grant Date
Expiry Date
Exercise Price
Number of Options
30 November 2017
4 December 2020
30 November 2017
4 December 2020
30 November 2017
4 December 2020
$0.25
$0.35
$0.45
5,200,000
5,200,000
5,200,000
15,600,000
Included in these options were options granted as remuneration to key management personnel during the year.
24
Directors’ Report
In addition, further option grants were awarded to key management personnel and staff on 20 March 2018. These grants are
subject to performance conditions and may vest after the publication of this annual report.
Details of all options granted to key management personnel are disclosed in the Remuneration report.
No option holder has any right under the options to participate in any other share issue of the company or any other entity.
No shares were issued on exercise of options during the year.
Significant changes in the state of affairs
On 12 April 2017, the Company entered into a Share Purchase Agreement (“SPA”) with all of the shareholders of SenSen Networks
Group Pty Ltd (“SenSen P/L”). The Company acquired 100% of SenSen P/L by the purchase of all the shares in SenSen P/L from
the shareholders of SenSen P/L, in exchange for the issue of shares in the Company. On 1 September 2017, a Prospectus was
issued for the offer of 15,000,000 New Shares to eligible Company shareholders under a Share Purchase Plan, up to 50,000,000
New Shares to eligible investors under a General Offer, and 273,764,706 Consideration Shares to the Vendors in consideration
for the acquisition of all of the shares in SenSen. Subsequently, a supplementary prospectus was issued on 14 September 2017
with an update on 25 September 2017.
The transaction was completed on 18 October 2017 and included a capital raising of $6.5 million. Pursuant to the SPA, the
company issued 273,764,706 shares to the shareholders of SenSen P/L as a consideration for the acquisition. As a result, the
company acquired a 100% interest in SenSen P/L.
The transaction has therefore been accounted for as a reverse acquisition from a consolidated perspective, where SenSen
Networks Group Pty Ltd is the accounting acquirer and SenSen Networks Limited is the legal acquirer.
Events after the Reporting Period
On 27 July 2018, 2,435,068 ordinary shares were issued to key management personnel and staff as part of the Long-Term
Incentive Plan.
The establishment of the SenSen Long-Term Incentive Plan (“the Plan”) was approved by shareholders at the 2017 annual general
meeting (AGM) and is detailed on the company’s website. The Plan is designed to provide long-term incentives for employees,
including directors, to deliver long-term shareholder returns. Under the Plan, participants are granted options which only vest if
certain performance standards are met. Participation in the Plan is at the Board’s discretion and no individual has a contractual
right to participate in the Plan or to receive any guaranteed benefits.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected the groups’ operations, results or
state of affairs, or may do so in future years
Likely developments and review of operations
Comments on review of operations of the Group are included in the annual report under the Review of Operations and
Activities on page 6.
Further information on likely developments in the operations of the Group and the expected result of operations have not been
included in the annual financial report because the Directors believe it would be likely to result in unreasonable prejudice to the
Group.
24
25
Directors’ Report
Environmental regulations
The Group is subject to environmental regulations in Australia and in foreign countries where it operates. To the best of the
Directors’ knowledge, all activities have been undertaken in compliance with these environmental regulations.
Directors’ Meetings
The Company held six Directors’ meetings during the year and two Audit and Risk Committee meetings.
The attendances of the directors in office during the year at meetings of the Board and Committees were:
Director
Board of Directors
Audit and Risk Committee
Number Eligible to attend
Number Attended
Number Eligible to attend
Number Attended
Subhash Challa
David Smith
Zenon Pasieczny
Jason Ko
Wayne Mitchell
Wesley Harder
Michael Rhodes
5
6
5
5
1
1
1
1
2
1
1
1
1
1
1
2
1
1
1
1
1
5
6
5
5
1
1
1
26
Remuneration Report (Audited)
The Directors are pleased to present the Company’s 2018 remuneration report which sets out remuneration information for the
Company’s executive directors, non-executive directors and other key management personnel.
(a) Details of Directors and Key Management Personnel during the year ended 30 June 2018
Mr Subhash Challa, Executive Chairman (Appointed 13 October 2017)
Mr Zenon Pasieczny, Non-Executive Director (Appointed 13 October 2017)
Mr David Smith, Executive Director
Mr Jason Ko, Non-Executive Director (Appointed 13 October 2017)
Mr Wayne Mitchell, Executive Chairman (Resigned 13 October 2017)
Mr Wesley Harder, Executive Director (Resigned 13 October 2017)
Mr Mike Rhodes, Non-Executive Director (Resigned 13 October 2017)
Mr Tony Lynch, Chief Financial Officer
The above Key Management Personnel (KMP) are the KMP of the Company, there are no other KMP in the Group.
Changes since the end of the reporting period
Ms Heather Scheibenstock has been appointed as a Non-executive Director on 7 September 2018.
(b) Remuneration governance
The Company does not have a remuneration committee, with remuneration decisions made by the Board on: -
•
The over-arching executive remuneration framework
• Operation of the incentive plans which apply to the executive team including key performance indicators and
performance hurdles
•
Remuneration levels of executive directors and the key management personnel, and
• Non-executive director fees
The objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term
interests of the Company.
(c) Executive remuneration policy and framework
Remuneration levels are competitively set to attract the most qualified and experienced directors and executives.
The remuneration structures outlined below are designed to attract suitably qualified candidates, reward the achievement
of strategic objectives, and achieve the broader outcome of creating shareholder value.
The Board ensures that executive reward satisfies the following criteria for good reward corporate governance practices:
– competitiveness and reasonableness;
– acceptability to shareholders;
– performance linkage/alignment of executive compensation;
– transparency; and
– capital management.
The executive remuneration framework has two components
base pay and benefits, including superannuation;
-
-
long-term incentives (LTIs) through participation in the SenSen Long Term Incentive Plan (“the Plan”).
The payment of LTIs is conditional on the achievement of set performance criteria.
26
27
Remuneration Report (Audited)
(d) Long-term incentives (LTIs)
The establishment of the SenSen Long-Term Incentive Plan (“The Plan”) was approved by shareholders at the 2017 annual
general meeting (AGM). The Plan is designed to provide long-term incentives for employees including directors, to deliver
long-term shareholder returns. Under the Plan, participants are granted LTI shares and options which only vest if certain
performance standards are met. Participation in the Plan is at the Board’s discretion and no individual has a contractual right
to participate in the Plan or to receive any guaranteed benefits.
Options granted under the Plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share.
(e) Non-executive Director remuneration
Non-executive Directors receive director’s fees plus superannuation contributions to a complying fund.
Fees are reviewed annually by the Board taking into account comparable roles and market data. These fees are subject to
the annual limit outlined below.
(f) Shareholder approved Non-executive Directors’ fees pool
The maximum annual aggregate non-executive directors’ fee pool limit is $400,000 and was approved by shareholders at
the 2017 annual general meeting held on 30 November 2017.
(g) Voting and comments made at the company’s 2017 Annual General Meeting
SenSen Networks Limited received more than 99% of ‘yes’ votes on its remuneration report for the 2017 financial year. The
company did not receive any specific feedback at the AGM or throughout the year on its remuneration policies.
(h) Group’s performance and link to remuneration
In considering the consequences of the Company’s performance on shareholder wealth the Board is focused on total
shareholder returns. The Company’s Long-Term Incentive Plan is heavily performance based and the vesting of Key
Management Personnel and staff options is dependent on the company meeting specific revenue targets.
(i) Use of remuneration consultants
The company did not engage remuneration consultants during the financial year ended 30 June 2018.
(j) Details of Remuneration
SenSen Networks Limited (formerly Orpheus Energy Limited) (the Company) acquired SenSen Networks Group Pty Ltd
(SenSen P/L) on 18 October 2017. From a legal and taxation perspective the Company is considered the acquiring entity
(“Legal Parent”). However, the acquisition has the features of a reverse acquisition as described in the Australian Accounting
Standard AASB 3 Business Combinations (AASB 3) because the acquisition resulted in SenSen P/L shareholders holding a
controlling interest in the Company after the transaction notwithstanding the Company being the legal parent of the Group.
Hence, SenSen P/L (the main operating company) is considered the “Accounting Parent”.
28
Remuneration Report (Audited)
Details of remuneration of key management personnel of SenSen Networks Limited (Legal parent)
2018
Name
Directors
W. Mitchell
D. Smith
W. Harder
M. Rhodes
Other Key
Management
Personnel
B. Neal (CFO)
2017
Name
Directors
W. Mitchell
D. Smith
W. Harder
M. Rhodes
Other Key
Management
Personnel
B. Neal (CFO)
Short term employee benefits
Post-
Employment Benefit
Long
Term
Share-based
payments
Total
Directors
Fees
$
Salary
$
Consulting
Fees
$
Super-
annuation
$
Long Service
Leave
$
Shares
and Options
$
-
-
-
-
-
-
-
-
-
-
-
-
-
21,000
-
-
16,320
37,320
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
21,000
-
-
16,320
37,320
Short term employee benefits
Post-
Employment Benefit
Long
Term
Share-based
payments
Total
Directors
Fees
$
Salary
$
Consulting
Fees
$
Super-
annuation
$
Long Service
Leave
$
Shares
and Options
$
-
-
-
-
-
-
-
-
-
-
-
-
-
72,000
-
-
50,101
122,101
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
72,000
-
-
50,101
122,101
28
29
Remuneration Report (Audited)
Details of remuneration of key management personnel of SenSen Networks Group Pty Ltd (Accounting Parent)
2018
Name
Directors
S Challa
D Smith
Z Pasieczny
J Ko
Other key
management
personnel
T Lynch (CFO)
Short-term
Employee Benefits
Post-Employment
Benefit
Long-term
Share-based
payments
Share-based
payments
Total
Salary and Fees
Superannuation Long Service Leave
Shares
Options
$
$
$
$
$
$
273,000
176,136
38,000
38,000
25,935
16,733
2,256
2,256
117,000
642,136
-
47,181
-
-
-
-
-
-
92,571
77,143
-
-
649,248*
442,669*
-
-
1,040,754
712,681
40,256
40,256
37,029
60,938*
214,966
206,743
1,152,855*
2,048,914
* The amounts included in the share-based remuneration represent the fair value of the options at grant date, amortised on
a straight-line basis over the expected vesting period. The option amounts above do not represent cash amounts and are the
product of a model-based valuation using a Black Scholes method and, in some cases, carry performance conditions around
the company’s financial performance. These valuations are the subject of certain assumptions that may change from year to
year and so will be re-performed at each reporting period.
2017
Short-term
Employee Benefits
Post-Employment
Benefit
Long-term
Share-based
payments
Share-based
payments
Total
Name
Salary and Fees
Superannuation Long Service Leave
Shares
Options
$
$
$
$
$
$
Directors
S Challa
D Smith
Z Pasieczny
219,000
-
-
Other key management personnel
-
T Lynch (CFO)
219,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
219,000
-
-
219,000
30
Remuneration Report (Audited)
(k) Details of share-based payments
The following ordinary shares and options over ordinary shares were issued as part of compensation to key
management personnel during the year ended 30 June 2018. There were no share-based payment grants to Key
Management Personnel for the year ended 30 June 2017.
Shares
2018
S Challa
D Smith
T Lynch
Options
Grant Date
No of Shares awarded
Valuation for year ended 30 June 2018
20 March 2018
20 March 2018
20 March 2018
514,286
428,571
205,714
1,148,571
$92,571
$77,142
$37,028
$206,742
Name
Grant
Date
Vesting
Date
Expiry
Date
Exercise
Price
Tranche 1
S Challa
30 Nov
2017
30 Nov
2017
Tranche 2
S Challa 20 March
See
2018 conditions
below
4 Dec
2020
25c, 35c
and 45c
in equal
proportion
30 Sept
See
2021 conditions
below
Tranche 3
S Challa 20 March
See 30 Sept
Tranche 1
D Smith
2018 conditions
below
30 Nov
2017
30 Nov
2017
Tranche 2
Tranche 3
Tranche 2
Tranche 3
D Smith 20 March
See
2018 conditions
below
D Smith 20 March
See
2018 conditions
below
T Lynch 20 March
See
2018 conditions
below
T Lynch 20 March
See
2018 conditions
below
See
2022 conditions
below
4 Dec
2020
25c, 35c
and 45c
in equal
proportion
30 Sept
See
2021 conditions
below
30 Sept
See
2022 conditions
below
30 Sept
See
2021 conditions
below
30 Sept
See
2022 conditions
below
No. of
options
granted
No. of
options
vested
vested
% options Valuation
for year
ended
30 June
2018
6,600,000
6,600,000 100%
$323,400
6,600,000
6,340,620
96%
$276,108
6,600,000
-
0%
$49,740
4,500,000
4,500,000 100% $220,500
4,500,000
4,323,150
96%
$188,256
4,500,000
-
0%
$33,913
1,234,286
1,185,778
96%
$51,636
1,234,286
-
0%
$9,302
30
31
35,768,572
22,949,549
$,1,152,855
Remuneration Report (Audited)
If all of the above options granted to Key Management Personnel were to vest and be exercised, excluding the time value of
money, the Company could receive cash proceeds of up a to a maximum of $8,325,343 on the potential exercise of these
options in the period from the vesting date to their expiry date which extends to 30 September 2022. It is not expected that all
options that have been granted will vest.
The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part
of remuneration.
During the year, no options were exercised by directors or other key management personnel.
Tranche 1 LTI Incentive Options have exercise prices of $0.25, $0.35 and $0.45 in three equal lots
Tranche 2 and 3 LTI Performance Options were granted on the basis of the following conditions:
Issue conditions
Exercise Price
Tranche 2
Upon satisfaction of the following hurdle:
• LTI Options (Performance) are only issued should the Company increase
its year on year revenue, commencing from the audited revenue of
$2,065,570, as reported in the 2017 Annual Report of SenSen P/L.
• LTI Options (Performance) will be issued based on the percentage
increase in audited revenue performance year-on-year. The Company
must achieve a minimum 50% increase in revenue from 2017 to 2018
or no LTI Options (Performance) will be issued.
Tranche 3
Upon satisfaction of the following hurdle:
• LTI Options (Performance) are only issued should the Company increase
its year on year audited revenue, as reported in the 2019 Annual Report.
• LTI Options (Performance) will be issued based on the percentage
increase in audited revenue performance year-on-year. The Company
must achieve a minimum 50% increase in revenue from 2018 to 2019
or no LTI Options (Performance) will be issued.
Five-day VWAP of the Company’s shares,
following the ASX release
of the Company’s Annual Report,
for the financial year ended 30 June 2018
Five-day VWAP of the Company’s shares,
following the ASX release of the Company’s
Annual Report, for the financial year
ended 30 June 2019
Fair value of options granted
The fair value of the equity-settled share options is estimated as at the date of grant using a binomial or other appropriate model
taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the
model used in the valuation of the options granted in 2018.
Expected Volatility
Risk-free rate
Expected life
Dividend yield
Weighted average exercise price
Share price at grant date
There were no options granted during the year ended 30 June 2017.
32
2018
65%
2.1%
3 years
0%
$0.23
$0.17
Remuneration Report (Audited)
(l) Key Management Personnel Shareholdings
(i) Option holdings of key management personnel in SenSen Networks Limited (Legal parent)
Balance at
1 July 2017
Granted as
remuneration
S Challa
D Smith
T Lynch
-
-
-
19,800,000
13,500,000
2,468,571
Options not
vested due to
performance
conditions
not met
(259,380)
(176,850)
(48,507)
Options
forfeited or
lapsed
Balance as at
30 June 2018
Total Vested
Total Non-
vested
-
-
-
19,540,620
13,323,150
2,420,064
12,940,620
8,823,150
1,185,779
6,600,000
4,500,000
1,234,286
(ii) Option holdings of key management personnel in SenSen Networks Group Pty Limited (Accounting parent)
There were no option holdings by key management personnel in the accounting parent.
(iii) Shareholdings of key management personnel in SenSen Networks Limited (Legal parent)
Balance at
1 July 2017
(Pre-consolidation)
Balance at
1 July 2017
(Post
consolidation)
Acquisition of
SenSen Networks
Group Pty Ltd
Shares issued
on exercise
of options
Other changes
during
the year
Balance held
at 30 June
2018
Directors
S Challa
D Smith
Z Pasieczny
J Ko
W. Mitchell*
W. Harder*
M. Rhodes*
KMP
T Lynch
-
36,500,000
-
-
15,264,210
6,452,824
4,277,833
-
3,650,000
-
-
1,526,421
645,282
427,784
78,024,970
2,241,197
46,376,259
-
-
-
-
-
-
-
Total
62,494,867
6,249,487
126,642,426
-
-
-
-
-
-
-
-
-
514,286
3,445,081
-
-
(1,526,421)
(645,282)
(427,784)
78,539,256
9,336,278
46,376,259
-
-
-
-
205,174
205,174
8,336,920
141,258,833
*Mr Mitchell, Mr Harder and Mr Rhodes are no longer considered Key Management Personnel after the date of their resignation
and as such their shareholdings, for this purpose, are listed above as nil as at 30 June 2018. All three ex-directors retained
shareholdings in the Company at that date.
32
33
Remuneration Report (Audited)
(iv) Shareholdings of key management personnel in SenSen Networks Pty Limited (Accounting parent)
Directors
S Challa
Z Pasieczny
J Ko
KMP
T Lynch
Total
Balance at
1 July 2017
Acquisition of
SenSen Networks
Other changes
during the year
Balance held
at 30 June 2018
1,783,965
516,851
-
(1,783,965)
(516,851)
-
-
-
2,300,816
(2,300,816)
-
-
-
-
-
-
-
-
-
-
-
(m) Loans from key management personnel
As part of the acquisition, each of the following ex-Directors of the Company and then Chief Financial Officer agreed to convert
50% of the amounts owing to them by the Company into Shares.
The details of the 50% of the Company’s previous Directors’ and CFO’s Loans converted in to Shares at date of acquisition are
provided below:
Name
W Mitchell
D Smith
W Harder
M Rhodes
B Neal
TOTAL
Total Outstanding
Debt as 1 July 2017
Amount Converted
into Shares- 50%
Shares Issued
($0.10 per Share)
$726,387
$603,303
$261,942
$199,756
$173,096
$363,193
$301,652
$130,971
$99,878
$86,548
3,631,935
3,016,515
1,309,710
998,780
865,480
Total Outstanding
Debt as at
30 June 2018
$363,193
$301,652
$130,971
$99,878
$86,548
$1,964,484
$982,242
9,822,420
$982,242
The remaining balances above will be repaid within 12 months of completion of the acquisition in cash, or in Shares, at the
election of the Company’s Board. If the Company’s Board elects to repay the loans in Shares, this will be subject to Shareholder
approval and the number of Shares to be issued will be calculated by dividing the relevant balances by the 30-day VWAP of the
Shares trading on ASX.
As at 30 June 2018 the amounts of $982,242 above were recorded as liabilities in the annual report as follows:
•
•
Borrowings - $343,284 for Company’s previous directors’ loans. Refer note 14.
Trade and other payables - $638,958 for outstanding payroll and tax liabilities to Company’s previous CFO and directors
There were no loans owing by key management personnel of the group, including their close family members and entities
related to them, during the financial year ended 30 June 2018.
34
Remuneration Report (Audited)
(n) Other transactions with key management personnel
There were no other transactions with key management personnel of the group, including their close family members and
entities related to them, during the financial year ended 30 June 2018.
(o) Service Agreements with key management personnel
The Company’s policy is to enter into service contracts with executive directors and senior executives on appointment that are
unlimited in term but capable of termination on specified notice periods; and that the Company has the right to terminate the
contract immediately by making payment equal to the specified notice period as pay in lieu of notice other than for misconduct
when termination is immediate. The executive directors and senior executives are also entitled to receive on termination of
employment their statutory entitlements of accrued annual leave and long service leave.
The service contract outlines the components of remuneration paid to the executive directors and key management personnel
but does not prescribe how remuneration levels are modified year to year.
End of Remuneration Report (Audited)
34
35
Directors’ Report
Auditor’s Independence Declaration
The directors received the Independence Declaration from the lead auditor of SenSen Networks Limited which is appended to
this report on page 37.
Non-Audit Services
The auditor, BDO, also performed the following services to the company during the year.
BDO Audit Pty Ltd – Investigating accountants report
Other services provided by BDO Audit Pty Ltd related entities
$
11,500
77,860
89,360
Indemnifying and Insurance of Directors and Officers
During or since the end of the previous financial year, the Company has given an indemnity or entered into an agreement to
indemnity, or paid or agreed to pay insurance premiums as follows:
The Company has paid premiums to insure all of the Directors and key management personnel of the Company as named
above, the Company Secretary, and all executive officers of the Company against any liability incurred as such by Directors,
the Secretary or Executive Officers to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
No indemnification has been obtained for the auditors of the Company or the Group.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or any part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
This report has been signed in accordance with a resolution of the directors.
Subhash Challa, Chairman
21 September 2018
36
Auditors Independence Declaration
Auditors Independence Declaration
Auditors Independence Declaration
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
Level 10, 12 Creek St
Tel: +61 7 3237 5999
DECLARATION OF INDEPENDENCE BY M CUTRI TO DIRECTORS OF SENSEN NETWORKS
Brisbane QLD 4000
Fax: +61 7 3221 9227
LIMITED (FORMERLY ORPHEUS ENERGY LIMITED)
GPO Box 457 Brisbane QLD 4001
www.bdo.com.au
Australia
As lead auditor of SenSen Networks Limited (formerly Orpheus Energy Limited) for the year ended 30
June 2018, I declare that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
DECLARATION OF INDEPENDENCE BY M CUTRI TO DIRECTORS OF SENSEN NETWORKS
LIMITED (FORMERLY ORPHEUS ENERGY LIMITED)
2. No contraventions of any applicable code of professional conduct in relation to the audit.
to the audit; and
As lead auditor of SenSen Networks Limited (formerly Orpheus Energy Limited) for the year ended 30
This declaration is in respect of SenSen Networks Limited and the entities it controlled during the year.
June 2018, I declare that, to the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of SenSen Networks Limited and the entities it controlled during the year.
M Cutri
Director
BDO Audit Pty Ltd
Brisbane, 21 September 2018
M Cutri
Director
BDO Audit Pty Ltd
Brisbane, 21 September 2018
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
Page | 40
Page | 40
36
37
Independent Auditor’s Report
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of SenSen Networks Limited (Formerly Orpheus Energy Limited)
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of SenSen Networks Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial report, including a summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act
2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report
section of our report. We are independent of the Group in accordance with the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation, other than for the acts or omissions of financial services licensees.
38
Independent Auditor’s Report
Accounting for Reverse Acquisition
Key audit matter
How the matter was addressed in our audit
As disclosed in note 2 of the financial report, the
company acquired SenSen Networks Group
Pty Ltd (unlisted entity incorporated in Australia).
The accounting for the reverse acquisition is a key
audit matter due to the effect of the arrangement
which is accounted for as SenSen Networks Group
Pty Ltd (the accounting parent) issuing a share-
based payment in return for the assets acquired in
the company and listing status. Furthermore, the
judgment is involved in the determination of the
value of the purchase consideration settled by way
of a share-based payment.
Our procedures included, but were not limited to:
• Obtaining an understanding of the
transaction including an assessment of
the accounting acquirer and whether the
transaction constituted a business or
asset acquisition;
• Assessing management’s proposed
accounting treatment in accordance with
applicable accounting standards;
• Evaluating the basis of the valuation of
the share-based payment (or fair value of
consideration) and challenged the
underlying assumption of the valuation
against comparable transactions and
market data.
• Checking the calculation of the share-
based payment, fair value of identifiable
net assets acquired, including any
separately identifiable intangible assets,
and listing expense.
• Considering whether any fair values or
adjustments to fair values have been
dealt with in accordance with generally
accepted accounting principles.
• Assessing the appropriateness of the
acquisition journals at acquisition date
and checking that the disclosures in the
financial statements are in accordance
with the basis of preparation as disclosed
in note 1(a) for the reverse acquisition.
• Assessing the adequacy of the related
disclosures in the financial report.
38
39
Independent Auditor’s Report
Revenue recognition
Key audit matter
How the matter was addressed in our audit
The group generates revenue from multiple
streams including sales of goods & rendering of
services as disclosed in Note 1 (b).
The amount of revenue recognised during the year
for sales and other services is dependent on the
appropriate identification on the timing of transfer
of the significant risks and rewards of ownership to
the buyer.
In our view, revenue recognition is significant to
our audit due to the significance of revenue to the
financial report and the complex nature of
accounting for the appropriate timing of revenue
related to the sales of goods & rendering of
services.
Our procedures included, amongst others:
• Assessing the Group’s revenue
recognition policy’s for compliance with
Australian Accounting Standards.
• Testing a sample of revenue transactions
and reviewing the terms and conditions of
the executed contracts and other
supporting evidence to ensure that the
accounting treatment had been correctly
applied, including evaluating whether
performance obligations had been met
and revenue had been recognised in the
correct period. This included assessing
whether the significant risks and rewards
of ownership as detailed in the customer
contract had passed to the buyer.
• Performing cut-off testing to ensure that
revenue transactions around year end
have been recorded in the correct
reporting period.
• Performing a detailed analysis of revenue
and the timing of its recognition based on
expectations derived from our knowledge
of the Group’s products and the market it
operates in.
40
Independent Auditor’s Report
Share-Based Payments
Key audit matter
How the matter was addressed in our audit
During the year ended 30 June 2018, the
Company issued performance options and shares
to employees including key management
personnel, which were accounted for as share-
based payments under AASB 2: Share Based
Payments.
Share-based payments are a complex accounting
area including assumptions utilised in the fair value
calculations and judgments regarding the
performance options and shares issued during the
year. There is a risk in the financial report that
amounts are incorrectly recognised and/or
inappropriately disclosed.
Refer to Note 1(o) of the financial report for a
description of the accounting policy and significant
estimates and judgements applied to these
transactions.
Our audit procedures included but not limited to:
• Evaluating the management’s
assessment of the valuation and
recognition of the performance options
and shares.
• Obtaining an understanding of the key
terms and conditions of the performance
options and shares by inspecting relevant
agreements.
• Holding discussions with the
management to understand the share-
based payments arrangements in place
and evaluating management’s
assessment of the likelihood of meeting
the performance condition attached to the
performance options.
• Recalculating the estimated fair value of
the performance options using the Black-
Scholes option valuation methodology,
including assessing the reasonableness
of the key inputs used in the Company’s
valuation model.
• Reviewing the adequacy of the
Company’s disclosures in respect of the
accounting treatment of share-based
payments in the financial statements,
including the significant judgments
involved, and the accounting policy
adopted.
Other information
The directors are responsible for the other information. The other information comprises the information
in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report
and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
40
41
Independent Auditor’s Report
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 has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 35 of the Directors’ report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of SenSen Networks Limited, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
BDO Audit Pty Ltd
M Cutri
Director
Brisbane, 21 September 2018
42
Directors’ Declaration
In accordance with a resolution of the Directors of SenSen Networks Limited, the Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 44-79.
a)
b)
comply with Australian Accounting Standards and interpretations, and Corporations Act Regulations 2001,
which confirms compliance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board; and
give a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the
financial year ended on that date;
2.
3.
in the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
the Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer.
Subhash Challa
Chairman
21 September 2018
42
43
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2018
Revenue
Sales Revenue
Cost of Sales
Gross Profit
Other income
Interest income
Expenses
Consulting expense
Employee benefits expense
Employee benefits expense – share based payments
Occupancy expense
Marketing expense
Administration expense
Depreciation and amortisation expense
Finance costs
Corporate restructure expense
Other expenses
(Loss) before income tax
Income tax (expense)/benefit
(Loss) for the period
Loss attributable to members of the parent entity
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign controlled entities
Total comprehensive income for the period
Consolidated
Note
2018
$
2017
$
4
4
5
6
4,049,910
(1,611,886)
2,065,570
(844,143)
2,438,024
1,221,427
723,140
9,274
847,349
1,276
(930,833)
(2,706,017)
(2,019,099)
(361,954)
(221,044)
(215,089)
(39,797)
(112,767)
(5,229,773)
(621,373)
(9,287,308)
66,892
(928,926)
(862,030)
-
(132,943)
(218,520)
(215,280)
(38,784)
(103,185)
-
(411,295)
(840,911)
(322,762)
(9,220,416)
(1,163,673)
(9,220,416)
(1,163,673)
(9,220,416)
(1,163,673)
27,369
27,369
(982)
(982)
Total comprehensive income for the period attributable to:
- Members of the parent entity
(9,193,047)
(1,164,655)
Loss per share:
Basic and diluted loss per share (cents)
7
(3.99)
(8.48)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes.
44
Consolidated Statement of Financial Position
As at 30 June 2018
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Other receivables
Property, plant and equipment
Deferred tax assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Tax liabilities
Other liabilities
Borrowings
Total Current Liabilities
Non-Current Liabilities
Other payables
Borrowings
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
Note
2018
$
2017
$
9
11
12
6
13
14
14
15
16
6,556,928
387,961
243,730
54,034
322,411
63,061
7,188,619
439,506
73
204,870
337,019
541,962
7,730,581
39,783
113,318
71,301
224,402
663,908
1,526,375
237,600
46,423
1,388,947
1,229,616
-
1,036,606
1,203,751
3,199,345
3,469,973
-
-
-
-
495,693
-
3,199,345
3,965,666
4,531,236
(3,301,758)
28,731,865
2,045,486
(26,246,115)
13,724,923
(982)
(17,025,699)
4,531,236
(3,301,758)
44
45
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Issued Capital
$
Consolidated
Accumulated
Losses
$
Reserves
$
Total
Equity
$
Balance at 1 July 2016
12,775,283
(15,862,026)
-
(3,086,743)
Loss for the year
Other comprehensive income for the period
Total comprehensive loss for the period
-
-
-
(1,163,673)
-
(1,163,673)
-
(982)
(982)
(1,163,673)
(982)
(1,164,655)
Transactions with owners in their capacity as owners
Shares issued during the year (Note 15)
Share issue costs (Note 15)
999,980
(50,340)
-
-
-
-
999,980
(50,340)
Balance at 30 June 2017
13,724,923
(17,025,699)
(982)
(3,301,758)
Balance at 1 July 2017
13,724,923
(17,025,699)
(982)
(3,301,758)
Loss for the period
Other comprehensive income for the period
Total comprehensive loss for the period
-
-
-
(9,220,416)
-
-
27,369
(9,220,416)
27,369
(9,220,416)
27,369
(9,193,047)
Transactions with owners in their capacity as owners
Acquired from reverse acquisition (refer to note 2)
Shares issued during the year (Note 15)
Share issue costs (Note 15)
Share Based Payments (Note 22)
10,306,942
5,000,000
(300,000)
-
-
-
-
-
-
-
-
2,019,099
10,306,942
5,000,000
(300,000)
2,019,099
Balance at 30 June 2018
28,731,865
(26,246,115)
2,045,486
4,531,236
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
46
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Government grants received
Taxation
Consolidated
Note
2018
$
2017
$
3,038,745
(7,711,679)
60,942
(54,145)
723,140
(228,836)
2,033,038
(3,456,634)
1,276
(103,185)
838,577
-
Net cash used in operating activities
10
(4,171,833)
(686,928)
Cash flows from investing activities
Purchase of plant and equipment
Cash from acquisition of subsidiary
Net cash provided by investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
(134,901)
6,422,440
6,287,539
(27,419)
-
(27,419)
10(b)
10(b)
5,050,000
727,600
(1,125,069)
788,663
67,628
(197,432)
Net cash provided by financing activities
4,652,531
658,859
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Cash and cash equivalents at end of financial year
6,768,235
(211,307)
(55,488)
(155,819)
6,556,928
(211,307)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
46
47
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report includes the financial statements and notes of SenSen Networks Limited, a listed public company
incorporated and domiciled in Australia.
The separate financial statements of the parent entity, SenSen Networks Limited, have not been presented within this financial
report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 21 September 2018 by the directors of the company.
(a)
Basis of Preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated entity is
a for-profit entity for the purpose of preparing the financial statements. For the year ended 30 June 2018 amounts contained in
this report and in the financial report have been rounded to the nearest dollar.
The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 23.
(b)
Accounting Policies
The financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration
given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.
The fair value of financial assets and financial liabilities approximate their carrying values due to their short-term nature. The
same accounting policies and methods of computation have been followed in this interim financial report as were applied in
the most recent annual financial statements except for the new accounting policies adopted as a result of the acquisition of
SenSen as set out below:
New accounting policies for the merged group
Upon completion of the SenSen acquisition, the business of the Company changed to that of the consolidated group resulting
in the need to consider and / or adopt new accounting policies.
Revenue and other income
Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a
rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially
recognised and the amount ultimately received is interest revenue. The following specific recognition criteria must also be met
before revenue is recognised:
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and
rewards of ownership of the goods and the cessation of all involvement in those goods.
48
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue from rendering of services
When the outcome of a project to provide services can be estimated reliably, revenue associated with the transaction is
recognised by reference to percentage of the service performed.
Interest Revenue
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net
carrying amount of the financial asset.
Other Revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
All revenue is stated net of the amount of goods and services tax.
Government Grants
Government grant revenue is recognised when cash is received.
The Group has considered the implications of new or amended Accounting Standards but determined that their application to
the financial statements is either not relevant or not material.
(c)
Going concern basis
The financial statements have been prepared on the going concern basis of accounting, which assumes the continuity of
normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
(d)
Business combinations and asset acquisitions
The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments
or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued, or liabilities incurred or assumed
at the date of exchange. Where equity instruments are issued in a business combination, the fair value of the instruments is their
published market price as at the date of exchange. Transaction costs arising on the issue of equity instruments are recognised
directly in equity.
All identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. The excess of the cost of the business combination over the net fair value of the
Group’s share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group’s
share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as a gain in the statement
of profit or loss and other comprehensive income, but only after a reassessment of the identification and measurement of the
net assets acquired.
Acquisitions of entities that do not meet the definition of a business contained in AASB 3 Business Combinations (IFRS 3) are
not accounted for as business combinations. In such cases the Group identifies and recognises the individual identifiable assets
acquired (including those assets that meet the definition of, and recognition criteria for, intangible assets in AASB 138 Intangible
Assets (IAS 38) and liabilities assumed. The cost of the group of net assets is then allocated to the individual identifiable assets and
liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event does not give rise to goodwill.
Except for business combinations, no deferred income tax is recognized from the initial recognition of an asset or liability, where
there is no effect on accounting or taxable profit or loss.
48
49
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised,
or the liability is settled, and their measurement also reflects the manner in which management expects to recover or settle
the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment
measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax
asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale.
(e)
Income tax
The income tax for expense (income) 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. Current tax liabilities (assets) are
measured at the amounts expected to be paid to (recovered from) the relevant taxation authorities.
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.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred
tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and
it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a ‘legally enforceable right of set-off exists and it is intended that net settlement
or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are
offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
SenSen Networks Limited and its fully owned Australian subsidiary SenSen Networks Group Pty Limited have implemented
the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and
liabilities of these entities are set off in the consolidated financial statements.
(f)
Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the
requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie
unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair
value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair
values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market
with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous
market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the
asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its
highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
50
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements)
may be valued, where there is no observable market price in relation to the transfer of such financial instrument, by reference
to observable market information where such instruments are held as assets. Where this information is not available, other
valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements.
(g)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid
investments with original maturities of twelve months or less, and bank overdrafts. Bank overdrafts are reported within
borrowings in current liabilities on the statement of financial position. For the purpose of the Cash Flow Statement, cash and
cash equivalents consist of cash and cash equivalents as defined above.
(h)
Trade and other receivables
Trade receivables and other receivables, both of which generally have 30-day terms, are non-interest bearing and are recognised
and carried at original invoice amount less an allowance for any uncollectible amounts. These receivables are classified as
current assets.
An allowance for doubtful debts is made when there is objective evidence that the Company will not be able to collect the
debts. Bad debts are written off when identified.
(i)
Trade and other payables
Trade payables and other payables represent the liabilities for goods and services received by the entity that remain unpaid at
the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days
of recognition of the liability.
(j)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from or payable to the ATO is included with other receivables or payables in the statement of financial position
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing and financing activities
which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers
or payments to suppliers
(k)
Property, plant and equipment
Property, plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation
and any accumulated impairment. In the event the carrying amount of property, plant and equipment is greater than the
estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and
impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a
revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(l)
for details of impairment).
50
51
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in
which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
recognised in profit or loss in the period in which they arise. When revalued assets are sold, amounts included in the revaluation
surplus relating to that asset are transferred to retained earnings.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life from the time the
asset is ready for use.
The depreciation rates used for each class of depreciable asset are:
Class of fixed asset
Computer Equipment
Furniture and Equipment
Depreciation Rate per annum
33%
20% - 33%
The assets’ residual values and useful life are reviewed and adjusted if appropriate, at the end of each reporting period. An
assets recoverable amount is written down to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
(l)
Impairment of assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources of information including dividends received from
subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition 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 to sell and value in use, to the asset’s carrying amount.
Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the
asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model
in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in
accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available
for use.
(m)
Borrowings
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 date.
52
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n)
Employee benefits – short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and personal leave that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are recognised in respect of
employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the
liabilities are settled.
The liability for accumulating personal leave is recognised in the provision for leave. All other short-term employee benefit
obligations are presented as payables
(o)
Equity-settled compensation
The Group provides benefits to employees (including senior executives) and consultants of the Group in the form of share-
based payments, whereby employees and consultants render services in exchange for shares or rights over shares (equity-
settled transactions).
The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments at the date
at which they are granted. The fair value of rights over shares is determined using a binomial, or Black-Scholes model, further
details of which are given in the Remuneration Report. The fair value of shares is determined by the market value of the Group’s
shares at grant date.
In valuing equity-settled transactions, any performance conditions are taken into account if relevant and assumptions around
the likelihood of meeting these performance conditions are factored into the valuation model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
(i) the extent to which the vesting period has expired; and
(ii) the Group’s best estimate of the number of equity instruments that will ultimately vest.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a
market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.
(p)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as
expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term.
52
53
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result, and that outflow can be reliably measured
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting
period.
(r)
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s
functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in
equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income
to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference
is recognised in profit or loss
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation
currency, are translated as follows:
•
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
•
income and expenses are translated at average exchange rates for the period; and retained earnings are translated at the
exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian
dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in
the statement of financial position. The cumulative amount of these differences is reclassified into profit or loss in the
period in which the operation is disposed of.
54
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(s)
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of
the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair
value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal
repayments and any reduction for impairment and adjusted for any cumulative amortisation of the difference between that
initial amount and the maturity amount calculated using the effective interest method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine
the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option
pricing models
The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent
to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or
discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument
to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate
an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. 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 subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the
reporting period.
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Gains or losses
are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been
impaired. A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated future cash
flows of the financial asset(s).
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with
the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled or have expired. The
difference between the carrying amount of the financial liability extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
54
55
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t)
New standards and interpretations issued but not yet effective
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or
after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes
revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of financial
assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the
irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other
comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the
ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge
policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be
largely prospective.
The directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments and are
considering the application of this standard.
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 July
2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-
based model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all
contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales
to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods
or services. To achieve this objective, AASB 15 provides the following five-step process:
-
-
-
-
-
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period
presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical
expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of
initial application. There are also enhanced disclosure requirements regarding revenue.
The directors anticipate that the adoption of AASB 15 may have an impact on the Group’s financial instruments and are
considering the application of this standard.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and
related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be
classified as operating or finance leases.
56
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The main changes introduced by the new Standard are as follows:
-
-
-
-
-
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less th an 12 months
of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead
account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with
AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of
initial application.
The directors anticipate that the adoption of AASB 16 will have an impact on the Group’s financial instruments and are
considering the application of this standard.
(u)
Significant accounting judgements estimates and assumptions
In applying the Company’s accounting policies, management continually evaluates judgements, estimates and assumptions
based on historical experience and other factors, including expectations of future events that may have an impact on the
Company. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of
circumstances available to management. Actual results may differ from the judgments, estimates and assumptions. The more
significant judgments, estimates and assumptions made by management in the preparation of these financial statements are
outlined below:
(i)
Impairment of loans to, and investment in, subsidiaries
Where a subsidiary entity incurs a loss, the parent entity assesses the recoverability of any loans due from, or
investments in, any subsidiary. Where required, the parent entity will then record an impairment loss against the
value of its loans to, or investment in, the subsidiary.
(ii)
Share-based Payments
The estimation of the likelihood of meeting performance conditions on Long Term Incentive Performance Options
has been based on historical experience and management judgement. In addition, this estimate is assessed annually
and considered in the context of actual company performance.
(iii)
Key judgements – impairment of other receivables
The directors have reviewed outstanding debtors as at 30 June 2018 and have formed the opinion that not all
debtors outstanding are collectible and have therefore decided that a provision for impairment of other receivables
should be made. These debts include $6,836,003 owing from the sale of Indonesian assets which are past due, and
which was fully provisioned in prior reporting periods
56
57
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
2. REVERSE ACQUISITION
SenSen Networks Limited (formerly Orpheus Energy Limited) (the Company) acquired SenSen Networks Group Pty Ltd (“SenSen
P/L”) on 18 October 2017.
From a legal and taxation perspective the Company is considered the acquiring entity. However, the acquisition has the
features of a reverse acquisition as described in the Australian Accounting Standard AASB 3 Business Combinations (AASB 3)
because the acquisition resulted in SenSen P/L shareholders holding a controlling interest in the Company after the transaction
notwithstanding the Company being the legal parent of the Group. At the time of the acquisition the Company divested all of
its operations, and its activities were limited to managing its cash balances, filing obligations (i.e., a listed shell), and completion
of the acquisition. It is therefore considered that the Company does not meet the definition of a business for the purposes of
AASB 3 as it did not have any processes or outputs.
The transaction has therefore been accounted for as a reverse acquisition from a consolidated perspective, where SenSen
P/L is the accounting acquirer and the Company is the legal acquirer. The annual report includes the consolidated financial
statements of SenSen P/L for the full year and the Company for the period 18 October 2017 to 30 June 2018. The annual
report represents a continuation of SenSen P/L’s financial statements with the exception of the capital structure. The amount
recognised as equity instruments in these consolidated statements represents the issued equity of the Company adjusted to
reflect the equity issued by the Company on acquisition.
Under the reverse acquisition principles, the consideration provided by SenSen P/L was determined to be $10,306,942 which is
the deemed fair value of the 103,069,423 shares owned by the former SenSen Networks Limited shareholders at the completion
of the acquisition, valued at the capital raising share price of $0.10 per share.
The excess of the deemed fair value of the shares owned by the Company shareholders and the fair value of the identifiable
net assets of the Company immediately prior to the completion of the merger is accounted for under AASB 2 Share Based
Payments and resulted in the recognition of $5,229,773 being recorded as “Corporate Restructure Expense”. The net assets
of the Company were recorded at fair value at acquisition date. As the carrying value of all assets and liabilities held by the
Company at acquisition date approximated their fair value, no adjustments were required.
58
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
2. REVERSE ACQUISITION (CONTINUED)
The fair values of the assets and liabilities of the Company (being the accounting acquiree) as at the date of acquisition and
the deemed consideration is as follows:
Assets acquired and liabilities of SenSen Networks Limited
assumed at the date of acquisition
Current assets
Cash and cash equivalents
Trade receivables
Total assets
Current liabilities
Trade and other payables
Borrowings
Total liabilities
Fair value of net assets acquired
‘Corporate restructure expense’ on acquisition:
Fair value of the shares deemed to have been issued by SenSen (a)
Less fair value of identifiable net assets acquired - Sensen Networks Limited (as per above)
Corporate restructure expense
At 18 October 2017
$
6,422,440
39,589
6,462,029
1,041,576
343,284
1,384,860
5,077,169
10,306,942
5,077,169
5,229,773
(a) The fair value of the deemed consideration of $10,306,942 was based on the Company’s most recent public offer
share price of $0.10 multiplied by the number of shares on issue at the date of the transaction being 103,069,423. The
directors believe that this is the most reasonable measurement of the consideration given the facts and circumstances
surrounding the acquisition.
58
59
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
3. SEGMENT REPORTING
Operating segments are identified on the basis of internal reports that are regularly reviewed by the executive team in order to
allocate resources to the segment and assess its performance.
AASB 8 Operating Segments states that similar operating segments can be aggregated to form one reportable segment.
Following the acquisition of SenSen P/L, the group aggregated all its reporting segments into two reportable operating
segments. Prior to acquisition, the Company operated as a corporate shell having ceased its previous exploration activities in
the prior period.
The principal areas of operation of the group are as follows:
- SenDISA Products
- Other products
Segment Revenues and Results
The following is an analysis of the Group’s revenue and results by reportable operating segment for the periods under review.
SenDISA
Products
$
Other
Consolidated
$
2018
$
SenDISA
Products
$
Other
Consolidated
$
2017
$
Segment performance
Revenue
Sales to external customers
Other external revenue
Inter-segment revenue
Total Revenue
4,049,910
723,140
-
4,773,050
-
-
-
-
4,049,910
723,140
-
2,065,570
847,349
-
4,773,050
2,912,919
Segment expenses
(8,830,585)
(5,229,773)
(14,060,358)
(3,753,830)
Segment result before tax
Income tax
(4,057,535)
66,892
(5,229,773)
-
(9,287,308)
66,892
(840,911)
(322,762)
Net Loss
(3,990,643)
(5,229,773)
(9,220,416)
(1,163,673)
39,797
38,784
(2,019,099)
-
-
Non-cash and other significant items:
Depreciation and amortisation
39,797
Share-based payment expense
(2,019,099)
-
-
Corporate Restructure Expense
-
(5,229,773)
(5,229,773)
60
-
-
-
-
-
-
-
-
-
-
-
2,065,570
847,349
-
2,912,919
(3,753,830)
(840,911)
(322,762)
(1,163,673)
38,784
-
-
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
3. SEGMENT REPORTING (CONTINUED)
SenDISA
Other
Total
$
$
As at 30 June 2018
$
SenDISA
Products
$
Other
$
As at 30 June 2017
Total
$
Assets:
Segment assets
Inter segment eliminations
7,691,439
-
39,143
-
7,730,581
-
663,908
-
7,691,439
39,143
7,730,581
663,908
Liabilities:
Segment liabilities
Inter segment eliminations
1,948,003
-
1,251,342
-
3,199,345
-
3,965,666
-
Total Liabilities
1,948,003
1,251,342
3,199,345
3,965,666
-
-
-
-
-
-
663,908
-
663,908
3,965,666
-
3,965,666
4. REVENUE AND OTHER INCOME
Revenue
Sale of goods and services
Other Income
Interest received
Other revenue – Government Grants
Total revenue and other income
5. EXPENSES
Finance costs – interest owing to related parties
Finance costs – interest paid to other persons
Rental expense on operating leases
Depreciation and amortisation
Contributions to defined contribution superannuation funds
Other employee benefits expenses
Total employee benefits expenses
Consolidated
Note
2018
$
2017
$
4,049,910
2,065,570
9,274
723,140
723,414
1,276
847,349
848,625
4,782,324
2,914,195
(b)
(a)
13,368
99,399
152,806
39,797
128,903
2,577,114
57,851
45,334
105,205
38,784
70,254
791,776
2,706,017
862,030
(a) Contributions to defined contribution plans are expensed when incurred.
(b) Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised
as expenses on a straight-line basis over the lease term
60
61
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
6. INCOME TAX
(a) Major components of income tax benefit (expense)
Current tax expense
Current tax expense
Deferred tax expense
Consolidated
2018
$
2017
$
211,748
394,063
Adjustments in respect of current income tax of previous years
Relating to origination and reversal of temporary differences
Total income tax expense/(benefit)
13,232
(291,872)
-
(71,301)
(66,892)
322,762
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
(9,287,308)
(840,911)
Tax at the Australian tax rate of 27.5% (2017: 27.5%)
(2,554,010)
(231,250)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Non-deductible items
Under provision for tax in the previous year
Accounting expenditure subject to R&D tax incentive
Other income not included in assessable income
Other
Prior year tax payable
2,067,875
13,233
726,599
(190,716)
(129,873)
-
6,875
-
418,863
-
(11,707)
139,981
Total Income tax (expense)/benefit
(66,892)
322,762
(c) Deferred Income Tax
Deferred income tax at 30 June relates to the following:
Deferred Tax Assets
Sundry creditors and accruals
Provisions
Borrowing expenses
Share issue costs
Section 40-880 Deduction
Depreciation
29,828
33,443
601
66,000
218,928
(11,781)
337,019
49,500
4,986
-
-
16,815
-
71,301
The benefit of the deferred tax asset will only be obtained if:
future assessable income of a nature and of an amount sufficient to enable the benefit to be realised is generated;
the conditions for deductibility imposed by tax legislation continue to be complied with; and
(i)
(ii)
(iii) no changes in tax legislation adversely affect the Group in realising the benefit.
62
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
6. INCOME TAX (CONTINUED)
(d) Movements in Deferred tax asset
Year ended June 2018
1 July 2017
Profit or Loss
Directly to
equity
Acquisition of
subsidiary
30 June
2018
Charged/credited to
Sundry creditors and accruals
Provisions
Borrowing expenses
Share issue costs
Section 40-880 Deduction
Depreciation
49,500
4,986
-
-
16,815
-
(44,683)
28,457
(250)
-
195,374
(11,781)
-
-
-
66,000
-
-
25,011
-
851
-
6,739
-
29,828
33,443
601
66,000
218,928
(11,781)
71,301
167,117
66,000
32,601
337,019
Year ended June 2017
1 July 2016
Profit or Loss
Directly to
equity
Acquisition of
subsidiary
30 June
2017
Charged/credited to
Sundry creditors and accruals
Provisions
Borrowing expenses
Share issue costs
Section 40-880 Deduction
Depreciation
-
-
-
-
-
-
-
49,500
4,986
-
-
16,815
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49,500
4,986
-
-
16,815
-
71,301
(e) Franking Credits
The company does not hold franking credits as at 30 June 2018 or 30 June 2017.
62
63
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
7. EARNINGS/(LOSS) PER SHARE
(a) Basic and diluted loss per share
From continuing operations attributable to the ordinary
equity holders of the company
Total basic loss per share attributable to the ordinary
equity holders of the company
(b) Reconciliation of earnings used in calculating loss per share
Profit/(Loss) attributable to the ordinary equity holders of the
company used in calculating basic and diluted loss per share
Consolidated
2018
Cents per Share
2017
Cents per Share
(3.99)
(3.99)
(8.48)
(8.48)
-
From continuing operations
(9,220,416)
(1,163,673)
(c) Weighted average number of shares
Consolidated
2018
Number
2017
Number
Weighted average number of ordinary shares outstanding during the
year used in calculating basic and diluted EPS
213,180,678
13,724,923
Weighted average number of ordinary shares outstanding during the current period has been calculated using:
• The number of ordinary shares outstanding from the beginning of the current period to the acquisition date computed on
the basis of the weighted average number of ordinary shares of SenSen Networks Group Pty Ltd (accounting acquirer)
outstanding during the period multiplied by the exchange ratio of 6,259,358 SenSen Networks Group Pty Ltd shares to
103,069,423 SenSen Networks Limited shares; and
• The number of ordinary shares outstanding from the acquisition date to the end of that period being the
actual number of ordinary shares of SenSen Networks Limited (the accounting acquiree) outstanding during the period.
At 30 June 2018, there are 15,600,000 (2017: nil) options outstanding. Options are not considered dilutive as they are currently
out of the money. Options may become dilutive in the future.
8. AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Audit and review of the financial reports
Taxation and other accounting services
Total remuneration of BDO
64
Consolidated
2018
$
60,000
89,360
149,360
2017
$
60,000
50,009
110,009
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
9. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Reconciliation of cash
Cash at the end of the financial year as shown in the cashflow statement is
reconciled to cash at the end of the finacial year as follows:
Cash at bank and in hand
Bank overdrafts
Consolidated
2018
$
2017
$
6,556,928
54,034
6,556,928
-
6,556,928
54,034
(265,341)
(211,307)
For statement of cash flow presentation purposes cash and cash equivalents include cash on hand, deposits available
on demand with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank
overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the statement of financial position.
10. CASH FLOW INFORMATION
(a) Reconciliation of profit/(loss) after income tax to net cash used in operating activities
Net (loss) for the year
(9,220,416)
(1,163,673)
Adjustments for:
Depreciation and amortisation expense
Corporate Restructure expense
Share based payment expense
Reverse acquisition adjustment
Changes in operating assets and liabilities,
net of the effects from acquisition of subsidiary
Decrease/(Increase)/in trade and other receivables
(Decrease)/increase in trade and other payables
Decrease/(Increase) in other assets
Decrease/(Increase) in inventory
39,797
5,229,773
2,019,099
406,930
35,462
-
-
-
(85,213)
(2,561,803)
-
-
(41,304)
601,200
(133,613)
15,000
Net cash used in operating activities
(4,171,833)
(686,928)
64
65
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
10. CASH FLOW INFORMATION (continued)
(b) Reconciliation of cash and non-cash movements in borrowings from financing activities
Year ended 30 June 2018
Opening Balance
Cash flows
Non-cash Changes
- Amortisation
Closing Balance
Borrowings
1,699,444
1,699,444
(397,469)
(397,469)
86,972
86,972
1,388,947
1,388,947
Year ended 30 June 2017
Opening Balance
Cash flows
Non-cash Changes
- Amortisation
Closing Balance
Borrowings
1,935,323
1,935,323
(129,804)
(129,804)
(106,075)
(106,075)
1,699,444
1,699,444
11. TRADE AND OTHER RECEIVABLES
CURRENT
Other receivables – owing on sale of subsidiaries
Provision for impairment of receivables - owing on sale of subsidiaries
Provision for doubtful debts
Trade Receivables
(a) Deferred payment owing on sale of subsidiaries
Opening balance
Foreign exchange (loss) gain
Closing balance
Note
(a)
(b)
2018
$
2017
$
6,836,003
(6,836,003)
(19,663)
407,623
387,961
6,836,003
(6,836,003)
322,411
322,411
6,836,003
-
7,171,243
(335,240)
6,836,003
6,836,003
(b) Although the Company continues to pursue the debt, the Board has resolved to make a provision for full impairment
of the amounts owing on the sale of subsidiaries as payment has not been received in accordance with the settlement
agreement.
66
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
12. PROPERTY, PLANT AND EQUIPMENT
30 June 2017
Opening net book value
Additions
Depreciation and amortisation
Balance at 30 June 2017
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book balance
30 June 2018
Opening net book value
Additions
Depreciation and amortisation
Balance at 30 June 2018
At 30 June 2018
Cost or fair value
Accumulated depreciation
Net book balance
13. TRADE AND OTHER PAYABLES
Current
Trade payables
Payroll liabilities
Accrued expenses
Motor
Vehicles
$
76,976
-
(4,816)
72,160
96,371
(24,211)
72,160
72,160
-
(5,501)
66,659
96,371
(29,712)
66,659
Furniture &
Equipment
$
Computer
Equipment
$
Total
$
13,000
-
(1,653)
11,347
41,300
(29,953)
11,347
11,347
3,652
(2,140)
12,859
44,952
(32,093)
12,859
31,384
27,419
(28,992)
29,811
129,725
(99,915)
29,811
29,811
127,697
(32,156)
125,352
257,422
(132,070)
125,352
121,360
27,419
(35,461)
113,318
267,396
(154,078)
113,318
113,318
131,349
(39,797)
204,870
398,745
(193,875)
204,870
Consolidated
2018
$
2017
$
414,016
742,433
369,926
538,852
510,764
180,000
1,526,375
1,229,616
Terms and conditions relating to the above financial instruments:
Trade payables are non-interest bearing and are normally settled between 30 to 90 days
66
67
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
14. BORROWINGS
(a) Loans from related parties – unsecured
(b) Bank Loan
(c) Car Loan
Consolidated
2018
$
870,895
450,000
68,052
2017
$
926,541
693,635
79,268
Total Current Borrowings
1,388,947
1,699,444
(a) During a prior period, directors extended short-terms loan to the Company of $686,568 (of which 50% were repaid
through equity as part of the reverse takeover) No interest was charged during the year ended 30 June 2018.
As part of the acquisition and as outlined in the Prospectus, one half of the loans were converted to equity on
completion of the acquisition and the balance of $343,284 will be paid through equity awards in October 2018.
A shareholder, Speedshield Holdings extended a loan of $500,000 to the Company with no interest payable.
(b) The company has a business loan facility with Commonwealth Bank for $450,000. Variable rate interest of 5.45% is
charged and the loan term expires on 13 December 2020.
(c) The company has a motor vehicle loan with Lexus which expires in June 2020.
15. ISSUED CAPITAL
Consolidated
2018
$
2017
$
Ordinary shares
(a)
28,731,865
13,724,923
68
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
15. ISSUED CAPITAL (CONTINUED)
(a) Share capital movement during the period:
2018
2017
No.
$
No.
$
Consolidated
Balance at beginning of the reporting period
Shares issued during the year (i)
Share issue costs (i)
6,259,358
-
-
13,724,923
-
-
5,990,375
268,983
12,775,283
999,980
(50,340)
Merger of SenSen Networks Limited
(the Company) and SenSen Networks
Group Pty Ltd (SenSen)
Elimination of existing SenSen shares at
acquisition date
(6,259,358)
Existing Company shares at acquisition of SenSen
103,069,423
-
-
Company shares issued to SenSen
vendors on acquisition (ii)
Placement of shares (iii)
Balance at end of period
273,764,706
10,306,942
34,481,766
4,700,000
411,315,895
28,731,865
6,259,358
13,724,923
-
-
-
-
-
-
(i) SenSen raised capital of $999,980 (being $160,997 of loans converted to equity and $839,003 raised in cash less
share issue costs of $50,340) prior to the Acquisition.
(ii)
Issue of shares at deemed issue price of $0.10 as consideration for the acquisition of SenSen Networks Group
Pty Ltd at acquisition date. No funds were raised as the consideration for the Shares was the transfer of shares in
SenSen Networks Group Pty Ltd.
(iii) Issue of shares at an issue price of $0.145 under a placement of shares to raise $5 million on 24 May 2018. Capital
raising costs associated with the placement were $300,000 and the net amount raised was $4,700,000.
(b) Capital Management
Management controls the capital of the group in order to provide capital growth to shareholders and ensure the group
can fund its operations and continue as a going concern. The Group’s capital includes ordinary share capital. There
are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the
Group’s financial risks and adjusting its capital structure in response to changes in these risks and the market.
There have been no changes in the strategy adopted by management to control the capital of the Consolidated Entity
since the prior year.
68
69
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
16. RESERVES
(a) Other Reserves
Share-based payment reserve
Foreign currency translation reserve
(b) Movements
Foreign exchange translation reserve
Balance at beginning of financial year
Currency translation differences arising during the year
Balance at end of financial year
Share-based payment reserve
Balance at beginning of financial year
Share-based payment valuation of awards
Balance at end of financial year
(c) Nature and purpose of reserves
(i) Share-based payment reserve
Consolidated
2018
$
2017
$
2,019,099
26,387
2,045,486
(982)
27,369
26,387
-
2,019,099
2,019,099
-
(982)
(982)
-
(982)
(982)
-
-
-
The share-based payment reserve is used to record the value of share-based payments provided to employees,
including key management personnel, as part of their remuneration.
(ii) Foreign exchange translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations where their functional currency is different to the presentation currency of the
reporting entity.
17. CONTINGENT LIABILITIES
The Group had no known contingencies at 30 June 2018 and 30 June 2017.
70
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
18. EVENTS AFTER THE REPORTING PERIOD
On 27 July 2018, 2,435,068 ordinary shares were issued to management and staff as part of the Plan.
The establishment of the SenSen Long Term Incentive Plan (LTI) was approved by shareholders at the 2017 annual general
meeting (AGM) and is detailed on the company’s website. The Plan is designed to provide long-term incentives for employees
including directors to deliver long-term shareholder returns. Under the Plan, participants are granted options which only vest if
certain performance standards are met. Participation in the Plan is at the Board’s discretion and no individual has a contractual
right to participate in the Plan or to receive any guaranteed benefits.
There are no other material matters subsequent to the end of the financial year.
19. RELATED PARTY TRANSACTIONS
(a) Directors Loans
As part of the acquisition, each of the following then Directors of the Company and then Chief Financial Officer agreed
to convert 50% of the amounts owing to them by the Company into Shares.
The details of the 50% of the Company’s previous Directors’ and CFO’s Loans converted in to Shares at date of acquisition
are provided below:
Name
W Mitchell
D Smith
W Harder
M Rhodes
B Neal
TOTAL
Total Outstanding
Debt as at
18 October 2017
Amount to be
Converted into
Shares- 50%
Shares to be
Issued
($0.10 per Share)
$726,387
$603,303
$261,942
$199,756
$173,096
$363,193
$301,652
$130,971
$99,878
$86,548
3,631,935
3,016,515
1,309,710
998,780
865,480
Total
Outstanding
Debt as at
30 June 2018
$363,193
$301,652
$130,971
$99,878
$86,548
$1,964,484
$982,242
9,822,420
$982,242
The remaining balances above will be repaid within 12 months of completion of the Acquisition in cash, or in Shares, at the
election of the Company’s Board. If the Company’s Board elects to repay the loans in Shares, this will be subject to Shareholder
approval and the number of Shares to be issued will be calculated by dividing the relevant balances by the 30-day VWAP of the
Shares trading on ASX.
As at 30 June 2018 the outstanding balances of $982,242 above were recorded as liabilities in the annual report as follows:
•
•
Borrowings - $343,284 for Company’s previous directors’ loans. Refer note 14.
Trade and other payables - $638,958 for outstanding payroll and tax liabilities to Company’s previous CFO and directors
(b) Shareholder Loan
As part of product licensing agreement, an amount of $500,000 is payable to Speedshield Technologies Pty Ltd, a
shareholder of the Company. There is no interest charged on this loan and it is expected to be settled through future
distribution fees payable to the Company.
70
71
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
20. INTEREST IN SUBSIDIARIES
The following are subsidiaries of the group, are controlled entities and have been consolidated at 30 June 2018.
(a) Controlled entities consolidated
Name of subsidiary
Country of incorporation
2018
Equity interest*
SenSen Networks Group Pty Ltd
SenSen Networks (Hong Kong) Limited
PT Orpheus Energy
SenSen Networks Singapore Pte Limited
SenSen Video Business Intelligence PVT Ltd
Australia
Hong Kong
Indonesia
Singapore
India
100%
100%
100%
100%
100%
2017
100%
50%
100%
100%
100%
21. KEY MANAGEMENT PERSONNEL DISCLOSURES
2018
$
2017
$
(a) Key Management Personnel compensation
Short-term employee benefits
689,316
219,000
Detailed remuneration disclosures are provided in the Remuneration Report on pages 27 to 36.
(b) Equity instrument disclosures relating to Key Management Personnel compensation
Details of Key Management Personnel option and share holdings are disclosed in the Remuneration Report.
72
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
22. SHARE BASED PAYMENTS
The following ordinary shares and options over ordinary shares were issued in respect of the reporting year as compensation
to key management personnel and other staff during the years ended 30 June 2018.
There were no share-based payments for the year ended 30 June 2017.
a)
Long Term Incentive Plan
Long term incentive shares have been issued to key management personnel and staff post the year-end.
The establishment of the SenSen Long Term Incentive Plan (“the Plan”) was approved by shareholders at the 2017
annual general meeting (AGM) and is detailed on the company’s website. The Plan is designed to provide long-term
incentives for employees including directors to deliver long-term shareholder returns.
Under the Plan, participants may be granted shares and options for nil consideration. Options only vest if certain
performance standards are met. Participation in the Plan is at the Board’s discretion and no individual has a
contractual right to participate in the Plan or to receive any guaranteed benefits.
b)
Long Term Incentive Shares
On 20 March 2018, the Company granted 2,435,068 ordinary shares were issued to key management personnel and
staff as part of the Long-Term Incentive Plan.
Awards under the same conditions are also payable for the financial years 2019 and 2020.
c)
Long Term Incentive Options
The company issued both LTI Incentive Options, General Options and LTI Performance Options during the year
ended 30 June 2018.
LTI Incentive Options and General Options
OI 30 November 2017, the Company granted 11,100,00 LTI Incentive Options to Subhash Challa (Executive Chairman
and CEO) and David Smith (COO) and 4,500,000 General Options to its broker, BW Equities. These options vested
immediately and have an exercise period of 3 years. These options were granted in 3 equal lots with exercise prices
of 25 cents, 35 cents and 45 cents.
The fair value of the LTI Incentive Options and General Options was $764,400.
72
73
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
22. SHARE BASED PAYMENTS (CONTINUED)
c)
Long Term Incentive Options (continued)
LTI Performance Options
20 March 2017, the Company granted 33,217,401 LTI Performance Options to key management personnel and other
employees. These options were in two tranches based on the performance of the company for the financial years
2018 and 2019. Full details can be found below.
Issue conditions
Exercise Price
Upon satisfaction of the following hurdle:
• LTI Options (Performance) are only issued should the Company increase
its year on year revenue, commencing from the audited revenue of
$2,065,570, as reported in the 2017 Annual Report of SenSen P/L.
• LTI Options (Performance) will be issued based on the percentage
increase in audited revenue performance year-on-year. The Company
must achieve a minimum 50% increase in revenue from 2017 to 2018
or no LTI Options (Performance) will be issued.
Upon satisfaction of the following hurdle:
• LTI Options (Performance) are only issued should the Company increase
its year on year audited revenue, as reported in the 2019 Annual Report.
• LTI Options (Performance) will be issued based on the percentage
increase in audited revenue performance year-on-year. The Company
must achieve a minimum 50% increase in revenue from 2018 to 2019
or no LTI Options (Performance) will be issued.
Share options outstanding at the end of the year follows:
Five-day VWAP of the Company’s shares,
following the ASX release
of the Company’s Annual Report,
for the financial year ended 30 June 2018
Five-day VWAP of the Company’s shares,
following the ASX release of the Company’s
Annual Report, for the financial year
ended 30 June 2019
2018
Grant date
30/11/2017
30/11/2017
30/11/2017
20/03/2018
20/03/2018
Expiry date
Exercise
Price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other (ii)
Balance at
the end of
the year
04/12/2020
04/12/2020
04/12/2020
30/09/2021
30/09/2022
$0.25
$0.35
$0.45
$0.18 (i)
$0.18 (i)
-
-
-
-
-
5,200,000
5,200,000
5,200,000
16,502,818
16,714,583
-
48,817,401
-
-
-
-
-
-
-
-
-
(660,113)
-
5,200,000
5,200,000
5,200,000
15,842,705
16,714,583
(660,113)
48,157,288
(i) Exercise price is based on estimated 5-day VWAP of the Company’s shares, following the ASX release of the Company’s
Annual Report, for the financial year ended 30 June 2018 and 30 June 2019
(ii) Adjustment to account for options not vested at 30 June 2018 due to performance condition not being satisfied.
74
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
22. SHARE BASED PAYMENTS (Continued)
The weighted average remaining contractual life of options outstanding at the end of the 2018 financial year was
3.42 years. The weighted average exercise price was $0.23. There were no LTI shares and options granted during the
year ended 30 June 2017.
If all of the above options to Key Management Personnel, other employees and the general options were to vest and
be exercised, excluding the time value of money, the Company could receive cash proceeds of up to a maximum of
$11,439,132 on the potential exercise of these options in the period from the vesting date to their expiry date which
extends to 30 September 2022. It is not expected that all options that have been granted will vest.
d)
Fair value of options granted
The fair value of the equity-settled share options is estimated as at the date of grant using a binomial or Black-Scholes
model taking into account the terms and conditions upon which the options were granted. The following table lists
the inputs to the model used in the valuation of the options granted in 2018.
2018
Grant date
Expiry date
Share Price
at grant date
Expected
Volatility
Risk-free
rate
Dividend
yield
Fair Value at
Grant Date
30/11/2017
30/11/2017
30/11/2017
20/03/2018
20/03/2018
04/12/2020
04/12/2020
04/12/2020
30/09/2021
30/09/2022
$0.17
$0.17
$0.17
$0.18
$0.18
65%
65%
65%
65%
65%
2.1%
2.1%
2.1%
2.1%
2.1%
0%
0%
0%
0%
0%
$0.0632
$0.0472
$0.0366
$0.0801
$0.0801
The total expense arising from share-based payment transactions recognised during the period as part of employee benefits
expense was $2,019,099 (2017: $nil).
e) Accounting Policy
The Group provides benefits to employees (including senior executives) and consultants of the Group in the form
of share-based payments, whereby employees and consultants render services in exchange for shares or rights over
shares (equity-settled transactions).
The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value of rights over shares is determined using a binomial, or Black-
Scholes model, further details of which are given in the Remuneration Report. The fair value of shares is determined
by the market value of the Group’s shares at grant date.
In valuing equity-settled transactions, any performance conditions are taken into account if relevant and assumptions
around the likelihood of meeting these performance conditions are factored into the valuation model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
(i) the extent to which the vesting period has expired; and
(ii) the Group’s best estimate of the number of equity instruments that will ultimately vest.
74
75
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
22. SHARE BASED PAYMENTS (Continued)
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a
market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
23. PARENT ENTITY INFORMATION
Parent entity information required to be disclosed in accordance with the Corporations Act 2001. The legal parent entity of the
group is SenSen Networks Limited, and the results shown below are for the 12 months ended 30 June 2018 and 2017:
(a) Summary financial information
Statement of profit or loss and other comprehensive income
(Loss) for the year
Other comprehensive income
Total comprehensive loss for the year
Statement of financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Issued capital
Accumulated losses
Total equity
Parent entity
2018
$
2017
$
(5,628)
-
(5,628)
(285,976)
-
(285,976)
37,366
21,347,763
305,928
14,972,063
21,385,129
15,277,991
545,876
1,283,712
2,101,859
1,266,687
1,829,587
3,368,546
39,590,292
(20,034,751)
31,478,839
(19,569,394)
19,555,541
11,909,445
(b) Guarantees entered into by the parent entity
The parent entity has not entered into any guarantees at the 30 June 2018 and 30 June 2017.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2018 and 30 June 2017.
(d) Contractual commitments for the acquisition of property, plant or equipment
As at the 30 June 2018, the parent entity has made no contractual commitments for the acquisition of plant or
equipment.
(e) 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 for the investments in subsidiaries which are accounted for at cost in the financial statements of
SenSen Networks Limited.
76
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Short term loans
Long term loans
Convertible notes
Consolidated
2018
$
2017
$
6,556,928
387,961
54,034
322,411
6,944,889
376,445
1,526,375
1,388,947
-
-
1,229,616
1,203,751
495,693
-
2,915,322
2,929,060
The Company monitors its exposure to key financial risks, principally market risk (including currency risk), interest risk, credit
risk and liquidity risk, with the objective of achieving the company’s financial targets whilst protecting future financial security.
The main risks arising from the company’s financial instruments are liquidity risk, interest rate risk and credit risk. The Company
uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels
of exposure to interest rates and assessments of market forecasts for interest rates. Liquidity risk is monitored through the
development of future rolling cash flow forecasts and regular internal reporting. Credit risks are managed by credit limits and
retention of the title over the investments sold.
The Board reviews and agrees policies for managing each of these risks as summarised below. Primary responsibility for
identification and control of financial risks rests with the Board. It reviews and agrees policies for managing each of the risks,
including the use of derivatives, hedging cover of interest rate exposure, credit allowances, and future cash flow forecast
projections.
(a) Market Risk
Foreign exchange risk
Exchange Risk arises whereby currency exchange rates may affect the assets and liabilities and the consolidation of
companies within the group.
The company reports in Australian Dollars; however, the operating currency of the Indonesian subsidiary is the
Indonesian Rupiah (IDR), the operating currency for the Hong Kong subsidiary is the HK$, and the operating currency
for the Singapore subsidiary is US$. These subsidiaries currently have no activities.
At 30 June 2018 if exchange rates had increased/decreased by 500 basis points from the year end rates with all other
variables held constant, the profit increase/decrease would be $8,951 (2017: nil).
76
77
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(b)
Interest Risk
The Group’s borrowings during 2018 from Directors and from Speedshield Holdings were not liable to interest.
The company has a business loan facility of $450,000 and an undrawn overdraft facility of $225,000 with the
Commonwealth Bank of Australia. Interest is charged at a variable rate of 5.45% on the business loan.
Group sensitivity
At 30 June 2018 if interest rates had increased/decreased by 50 basis points from the year end rates with all other
variables held constant, the result would not be material at $2,250. (2017: $2,250)
Based on movements in interest rates the company regularly reviews the deployment of funds and the exposure
to interest rate risk in conjunction with currency and exchange rate risk in order to manage these risks in line with
corporate objectives.
(c) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group’s receivables from other third parties, investments,
banks and financial institutions.
Trade and other receivables
The Group limits its exposure to credit risk by only limiting transactions with high credit quality financial institutions
principally government bodies and large listed corporate firms.
(d) Liquidity Risk
The table below reflects all contractually fixed pay-offs and receivables for settlement from recognised financial
assets and liabilities, including derivative financial instruments as of 30 June 2018. The amounts disclosed are
undiscounted cash flows anticipated to eventuate in the next fiscal year.
Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at
30 June 2018.
Total
$
< 6 Mths
$
6-12 Mths
$
1-5 Yrs
$
2018
Financial assets
Cash and cash deposits
Trade and other receivables
Financial liabilities
Trade and other payables
Short term loans
Long Term Loans
6,556,928
387,961
6,556,928
387,961
6,944,889
6,944,889
1,526,375
1,388,947
-
1,526,375
343,284
-
2,915,322
1,869,659
Net maturity
4,029,567
5,075,230
-
-
-
-
-
-
-
-
-
-
-
1,045,663
-
1,045,663
(1,045,663)
78
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(d) Liquidity Risk (continued)
Total
$
< 6 Mths
$
6-12 Mths
$
1-5 Yrs
$
2017
Financial assets
Cash and cash deposits
Trade and other receivables
Financial liabilities
Trade and other payables
Short term loans
Long term loans
54,034
322,411
54,034
322,411
376,445
376,445
1,229,616
1,203,751
495,693
1,229,616
-
-
2,929,060
1,229,616
Net maturity
(2,552,615)
(853,171)
-
-
-
-
-
-
-
-
-
-
-
-
1,203,751
495,693
1,699,444
(1,699,444)
The contractual maturities of the company’s financial assets and liabilities set out in the table are equivalent to the
maturity analysis of financial assets and liability based on management’s expectation.
The risk implied from the values in the table reflects a balanced view of cash inflows and outflows.
(e) Fair value
The methods for estimating fair value are outlined in the relevant notes to the financial statements, and unless
specifically stated, carrying value approximates fair value for all financial instruments.
25. COMMITMENTS
Operating Lease Commitments
Non-cancellable operating lease contracted for but not
recognised in the financial statements
Payable – minimum lease payments
- Not later than 12 months
-
-
Between 1 and 5 years
Later than 5 years
Consolidated
2018
$
2017
$
201,609
203,076
-
91,092
4,979
-
404,685
916,091
The property lease is a non-cancellable lease with a three-year term, with rent payable monthly in advance. Contingent rental
provisions within the lease agreement require that the minimum lease payments shall be increased by the cost of living per
annum.
The Company has no contingent liabilities.
78
79
Additional Shareholder Information (Unaudited)
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The
information is current as at 18 September 2018.
(a) Distribution of equity securities
The share capital as advised to ASX on 24 August 2017 has been consolidated 10:1 effective from 31 August 2017.
After consolidation 18,347,952 fully paid ordinary shares are held by 826 individual shareholders.
All issued ordinary shares carry one vote per share and carry the rights to dividends.
The numbers of shareholders, by size of holding, in each class are:
Holdings Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Holders
164
774
349
628
199
2,114
Holding less than a marketable parcel 668
(b) Substantial shareholders aid
Name
Smart Equity EIS Pty Ltd
Subhash Challa
Zenon Pasieczny/Saphet Capital Management Pty Ltd
Speedshield Holdings Pty Ltd
(c) Twenty largest holders of quoted equity securities
Rank
Ordinary shareholders - Fully Paid
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SMARTEQUITY EIS PTY LTD
SPEEDSHIELD HOLDINGS PTY LTD
MR SUBHASH CHALLA
SAPHET CAPITAL MANAGEMENT PTY LTD
MR FRANCIS ALAN ALEXANDER WHITAKER
SANDHURST TRUSTEES LTD
MR WILLIAM MORAN
CITICORP NOMINEES PTY LIMITED
MR SATISH GUPTA
GASMERE PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
MR VENKATESWARA PRASAD GUNUPATI
MR DAVID EDWARD SMITH
UNIVERSITY OF TECHNOLOGY SYDNEY
MRS LAXMI CHALLA
MR WAYNE MITCHELL
TAT CAPITAL PTY LTD
SISU INTERNATIONAL PTY LTD
TR NOMINEES PTY LTD
MRS LAXMI CHALLA
Total Units
78,345
2,351,505
2,870,716
21,736,516
386,713,881
413,750,963
Number
141,450,407
78,539,256
46,376,259
28,999,266
Number
141,450,407
28,999,266
28,778,002
22,262,395
9,603,301
9,238,284
9,232,976
8,218,194
6,874,701
6,021,000
5,856,170
4,822,335
4,522,083
4,373,683
4,100,616
3,631,935
3,209,201
2,758,621
2,700,000
2,248,188
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
308,901,358
Total Remaining Holders Balance
104,849,605
UNQUOTED SECURITIES
There are no unquoted securities at 30 June 2018
80
%
0.02
0.57
0.69
5.25
93.47
100.00
Percentage
34.19%
18.98%
11.21%
7.01%
Percentage
34.19
7.01
6.96
5.38
2.32
2.23
2.23
1.99
1.66
1.46
1.42
1.17
1.09
1.06
0.99
0.88
0.78
0.67
0.65
0.54
74.66
25.34
80
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