2023
Annual Report
Keeping communities connected
ABN: 46 072 369 870
Level 4, 357 Collins Street, Melbourne, Victoria 3000
servicestream.com.au
Annual General Meeting
The Annual General Meeting of
Service Stream Limited will be held at
RACV City Club
Level 2, 501 Bourke Street, Melbourne
Wednesday 18 October 2023, 10.00am
Service Stream Limited
ABN 46 072 369 870
Annual report for the financial year ended
30 June 2023
Performance Highlights
Financial Performance
Total Revenue
$2,151m
▲ 38% on pcp
NPAT-A
$36.8m
▲ 17% on pcp
Net Debt
$35.7m
Underlying EBITDA
$114.1m
▲ 25% on pcp
Cashflow Conversion
81%
OCFBIT
FY23 Total Dividends
1.5 cps
▲ 50% on pcp
Diversified Group Portfolio
Supporting Australia’s
essential network
infrastructure across
growing markets
Telecommunications
Utilities
Transport
Total Revenue
Total Revenue
Total Revenue
$970.4m
▲ 51.6% vs pcp
$888.4m
▲ 27.5% vs pcp
$292.2m
▲ 32. 8% vs pcp
EBITDA
EBITDA
EBITDA
$85.5m
▲ 38.9% vs pcp
$28.4m
▲ 45.6% vs pcp
$14.8m
▲ 49.9% vs pcp
WIH
$1.2b
WIH
$2.6b
WIH(1)
$1.2b
(1) Value of Inland Rail O&M contract removed from Transport WIH pending outcome of the Federal Government’s Independent Review
Service Stream Limited ABN 46 072 369 870
Annual Report
for the year ended 30 June 2023
Contents
Directors’ report
Remuneration report
Auditor’s independence declaration
Financial report
Page 1
Page 18
Page 37
Consolidated statement of profit or loss and other comprehensive income
Page 38
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report to the members
Page 39
Page 40
Page 41
Page 42
Page 86
Page 87
These financial statements are the consolidated financial statements of the consolidated entity consisting of
Service Stream Limited and its subsidiaries. The financial statements are presented in Australian dollars.
Service Stream Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Level 4, 357 Collins Street Melbourne VIC 3000.
A description of the nature of the consolidated entity's operations and its principal activities is included in the
review of operations and financial performance on pages 6 to 13, which is not part of these financial
statements.
The financial statements were authorised for issue by the Directors on 22 August 2023. The Directors have the
power to amend and reissue the financial statements.
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All
media releases, financial reports and other information are available on our website:
www.servicestream.com.au.
Annual Report
22 August 2023
Chairman’s Letter
The past 12 months has been one of consolidation in a challenging economic environment impacted by
increased inflation and the ongoing labour shortage in Australia. Notwithstanding these macroeconomic
headwinds, and a one-off financial impact of an onerous contract in Queensland, Service Stream has
delivered solid underlying financial performance underpinned by our strong portfolio of contracted
operations across growing markets.
Despite these challenges which are forecast to remain over the short-term, the Group remains well
positioned to continue to grow and further diversify throughout FY24. We continue to experience strong
demand from our clients as they continue to invest in the construction, upgrade and maintenance of their
essential infrastructure networks driven by population growth, aging infrastructure, the digital transition and
energy transition.
While the Board was disappointed with the reported onerous contract and associated financial impacts on
the business, we are pleased by the way in which the executive team has steered the business through this
issue. Consequently, the Board together with the executive team have successfully pivoted the Group away
from uncommercial and higher-risk contracting models that are materially exposed to environmental and
economic uncertainty.
The Board has every confidence in the Executive Management Team, led by Leigh Mackender, to successfully
execute the Group’s new strategy and deliver consistent and incremental value for our shareholders in FY24
and beyond.
Safety
The health and safety of our workforce, clients and the communities in which we operate remains the
number one priority for the Board and Management. Pleasingly, all of the Group’s lag-indicator frequency
rates demonstrated strong improvement in FY23, with the business continuing to deliver industry leading
safety performance. The Board remains committed to supporting Management’s focus on driving superior
safety performance, supported by a strong safety culture and leading practices.
Financial performance
Notwithstanding the financial challenges encountered in FY23, the Group recorded Total Revenue of $2,151m,
which was a 37.5% increase on the prior year, and saw underlying EBITDA from Operations of $114m, an
increase of 25.2% on FY22. Additionally, the team delivered a strong cash result with an Underlying EBITDA
from Ops to OCFBIT conversion rate of 81%, with net debt significantly reduced to $34.3m following ongoing
focus on the Group’s profit-to-cash life-cycle and the receipt of a material tax refund under the ATO’s Loss
Carry Back Tax Offset initiative. The Board is very pleased with the strength of the business’ balance sheet
heading into FY24.
Sustainability
The Board recognise the importance of driving long-term sustainable practices which support and enhance
the environment, social and economic performance for both Service Stream and our wider business
stakeholders. The Board remains committed to the development and continual improvement of
performance and understands the increasing demands of our stakeholders in appropriately managing ESG
related risks and opportunities.
During the year, Service Stream strengthened its delivery across its core focus areas, aligned to the Group’s 5
pathways framework, encompassing: Safety, People, Community, Environment and Governance.
The business has taken an important step in delivering tangible social and economic results including the
implementation of a formal Innovative Reconciliation Action Plan, and our Group’s inaugural Diversity, Equity
and Inclusion strategy, each providing a detailed plan and set of focussed initiatives for the years ahead.
Dividends
The Board remains committed to the consistent payment of dividends to our shareholders aligned to the
business’ profit, while ensuring the Group maintains an appropriate capital management strategy which can
support both operational delivery and the execution of our strategic plan. Following the year’s performance
and strong cashflow result, the Board is pleased to confirm a final fully-franked dividend of 1.0 cents per share.
Board Refresh
This past year we have continued to implement the Board refresh process for our longstanding directors. I
would like to thank retired directors Deborah Page and Greg Adcock for their significant contributions and
support during their time with Service Stream. I am also very pleased to welcome Martin Monro and Sylvia
Wiggins to the Board who each bring a wealth of experience, knowledge and skills that are complementary
to the business.
Finally, on behalf of the Board, I would like to thank all our valued people working across the business for their
hard work and dedication throughout the year.
Brett Gallagher
Chairman
Service Stream Limited
Directors' report
Directors’ Report
Your Directors present their report on the consolidated entity (the Group) consistent of Service Stream
Limited and entities it controlled at the end of, or during, the year ended 30 June 2023, and in order to comply
with the provisions of the Corporations Act 2001. The Directors’ report is as follows:
Board of Directors biographical details
The names and particulars of the Directors of the Company during or since the end of the financial year are:
Brett Gallagher
Chairman
Leigh Mackender
Managing Director
Peter Dempsey
Non-Executive Director
Term of Office: Non-Executive Director
Term of Office: Managing Director since
Term of Office: Chairman from November
from April 2010 to April 2013 and from
May 2014.
November 2013 to May 2014, Managing
Director from April 2013 to November
2013, Executive Director from May 2014 to
February 2015, Chairman since March
2015.
Qualification: FAICD.
Qualifications: MBA (VU), MAICD.
Leigh Mackender joined Service Stream
Limited in February 2008, and has held
many leadership roles across the
2010 to February 2015, Non-Executive
Director since March 2010.
Qualifications: B. Tech. (Civil Eng.) (Adel),
Grad. Diploma (Bus. Admin.), SAIT,
FIEAust, MAICD.
company as it has evolved through both
Peter Dempsey brings to the Board
organic and acquisition growth. Prior to
extensive construction and development
Brett Gallagher brings to the Board
being appointed Managing Director,
expertise following a 40-year career in
extensive commercial and operational
Leigh had executive responsibility for the
those industries. He spent 30 years at
expertise, and strategic leadership gained
Group’s utility operations, accountable for
Baulderstone, including five years as
in the telecommunications, utilities,
the operational and financial
Managing Director. He has specific
infrastructure and technical services
performance and strategic growth of the
expertise in engineering, strategic
industries. He has spent over 25 years as a
division.
senior executive, director and owner of
businesses within these sectors. Brett has
specific experience in service delivery,
contract management, business
development, health, safety &
environment, corporate finance and
mergers & acquisitions.
Leigh has held senior roles in
government, private and public
leadership, health, safety & environment,
corporate finance, mergers & acquisitions
and human resources.
businesses, always maintaining a strong
Peter has extensive experience as a
focus on the strategic development and
company director gained across ASX
implementation of business strategy,
listed and private companies over the last
operational and financial management,
15 years. His relevant sector experience
health & safety and information
includes engineering, construction,
Brett is an experienced company director
technology.
utilities and telecommunications. Peter’s
and has experience in governance and
compliance, reporting and investor
relations. His current directorships
include not-for-profit and several private
businesses that operate predominantly in
the utilities and services sector.
Brett is a member of the Health, Safety,
Environment & Sustainability Committee.
Brett has no other listed company
directorships and has held no other listed
company directorships in the last three
years.
Leigh is a member of the Health, Safety,
Environment & Sustainability Committee.
experience includes Board leadership,
governance and compliance, risk
Leigh has no other listed company
directorships and has held no other listed
company directorships in the last three
years.
management, reporting and
remuneration practices.
Peter was Chairman of the Remuneration
and Nomination Committee (until 28
February 2023) and is a member of the
Remuneration and Nomination
Committee and Audit and Risk
Committee.
Peter held a listed company directorship
with Monadelphous Limited (retired 22
November 2022) and has held no other
listed company directorships in the last
three years.
1
Service Stream Limited
Directors' report
Elizabeth Ward
Martin Monro
Sylvia Wiggins
Non-Executive Director
Non-Executive Director
Non-Executive Director
Term of Office: Non-Executive Director
Term of Office: Non-Executive Director
Term of Office: Non-Executive Director
since September 2021.
since October 2022.
since November 2022.
Qualifications: MBA, MAICD.
Qualifications: BA (Psych) FAICD, FAIB.
Qualifications: LLB, LJuris Law, GAICD.
Elizabeth Ward brings to the Board
Martin Monro brings to the Board
Sylvia Wiggins brings to the Board
extensive operational, contracting and
extensive operational, contracting and
extensive infrastructure, finance,
commercial expertise gained across a
commercial expertise gained across
strategic planning and risk management
diverse range of industries including
large-scale infrastructure projects in
gained across a diverse range of
large-scale infrastructure, transport,
Australia and overseas. He has over 30
industries including energy,
fisheries and telecommunications in
years’ experience as a CEO, senior
infrastructure, finance, funds
Australia and New Zealand. She has over
executive and strategic advisor across
management, transport and
30 years’ experience as a CEO, senior
these sectors. He has specific experience
government in Australia and overseas.
executive and strategic advisor across
in risk management, industrial relations,
She has over 30 years’ experience as a
these sectors. She has specific
contract management, stakeholder
CEO, senior executive and strategic
experience in change management,
engagement and service delivery.
advisor across these sectors. She has
business development, industrial
relations, contract management,
stakeholder engagement, service
delivery and mergers & acquisitions.
Martin was previously Managing Director
and CEO of Watpac Limited (now BESIX
Watpac) and held senior roles at
Baulderstone Hornibrook. He is an
specific experience in corporate finance,
audit, risk management, contract
management, stakeholder engagement
and service delivery.
Elizabeth has held CEO roles with Gough
experienced company director gained
Sylvia was previously a public market
Group, Kennards Hire and CentrePort Ltd
across listed entities such as Fleetwood
CEO at Global Investments Limited and
and is an experienced company director
Limited, Big River Industries and BESIX
Executive Director of Finance &
gained across government, privately
Watpac, as well as private and
Commercial of ASX listed company
owned and regulated entities such as
government enterprises such as Moits
Infigen Energy Group, prior to its
NSW Telco Authority and Moana
Geo-Civil Contracting, Pannell Enoteca
takeover.
(formerly Aotearoa Fisheries Ltd). She
(previously S.C. Pannell Wines) and Royal
has experience in audit and risk, health
Melbourne Showgrounds
and safety, and remuneration board
Unincorporated Joint Venture. He has
committees.
experience in audit and risk, health and
Elizabeth is Chair of the Health, Safety,
safety, and remuneration board
Environment & Sustainability Committee
committees.
Sylvia is an experienced company
director and currently a Non-Executive
Director of Aeris Resources Limited,
Collgar Renewables Group, the Scheme
Financial Vehicle Pty Limited and 5 B
Solar Pty Limited, and was a director of
and a member of the Remuneration and
Martin is Chairman of the Remuneration
Infigen Energy Group from 2016 to 2020.
Nomination Committee.
and Nomination Committee, a member
Sylvia is Chair of the Audit and Risk
Elizabeth has no other listed company
of the Health, Safety, Environment &
Committee.
directorships and has held no other listed
company directorships in the last three
Sustainability Committee and a member
of the Audit and Risk Committee.
years.
Martin is currently a Non-Executive
Director of Fleetwood Limited and Big
River Industries and has held no other
listed company directorships in the last
three years.
Sylvia is currently a Non-Executive
Director of Aeris Resources Limited, and
has held no other listed company
directorships in the last three years.
2
Deborah Page AM
Greg Adcock
Non-Executive Director
Non-Executive Director
Term of Office: Non-Executive Director
Term of Office: Non-Executive Director
since September 2010. Deborah retired 30
since June 2016. Greg retired 19 October
April 2023.
2022.
Qualifications: B Ec (Syd), FCA, FAICD.
Qualifications: MAICD, MAIPM.
Deborah Page brought to the Board
Greg Adcock brought to the Board
extensive financial expertise from her
extensive commercial and operational
time at Touche Ross/KPMG including as a
expertise developed from senior
Partner, and subsequently from senior
executive roles at Concrete Constructions,
finance and operating executive roles
Telstra Corporation and nbn co, where he
with the Lendlease Group, Allen, Allen &
was the Chief Operating Officer. He has
Hemsley and the Commonwealth Bank.
specific experience in strategic
She has specific experience in corporate
leadership, large scale infrastructure and
finance, accounting, audit, mergers &
construction, telecommunications
acquisitions, capital markets, insurance
technology, health, safety & environment,
and joint venture arrangements.
risk management and human resources.
Deborah has extensive experience as a
Greg has served on numerous Boards
company director gained across ASX
throughout his executive career and has
listed, private, public sector and regulated
experience in governance and
entities since 2001. Her relevant sector
compliance, corporate finance and
experience includes telecommunications,
mergers & acquisitions.
Greg was Chairman of the Health, Safety,
Environment & Sustainability Committee
and a member of the Audit and Risk
Committee until his retirement on 19
October 2022.
During the last three years, Greg held a
listed company directorship with Service
Stream Limited (retired 19 October 2022)
and OptiComm Limited (retired as entity
was acquired in November 2020).
utilities, insurance, technology,
renewables and infrastructure. Deborah’s
experience includes Board leadership,
governance and compliance, risk
management, remuneration practices,
technology, investor relations and health,
safety & environment.
Deborah was Chair of the Audit and Risk
Committee and a member of the
Remuneration and Nomination
Committee until her retirement on
30 April 2023.
Deborah is currently a Non-Executive
Director of Brickworks Limited,
Growthpoint Properties Australia Limited
and The Star Entertainment Group
Limited. During the last three years,
Deborah held a listed company
directorship with Service Stream Limited
(retired 30 April 2023) and Pendal Group
Limited (retired 23 January 2023 as entity
acquired in January 2023). Deborah is a
member of the Chief Executive Women
and is a member of the Takeovers Panel.
Service Stream Limited
Directors' report
3
Directors’ Shareholdings
The following table sets out each Director’s relevant interest in shares of the Company as at the date of this
Service Stream Limited
Directors' report
report.
Directors
B Gallagher
P Dempsey
E Ward
M Monro
S Wiggins
L Mackender
Fully paid ordinary shares
Performance rights
Number
Number
4,000,000
1,530,000
80,901
40,000
66,000
1,712,601
-
-
-
-
-
1,966,173
Key updates (retirement of Greg Adcock and Deborah Page AM)
Greg Adcock retired from the Service Stream Limited Board on 19 October 2022.
Deborah Page AM retired from the Service Stream Limited Board on 30 April 2023.
Remuneration of key management personnel
Information about the remuneration of key management personnel is set out in the remuneration report of
this Directors’ report, on pages 18 to 35.
Performance rights granted to Directors and senior management
During and since the end of the financial year, the following performance rights were granted to Directors
and to the five highest remunerated officers of the Group as part of their remuneration:
Director and senior executives
Number of rights granted
Number of ordinary shares under
rights
L Mackender
L Kow
D Zropf
K Smith
J Van Dyk
990,441
544,629
519,995
442,853
333,918
2,831,837
990,441
544,629
519,995
442,853
333,918
2,831,837
4
Service Stream Limited
Directors' report
Company secretaries
Chris Chapman
Qualifications: LLB, BA (Politics), GAICD.
Chris Chapman was appointed General Counsel for the Group in August 2015. Chris has significant in-house
experience having held senior legal positions at large private and listed construction and infrastructure
businesses. Chris was appointed Company Secretary in February 2019.
Jamie O’Brien
Qualifications: LLB (Hons), BA.
Jamie O’Brien joined Service Stream in April 2015 and is currently a Senior Legal Counsel in the Legal team.
He has extensive experience as an in-house lawyer and senior lawyer in Australian and overseas law firms.
Jamie O’Brien was appointed as additional Company Secretary in April 2021.
Principal activities
Service Stream is an essential services provider in Australia. The Group designs, constructs, operates and
maintains critical infrastructure networks across the Telecommunications, Utilities and Transport sectors.
Services are provided on behalf of government, government related entities and private asset owners /
network operators.
5
Service Stream Limited
Directors' report
Review of operations and financial performance
Financial overview
$'000
Revenue
EBITDA from Operations1
Non-operational costs
Joint venture adjustments
Depreciation & amortisation
Amort. of customer contracts /
relationships
FY23
2,052,767
93,957
(5,081)
(1,998)
FY22
1,516,537
91,114
(25,537)
(968)
(52,639)
(39,298)
536,230
2,843
20,456
(1,030)
(13,341)
(15,411)
(14,024)
(1,387)
Impairment expense
-
(38,206)
EBIT
Net financing costs
Income tax expense
Net profit / (loss) after tax
Statutory EPS (cents)
Total Dividends (cents per share)
Adjusted profitability2:
Total Revenue
18,828
(13,605)
(761)
4,462
0.72
1.50
(26,919)
(7,163)
(2,242)
(36,324)
(6.09)
1.00
2,150,782
1,563,767
Underlying EBITDA from Operations
114,098
Underlying EBITDA from Operations
margin
Adjusted NPAT (NPAT-A)
Adjusted EPS (cents)
5.3%
36,768
5.9
91,114
5.8%
31,385
5.3
38,206
45,747
(6,442)
1,481
40,786
6.81
0.50
587,015
22,984
(0.5%)
5,383
0.62
Change
35.4%
3.1%
(80.1%)
106.5%
33.9%
9.9%
n/a
(169.9%)
89.9%
(66.1%)
(112.3%)
(111.7%)
50%
37.5%
25.2%
17.2%
11.7%
1Earnings before interest, tax, depreciation and amortisation, non-operational costs and joint venture proportionate consolidation adjustments.
2Adjusted profitability includes non-IFRS measures that have been adjusted for non-operational costs, impairment charges, amortisation of customer
contracts and proportionate consolidation of equity-accounted joint ventures. Refer to reconciliation between IFRS and non-IFRS financial information for
further details on page 7.
Group results
Revenue increased by 35.4% to $2,052.8 million from $1,516.5 million with the full year impact of the Lendlease
Services acquisition adding an additional 4 months of revenue from the acquired business. Underlying pro
forma revenue growth was 11.8% driven by strong performance in the Telecommunications segment.
Group EBITDA from Operations increased to $94.0 million from $91.1 million. This was predominantly driven
by a strong contribution from the Telecommunications segment, partially offset by lower earnings in the
Utilities segment which was impacted by the onerous contract provision relating to the Queensland utility
project.
Non-operational costs of $5.1 million were incurred in FY23 comprising of business integration and transitional
services costs relating to the acquisition of Lendlease Services.
Depreciation & amortisation expense increased by $13.3 million due to:
● Additional assets acquired through Lendlease Services in November 2021. This included the impact of
revaluation of fleet assets as part of the acquisition purchase price accounting.
● $6.6 million of non-cash asset write-downs recognised from decommissioning of software assets as part of
integration activities.
Group earnings before interest and tax (EBIT) was $18.8 million, an increase of $45.7 million on FY22. The FY22
result includes a $38.2 million non-cash impairment charge to the carrying value of goodwill against the
legacy Energy and Water cash generating unit.
The Group’s net financing costs increased by $6.4 million to $13.6 million driven by additional 4 months of
acquisition funding and rate increases on loan facilities.
6
Service Stream Limited
Directors' report
Tax expense reduced to $0.8 million in FY23 reflecting an effective tax rate (ETR) of 15%. The lower ETR was
driven by tax credits associated with dividend payments from joint ventures and the true-up from the
finalisation of prior year’s tax return.
Group net profit after tax (NPAT) was $4.5 million in FY23 from a loss of $36.3 million in FY22. The FY22 loss was
primarily attributed to the non-cash impairment charge to the carrying value of goodwill.
Adjusted NPAT (NPAT-A) was $36.8 million, an increase of $5.4 million driven by the revenue and EBITDA from
Operations drivers outlined above.
The Directors have declared a final FY23 dividend of 1.0 cents per share (fully franked).
Reconciliations between IFRS and non-IFRS financial information
$'000
Reconciliation of Total Revenue to revenue
Total Revenue
Less: Share of revenue from joint ventures1
Revenue
Reconciliation of Underlying EBITDA from Operations to net profit/(loss) after tax
Underlying EBITDA from Operations
Onerous contract provision for QLD Utility project
EBITDA from Operations
Adjustments for joint ventures2
Depreciation and amortisation
Non-operational costs (before tax)3
Net finance costs
Tax expense
Net profit / (loss) after tax
Reconciliation of NPAT-A to net profit/(loss) after tax
Adjusted NPAT (NPAT-A)
- Amort. of customer contracts (tax-effected)
- Non-operational costs (after tax)3
- Impairment expense
- Onerous contract provision for QLD Utility project (tax effected)2
Net profit/(loss) after tax
FY23
FY22
2,150,782
1,563,767
98,015
47,230
2,052,767
1,516,537
114,098
(20,141)
93,957
(1,998)
(68,050)
(5,081)
(13,605)
(761)
4,462
36,768
(10,787)
(7,421)
-
(14,098)
4,462
91,114
-
91,114
(968)
(53,322)
(25,537)
(7,163)
(2,242)
(36,324)
31,385
(9,669)
(19,834)
(38,206)
-
(36,324)
1Proportionate share of revenue from equity accounted joint ventures.
2Relates to depreciation and amortisation, interest and tax expense associated with equity accounted joint ventures.
3Non-operational costs include acquisition, business integration and restructuring costs. Refer note 6(c).
7
Service Stream Limited
Directors' report
FY23
970,380
888,429
292,246
(273)
FY22
639,968
696,987
220,078
6,734
Change
330,412
191,442
72,168
(7,007)
2,150,782
1,563,767
587,015
85,460
28,425
14,791
(14,578)
114,098
8.8%
3.2%
5.1%
5.3%
61,509
19,533
9,864
208
91,114
9.6%
2.8%
4.5%
5.8%
23,951
8,892
4,927
(14,786)
22,984
(0.8%)
0.4%
0.6%
(0.5%)
51.6%
27.5%
32.8%
(104.1%)
37.5%
38.9%
45.5%
50.0%
n/a
25.2%
Segment Results
$'000
Telecommunications
Utilities
Transport
Eliminations, interest & other
revenue
Total Revenue
Telecommunications
Utilities (Underlying)
Transport
Unallocated corporate costs
EBITDA from Operations
(underlying)
Telecommunications
Utilities
Transport
EBITDA from Ops Margin
Telecommunications
Telecommunications’ Total Revenue increased by $330.4 million (51.6%) compared to FY22 due to:
● Acquisition of Lendlease Services contributing an additional 4 months of revenue; and
● Continued strong client demand driven by the nbn fibre upgrade and wireless programs.
Telecommunications' EBITDA from Operations was $85.5 million, an increase of 38.9% against prior year
reflecting impact of the revenue drivers outlined above. EBITDA margin decreased to 8.8% due to the full year
impact of Lendlease Services contracts, and increased competition for resources to support higher demand
and program targets.
Utilities
Utilities’ Total Revenue increased by $191.4 million (27.5%) compared to FY22 driven by the additional 4
months of revenue contribution from the Lendlease Services acquisition. Utilities Underlying EBITDA from
Operations was $28.4 million, an increase of $8.9 million, primarily driven by improved earnings delivered in
the second half of the year as the business progressively closed out problematic legacy projects and
addressed under-performing contracts. Underlying EBITDA margin was 3.2% with the business incurring
higher operating expenses driven by inflationary pressures, weather related delays and additional costs
incurred to proactively close-out under-performing projects.
Transport
Transport’s Total Revenue increased by $72.2 million (32.8%) compared to FY22. The increase relates to 4
months of additional revenue from the Lendlease Services acquisition and strong growth achieved in the
Connect Sydney joint venture as it entered its second year of operations. This was partially offset by lower
maintenance revenue due to the insourcing of works by Main Roads WA.
Strong earnings growth and margin improvement was driven by the scale up of Connect Sydney joint
venture and additional program of maintenance works in WA.
8
Service Stream Limited
Directors' report
Cashflow and Financial Position
$’000
FY23
FY22
Change
Underlying EBITDA from Operations
114,098
+/- non-cash items & change in working capital
(16,750)
Adjustment for joint ventures
OCFBIT 1
EBITDA to OCFBIT 1 conversion %
Non-operational costs and onerous contract2
Net interest and financing paid
Income taxes paid
Operating cashflow
Capital expenditure
(4,962)
92,386
81.0%
(31,151)
(10,889)
44,466
94,812
(7,984)
91,114
6,768
825
98,707
108.3%
(22,637)
(6,740)
(10,783)
58,547
(5,379)
22,984
(23,518)
(5,787)
(6,321)
(8,514)
(4,149)
55,249
36,265
(2,605)
Business acquisitions (net of cash acquired)
(12,896)
(313,537)
300,641
Proceeds from sale of assets
Free cashflow
Dividends paid
Lease liability payments
Proceeds / (repayment) of borrowings
Proceeds from capital raising
Purchase of shares
Net increase in cash
3,970
77,902
(9,236)
(23,064)
(30,012)
-
-
15,590
1,175
2,795
(259,194)
337,096
-
(16,739)
115,013
179,228
(204)
18,104
(9,236)
(6,325)
(145,025)
(179,228)
204
(2,514)
25.2%
(347.5%)
(701.4%)
(6.4%)
37.6%
61.6%
(512.4%)
61.9%
48.4%
(95.9%)
237.8%
(130.1%)
37.8%
(126.1%)
(100.0%)
(100.0%)
(13.9%)
1Operating Cashflow before interest, tax and non-operational costs
2Non-operation costs and onerous contract includes non-operational costs related to acquisition and integration of Lendlease Service transaction
(Note 6(c)) and net cash outflow associated with the QLD utility project onerous contract.
Cash Flow
Operating cash flow was $94.8 million, an increase of $36.3 million driven by:
● $49.4 million income tax refund received in June 2023 arising from a one-off tax deduction claimed on the
acquired accrued revenue asset balance from the Lendlease Services acquisition.
This was partially offset by:
● Higher working capital driven by increase in debtors supporting revenue growth.
● Higher finance costs due to additional 4 months’ debt to fund the Lendlease acquisition and increase in
interest rates across the Group’s funding facilities.
● Non-operational costs associated primarily with the Queensland Utility onerous contract.
Operating cash flow before interest, tax and non-operational costs (OCFBIT) was $92.4 million, representing
an 81.0% cash flow conversion rate which exceeded expectations.
Net investing cash outflows were $16.9 million and comprised:
● $8.0 million of capital expenditure relating to investment in technology and plant & equipment.
● $12.9 million paid for the finalisation of the Completion Payment and working capital adjustment relating
to the Lendlease Services acquisition in accordance with the Share sale agreement.
● Net of $4.0 million received as proceeds from the sale of fleet assets.
Net financing outflows for the year were $62.3 million which included:
● Operating lease payments for fleet assets and property;
● Dividends of $9.2 million.
● Repayment of net borrowing of $30.0 million, as the Group reduced its net debt profile following a strong
operating cash flow result.
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Financial position
The Group had net assets of $465.4 million at 30 June 2023 (2022: $468.1 million).
Cash and financing facilities
● The Group ended the year with net debt (excluding lease liabilities) of $34.3 million, a reduction of $45.9
million from prior year. The decrease is driven primarily by a one-off tax deduction claimed on the
acquired accrued revenue asset balance from the Lendlease Services acquisition and strong cash flow
generated by operating activities.
● As at 30 June 2023, the Group had liquidity of $246.5 million comprising cash balances of $84.3 million and
an undrawn committed loan facility of $161.6 million.
● During the year, the Group extended the term of its syndicated debt facility of $395 million to November
2025.
● The Group was in compliance with each of the financial covenants that applied during the year across all
its financing facilities with its lenders.
Other Balance Sheet items / movements
Other key balance sheet movements during the year included:
● Net working capital (comprising the net of trade & other receivables, inventories, accrued revenue, other
assets, trade & other payables and provisions) at 30 June 2023 was a net asset position of $86.9 million, an
increase of $20.3 million from 30 June 2022. This is primarily attributed to an increase in trade debtors
supporting growth in revenue across the business.
● Plant and equipment at 30 June 2023 was $43.0 million compared to $59.6 million at 30 June 2022. The
decrease is primarily resulting from a higher depreciation charge for the year which included revalued
fleet assets acquired as part of the Lendlease Services acquisition.
●
Intangibles at 30 June 2023 were $437.0 million compared to $451.7 million. This included amortisation of
customer intangible assets acquired through business combinations and the write-off of software assets
decommissioned during business integration. This was partially offset by an increase in goodwill
recognised as part of the finalisation of the Lendlease Services consideration; and
● Right-of-use assets and lease liabilities recognised under AASB 16 Leases were $50.2 million (2022: $52.5
million) and $53.2 million (2022: $57.5 million), respectively. The reduction was attributed to property leases
as the Group continued to consolidate its premises footprint following the acquisition of Lendlease
Services.
Overall Group strategy, prospects and risks
The Board believes that demand for essential network services will remain strong over the long term,
supported by increasing investment in critical infrastructure. The Board are confident that the Group’s
specialist capabilities and service offerings positions Service Stream to grow across a stable and attractive
blue-chip client base of utility, telecommunications and transport asset owners and operators.
The transformational acquisition of Lendlease Services completed in FY22 aligns to the Group’s strategic
priorities to grow the business’ operations and further diversify the Group’s revenues, enhance current
capabilities and expand operations across additional market sectors.
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The achievement of the Group’s business objectives may be impacted by the following material risks:
Inflation
The nature of Service Stream’s operations can be exposed to inflationary pressures
across materials, labour and other operating costs. While the majority of the Group’s
contractual agreements enable the business to recover some or all inflationary
pressures, a smaller number of agreements are fixed over a period of time.
Management seek to mitigate this risk by incorporating anticipated inflationary
increases into the prices charged to clients. The timing of contractual reviews and
the relief mechanisms prescribed under each agreement may also pass through
less than the actual inflationary impacts incurred, and may not directly align with
the timing of the business incurring inflationary pressures.
Weather / Climatic
In undertaking and delivering programs for our clients, Service Stream is exposed to
Conditions
the impacts of adverse weather events such as floods, bushfires and extreme heat,
as well as the effects of climate cycles such as La Nina. Some of the key risks include
physical risks to: fixed assets, key sites and locations, delays and increased costs to
completing work under contract and reputational risks such as customer and
shareholder expectations.
Group-wide or project specific insurance policies and negotiated contract positions
which enable Service Stream to recover some of the cost impacts associated with
adverse weather assist in the mitigation of this risk.
Retention of key
Attracting and retaining key personnel in a market with historically low
personnel and
unemployment and market-wide inflationary wage pressures presents a risk to
sourcing of
Service Stream. Management and the Board have implemented a number of
subcontractors
strategies to attract and retain key personnel and enhance the Group’s employee
value proposition. Initiatives include but are not limited to; participation in
appropriate incentive arrangements, out-of-cycle remuneration reviews,
implementation of retention bonuses and participation in the Group’s employee
development, talent identification and succession programs.
Access to an appropriately skilled and resourced pool of subcontractors across
Australia is also critical to Service Stream’s ability to successfully secure and
complete field-based work for its clients. The business continues to make
appropriate capital investments to improve the ease of engagement, review and
implement favourable payment terms, offer broader programs of work across the
Group and conducts reviews against market rates to assist with the engagement,
deployment, daily management and retention of the Group's growing
subcontractor base.
Integration risk
The acquisition of Lendlease Services which completed on 1 November 2021, created
a leading multi-network essential services provider with diverse operations.
On 30 June 2022, Service Stream successfully exited all Transitional Services
Agreement (TSA) modules. Notwithstanding the exit from the TSA, possible issues
which may arise include:
● unanticipated or higher than expected costs or delays in the planned
upgrades, migration, integration and decommission of information technology
systems and platforms; and
● historical payment practices inconsistent with Service Stream payroll systems.
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Service Stream Limited
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Client
Management and the Board are conscious of the Group’s exposure to a small
concentration
number of key clients and infrastructure programs particularly within the
telecommunications sector as a source of revenue and profitability but accepts that
such concentration is a natural consequence of operating in the Australian market.
In that context, Management and the Board remain alert to factors that could
disrupt or delay the flow of work from its major customers, and implement
strategies to actively pursue the diversification of income streams both within and
separate to those customers by developing and offering a broad range of services
and geographic coverage.
The acquisition of Lendlease Services, completed on 1 November 2021, expanded
the Group’s customer base by creating a broader portfolio of operations across the
wider infrastructure services market to assist in further addressing this risk.
Client demand
Many of the Group’s contractual agreements do not contain volume commitments
and therefore may be dependent on the client’s demand requirements which could
change over time. The adoption and deployment rate of new technology, such as
5G, smart metering and Solar PV, can also provide variability against expected
future earnings. Whilst Management and the Board take a balanced view on the
level of client demand that is expected to arise when forecasting financial
performance, there is a risk that these levels may change over time.
In addition, the potential variability in client demand presents operational
challenges to the Group. In this regard, Management and the Board are conscious
of the need to maximise the variability of the Group’s cost-base and structures by
maintaining an appropriate balance between an employee-based workforce and
the use of specialist subcontractors. A flexible workforce model is therefore
maintained to attract, mobilise, and retain key resources to ensure that they are
available at the right time and right place to match customers' forecasts of volume
as they change over time.
Contract
Given that Service Stream’s operating model is premised on the provision of
management
infrastructure-related services to clients under periodically renewed contracts,
Management and the Board are conscious of the risks that can arise through the
acceptance of sub-optimal conditions in client contracts and through the
ineffective commercial administration of these contracts over their term.
Management and the Board therefore remain focused on ensuring that
appropriate contract management disciplines are effectively embedded in the
organisation to manage contract risks and to maximise contract entitlements.
A Group Commercial function is in place to mitigate this risk. Group Commercial is
responsible for the development and maintenance of a Bid Management
Framework in respect of winning new business and a Commercial Health-Check
Program in respect of existing business, and generally for ensuring that sound
contract management disciplines are embedded across the Group.
Renewal of
Service Stream is a contracting business and as such there is always a natural cycle
customer contracts
of contracts coming up for renewal. The renewal of contracts remains a key risk that
Management and the Board continues to actively monitor and manage.
Service Stream operates in a limited number of market segments in which there
are relatively few competitors. Management and the Board are therefore
particularly conscious of the risks related to the loss of business to competitors
either through their ability to potentially leverage more cost-effective business
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Service Stream Limited
Directors' report
platforms or as a consequence of their potential adoption of loss-leading strategies
to maintain or increase market share.
The Board is confident that the Group’s superior performance and consistency of
service delivery will ensure successful delivery on these contracts, but failure to do
so would have a material impact on the Group.
Working with
In undertaking work and delivering programs for its clients, Service Stream’s
potential safety
employees and subcontractors can operate in potentially hazardous environments
hazards
and perform potentially hazardous tasks.
Management and the Board remain alert to the safety risks posed to employees
and subcontractors, devote significant time to monitoring the effectiveness of the
Group’s safety framework, and have implemented a wide range of controls and
proactive programs to increase awareness of significant hazards and prevent
injuries to employees and subcontractors.
Digital disruption
As technology continues to change and evolve at a rapid pace, it is possible that
such advances may cause disruptions to certain elements of the markets in which
Service Stream operates, or to services that Service Steam provides.
Management and the Board spend time each year during a planning cycle to
update the Group Strategic Plan which extends across a four-year horizon. This
planning process includes a detailed assessment of relevant external factors,
including digital disruption or technological changes, which may have a bearing on
the Group’s current markets and service offerings.
Information
The Group's operational agility, overall cost effectiveness and ability to convert
technology systems
works to cash in a timely manner are becoming increasingly reliant on a number of
and cyber security
business-critical systems and in turn, the appropriate management of data and
information and risks associated with cyber security and malicious emails.
Management and the Board remain alert to ensure that funds are sufficient and
made available to maintain fit-for-purpose system applications and infrastructure,
and that IT investments are appropriately prioritised and undertaken effectively as
part of the Group’s annual strategic planning process.
Service Stream will continue to invest in cyber security capability to protect both
our clients and the Company’s information assets. The backbone of our approach is
a formal Information Security Management System (ISMS), which provides a
detailed overview to the Board, Audit and Risk Committee, and our Managers of key
security risks.
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Directors' report
Dividends
Dividends paid or declared by the Company during and since the end of the year are set out in Note 19 to the
financial statements and further set out below:
Per share
(cents)
Total amount
($ million)
Franked
Final 2023
Interim 2023
Final 2022
1.00
6.15
0.50
3.08
1.00
6.15
100%
100%
100%
Payment date
5 October 2023
6 April 2023
5 October 2022
Significant changes in the State of affairs
Except as stated in the review of operations and financial performance, there were no other significant
changes in state of affairs of the Group during the financial year.
Events after the reporting date
There has not been any matter or circumstance arising in the interval between the end of the financial
year and the date of this consolidated financial report, that in the opinion of the Directors that affect
significantly the operations, results of those operations, or the state of affairs of the Group in future
financial years.
Environmental regulation
Other than compliance with general obligations under Federal and State environmental laws and
regulations, the Group’s operations are not subject to any particular or significant environmental
regulation under a Commonwealth, State or Territory law.
Shares under performance rights
Details of unissued shares under performance rights at the date of this report are:
Series
Class of
shares
Exercise
price of right
Rights vesting
date
Share grant date
Number of
shares under
rights
FY21 LTI Tranche
Ordinary
$0.00
30 June 2023
September 2023
720,587
FY22 LTI Tranche
Ordinary
$0.00
30 June 2024
September 2024
3,182,182
FY23 LTI Tranche
Ordinary
$0.00
30 June 2025
September 2025
5,956,153
9,858,923
The holders of these rights do not have the right, but virtue of the performance right, to participate in any
share issue of the Company or of any other body corporate or registered scheme. No further performance
rights have been issued since the end of the financial year.
In accordance with the Employee Share Ownership Plan, the shares relating to the Long-Term Incentive (LTI)
Plan will be issued to participants after release of the financial statements in the relevant financial year, to the
extent that the vesting criteria have been satisfied.
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Directors' report
Directors’ meeting attendance
The following table sets out the number of Directors’ meetings (including meetings of Committees of
Directors) held during the financial year and the number of meetings attended by each Director (while they
were a Director or Committee member).
Meetings of Committees
Board
meetings
Audit and Risk
Remuneration
and
Nomination
Health, Safety,
Environment &
Sustainability
Term of
Directorship
19
4
4
4
17
19
18
15
13
19
13
6
3*
4
4*
2*
1#
3
4*
3
1
3*
4
4
2*
1#
3*
4*
3
1*
4
4*
4
1*
2#
2*
4
3*
2
13 years
12 years
1 year
7 months
6 months
9 years
12 years
6 years
No. of
meetings held
No. of
meetings
attended by
B Gallagher
P Dempsey
E Ward
M Monro1
S Wiggins2
L Mackender
D Page3
G Adcock4
*Attended as Standing Invitee
# Attended as a member
1M Monro joined Service Stream Board on 3 October 2022. He was appointed Chair of Remuneration and Nomination Committee effective 1
March 2023, following the retirement of P Dempsey as Chair.
2S Wiggins joined the Service Stream Board effective 7 November 2022. She was appointed is Chair of Audit and Risk Committee effective 1 May
2023, following the retirement of D Page as a Director.
3D Page retired on 30 April 2023.
4G Adcock retired on 19 October 2022.
Indemnification of officers and auditors
During the financial year, the Group paid a premium in respect of a contract insuring the Directors of the
Company (as named above), the Company Secretaries, and all officers of the Group and any related body
corporate against a liability incurred as a Director, Secretary or officer to the extent permitted under the
Corporations Act 2001.
The contract of insurance prohibits the general disclosure of the terms and conditions, nature of the liability
insured and the amount of the deductible or premium paid for the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by
law, indemnified or agreed to indemnify an officer of the Company or of any related body corporate against a
liability incurred as an officer.
The auditors of the Group are not indemnified by the Group or covered in any way by the above insurance in
respect of the audit.
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Directors' report
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 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.
Non-audit services and auditors
Details of any amounts paid or payable to the auditor for non-audit services provided during the year by the
auditor are outlined in note 32 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or by
another person or firm on the auditor’s behalf) are compatible with the general standard of independence of
auditors imposed by the Corporations Act 2001.
PricewaterhouseCoopers has been the auditor of the company since FY 2013, and Andrew Cronin has been
the Partner responsible since FY 2023. Trevor Johnson rotated off as the Partner responsible at the end of FY
2022.
The Directors are of the opinion that the services disclosed in note 32 to the financial statements do not
compromise the external auditor’s independence, based on advice received from the Audit and Risk
Committee, for the following reasons:
● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity
and objectivity of the auditor; and
● none of the services undermine the general principles relating to auditor independence as set out in the
Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional & Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the Company, acting as advocate for the Company or jointly
sharing economic risks and rewards.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 35 of the annual financial report.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors' Reports)
Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the
rounding-off of amounts in the Directors' report and the financial report. Amounts in the Directors' report and
the financial report have been rounded-off to the nearest thousand dollars, in accordance with that
Instrument.
Corporate governance statement
Service Stream Limited and the Board are committed to achieving and demonstrating the highest standards
of corporate governance. Service Stream has reviewed its corporate governance practices against the 4th
edition ASX Corporate Governance Principles and Recommendations. Service Stream is materially compliant
with all ASX Corporate Governance Principles and Recommendations.
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: http://www.servicestream.com.au/investors/corporate-
governance. The corporate governance statement is accurate and up to date as at 22 August 2023 and has
been approved by the Board.
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Service Stream Limited
Directors' report
Sustainability report
Service Stream Limited and the Board recognise the importance of driving long-term sustainable practices
which support and enhance the environment, social and economic performance for both the Group and our
wider stakeholders.
The Group’s current sustainability report can be viewed at:
http://www.servicestream.com.au/investors/corporate-governance.
17
Service Stream Limited
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Remuneration Report
22 August 2023
Message from the Chairman of the Remuneration and
Nomination Committee
Dear Shareholders,
On behalf of the Board, I am pleased to be writing to you as the new Chairman of Service Stream’s
Remuneration and Nomination Committee (RNC) and to present Service Stream’s FY23 Remuneration
Report. I would like to thank outgoing RNC Chairman Peter Dempsey for his leadership and guidance over
the past 12 years.
Service Stream’s FY23 Remuneration Report provides information about the remuneration of its Key
Management Personnel and Non-Executive Directors, and seeks to explain how performance has been linked
to reward outcomes for the FY23 financial year.
2022 Annual General Meeting
At our 2022 Annual General Meeting (AGM), the Company received a first strike against its FY22
Remuneration Report. The Board acknowledges the feedback received at last year’s AGM and in subsequent
discussions with various stakeholders (including proxy advisors). We have sought to address the principal
concerns raised by those stakeholders through improved disclosures in our FY23 Remuneration Report and
the ongoing review of the Company’s remuneration and incentive schemes.
Improved Disclosures
The Board remains committed to being transparent with all stakeholders in the development and
implementation of Service Stream’s reward philosophy. Noting the feedback from some stakeholders, some
of the improvements to our disclosure reporting include:
● separation of discretionary payment (if any) from any STI payments to Key Management Personnel (KMP);
●
improved STI and LTI plan disclosures; and
● explanation for Service Stream’s chosen comparator group (ASX 200 Industrials).
Ongoing Review
It is the view of the Board that an incentive scheme which rewards Management for taking a longer-term
view of the Business, and that drives behaviour and decisions over the long term to deliver growth and a
more sustainable future, is in the best interests of all shareholders.
In 2022, the Board reviewed the Company’s short-term incentive (STI) and long-term incentive (LTI) plans
(together the “Incentive Plans”) and proactively consulted with stakeholders in the process. The RNC also
engaged Ernst and Young (EY) to conduct a review of Service Stream’s incentive framework against market
practices and provide executive remuneration market data.
The key changes to the FY23 Incentive Plans that maintain the Board’s reward philosophy are summarised
below:
●
introduction of a 25% deferral of any awarded STI for Executive Level Management for a period of 1
year to allow for any claw back in the event it was ever needed;
● adjustments to the sliding scale mechanism for the STI and LTI plans;
● STI targets significantly weighted to financial metrics for KMP (for the Managing Director 60% at a
Group level, with a portion of his individual component (30%) also relating to financial performance);
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Service Stream Limited
Directors' report
●
●
introduction of a point-to-point compound annual growth rate (CAGR) for measuring the Company’s
Adjusted Earnings Per Share (EPS) performance for the LTI plan; and
the removal of the single year re-testing mechanism for the LTI plan (LTI performance is measured
over a 3-year horizon).
Remuneration Policy for Key Management Personnel
The Managing Director’s and CFO’s remuneration is reviewed annually and benchmarked against peer
companies. For FY23, the Board determined that the Managing Director’s remuneration would be increased
to $1,050,000 (inclusive of Superannuation) given the complexity of the enlarged Company and the expanded
duties and responsibilities of the Managing Director. The Managing Director had not received an adjustment
to his fixed annual remuneration since 2019. The Chief Financial Officer received an adjustment to her fixed
annual remuneration to $720,000 in February 2022, to reflect market benchmarks for like roles against peer
companies and the increased level of responsibilities in her role following the Lendlease Services acquisition.
The Chief Financial Officer had not received an adjustment to her fixed annual remuneration since 2020.
In FY23, neither the Managing Director nor CFO were awarded any of their potential STI payments and no
component of the applicable LTI plan vested.
The Board accepts that the way in which the FY22 STI payments made to the Managing Director and CFO
were disclosed in the FY22 Remuneration Report was not patently clear to shareholders, particularly due to
the payment of a one-off discretionary bonus to the KMP for the successful completion of the Lendlease
Services acquisition. However, the Board remains of the view that it should retain the right to award
discretionary bonuses in unique circumstances. While unlikely to occur in the foreseeable future, the Board
will ensure that the amount and rationale for any discretionary bonus is more thoroughly articulated to
shareholders.
Remuneration Policy for the Chairman and Non-Executive Directors
Fees for the Chairman and Non-Executive Directors are also reviewed annually and benchmarked against
peer companies. In FY23, no adjustments were made to the Chairman’s and Non-Executive Directors’ fees
except for compulsory superannuation increases. For those Non-Executive Directors who transitioned into
being a Chair of a Board sub-committee during the period, their fees were adjusted in accordance with the
Company’s current fee structure.
Summary
The Board believes that the Company’s Incentive Plans achieve the Board’s objective of rewarding
Management for delivering outcomes that contribute to the long-term, sustainable performance and success
of the business.
The Board is also of the view that the remuneration outcomes for FY23 are appropriate, present a fair
alignment between pay and performance, and recognise the challenges that presented in the business in
FY23.
I look forward to engaging with you in FY24 and thank you for your ongoing support of Service Stream.
Martin Monro
Chairman of the Remuneration and Nomination Committee
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Service Stream Limited
Directors' report
Introduction and scope
The Service Stream Limited remuneration report sets out information about the remuneration of Service
Stream’s KMP for the year ended 30 June 2023 (FY23). The term KMP refers to those persons having authority
and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or
indirectly, including any Director (whether executive or otherwise) of the consolidated entity.
The remuneration report covers the following matters:
Contents
1. Details of Key Management Personnel
2. Remuneration policy and framework
2.1 Objectives of Remuneration Policy and Framework
2.2 Remuneration Reviews
3. Linking Remuneration to Company Performance
3.1 Group Financial Performance
4. Remuneration Governance – Role of the RNC
5. Overview of remuneration structure
5.1 Fixed Remuneration
5.2 Short Term Incentive
5.3 Long-Term Incentive
5.4 Cessation of single-year testing mechanism
6. Executive Remuneration
6.1 Fixed Remuneration and Incentive Outcomes
6.2 Shareholdings of Managing Director and Chief Financial Officer
7. Non-Executive Director Remuneration
7.1 Non-Executive Director Fees
7.2 FY23 Non-Executive Director Remuneration
7.3 Non-Executive Director Shareholdings
7.4 Related Party and Other Transactions
20
1. Details of Key Management Personnel (KMP)
The following tables depict the Personnel of the Group who were classified as KMP for the entire financial
year unless otherwise indicated in accordance with the definition of a KMP under AASB 124.
Service Stream Limited
Directors' report
Non-Executive Directors
Brett Gallagher
Peter Dempsey
Elizabeth Ward
Martin Monro1
Sylvia Wiggins2
Deborah Page AM3
Greg Adcock4
1M Monro commenced on 3 October 2022.
2S Wiggins commenced on 7 November 2022.
3D Page retired on 30 April 2023.
4G Adcock retired on 19 October 2022.
Executive Key Management Personnel
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Leigh Mackender
Linda Kow
CEO & Managing Director
Chief Financial Officer
2. Remuneration policy and framework
2.1 Objectives of Remuneration Policy and Framework
The objectives of Service Stream’s remuneration policy and framework is to ensure that it:
● supports Service Stream’s strategy and reinforces our culture and values;
● provides consistent and market competitive rewards which attract, motivate and retain highly skilled
employees;
● aligns employee activities to the achievement of business objectives;
● supports alignment between executive remuneration and shareholder outcomes;
● maintains fair and equitable rates of pay for all employees based on their performance and the markets in
which the Group operates;
● encourages, recognises and rewards individual, team and group performance in alignment with
shareholder returns;
● operates a remuneration system that is transparent, accountable, scalable, flexible and consistent,
enabling comparison with the external market; and
● reflects market practice by benchmarking remuneration outcomes against relevant peer companies.
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Service Stream Limited
Directors' report
To achieve the objectives of the Group’s remuneration policy, the Remuneration and Nomination Committee
(RNC) will:
● set measurable performance objectives for all employees on an annual basis;
● undertake an annual salary review based on performance and market rates;
● utilise an external evaluation system to review rates of pay against the market in which the Company
operates; and
●
implement short-term and long-term incentive plans for relevant employees to incentivise behaviour and
to reward outcomes that generate shareholder value.
2.2 Remuneration Reviews
The RNC reviews the remuneration packages of all Directors and Executives on an annual basis and makes
recommendations to the Board in respect to any changes thereto. Remuneration packages are reviewed with
due regard to performance, the relativity of remuneration to comparable companies and the level of
remuneration required to attract, retain, and compensate Directors and Executives, given the nature of their
work and responsibilities.
The RNC periodically seeks independent advice from external consultants on various remuneration-related
matters to assist in performing its duties and making recommendations to the Board. During FY23, the RNC
has continued to engage Korn Ferry Hay to provide remuneration benchmarking data for salaried roles
across the organisation that are consistent with the markets in which Service Stream operates.
3. Linking Remuneration to Company Performance
The executive remuneration framework is linked to the Group’s performance by:
● requiring a significant portion of executive remuneration to vary with short-term and long-term
performance;
● requiring a ‘Minimum Group Performance Threshold’ to be met before any STI can be paid to executive
management; linked to achieving the Group’s EBITDA from Operations target;
● tying individual performance goals to the annual objectives of the Group; linked directly to the overall
Group strategy; and
● delivering a significant portion of remuneration in equity, to align with shareholder interests.
Service Stream measures performance across key corporate measures, including:
● Group EBITDA from Operations;
● Reported EBITDA to OCFBIT conversion;
● Adjusted earnings per share (EPS) performance measured using a point-to-point compounding annual
growth rate (CAGR);
● Total Shareholder Returns (TSR) relative to the ASX 200 Industrials index; and
● Health & Safety Performance based on High Potential Incident Frequency Rate (HPIFR)
Performance across the key corporate measures for the past 12 months are summarised in the tables below
and outlined in detail throughout the report.
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Service Stream Limited
Directors' report
3.1 Group Financial Performance
The graphs below outline the Group’s performance against key financial and non-financial performance
indicators over the past 5 years.
Key Indicators
2019
2020
2021
2022
2023
Total Revenue ($'000)
852,178
929,133
804,163
1,563,767
2,150,782
Underlying EBITDA from Operations1
($'000)
93,266
108,115
80,111
91,114
114,097
Net profit after tax ($'000)
49,859
49,315
29,274
(36,324)
4,462
Statutory Earnings per share (cents)
Adjusted Earnings per share (cents)
Total Dividends per share (cents)
Share price 30 June ($)
13.1
15.1
9.0
2.81
12.1
14.5
9.0
1.91
7.2
9.5
2.5
(6.1)
5.3
1.0
0.7
6.0
1.5
0.87
0.88
0.81
1Total Revenue and EBITDA from Operations are non-IFRS measures that have been derived from statutory information. Non-operational cost
items include acquisition and integration costs associated with the Lendlease Services transaction (refer note 6(c))
* The 10 day VWAP after result announcement is used for TSR calculation. As as a result, FY23 TSR is not available yet.
23
Service Stream Limited
Directors' report
4. Remuneration Governance - Role of the RNC
The RNC is comprised of three Non-Executive Directors and is responsible for reviewing and making
recommendations to the Board on the remuneration policies and frameworks for the Group, as well as the
remuneration packages for the Non-Executive Directors, the Managing Director, KMP and the executive
management team.
Specifically, the Board has delegated power to the RNC to:
● Develop strategies to drive performance, including the annual evaluation of the performance of the
Managing Director, by giving guidance to the Board.
● Develop strategies to identify the necessary and desirable competencies of directors, and to evaluate the
extent to which those competencies are reflected in the diversity and mix of skills, expertise and
experience offered by the Board.
● Assist with the management of the Company’s remuneration policy by overseeing the remuneration
philosophy and policy, its specific application to the Managing Director and executives reporting to the
Managing Director, and its general application to all employees throughout the Company.
● Oversee the remuneration of Non-Executive Directors.
● Carry out succession planning, including the development of appropriate succession plans for the Board
and Managing Director.
● Develop people strategies, including strategies for advancing diversity in the workplace, in particular
diversity reporting and compliance and improving employee engagement.
● Recommend appropriate Board performance review methodologies.
● Make recommendations to the Board in respect of any remuneration related disclosures in the annual
report, or otherwise as required by ASX Listing Rules, the Corporation Act 2001 (Cth) or other relevant laws.
The RNC is accountable to the Board for the performance of its duties.
5. Overview of Remuneration Structure
The Managing Director’s and Chief Financial Officer’s total remuneration packages are comprised of both
fixed and variable components:
● a fixed annual remuneration (inclusive of superannuation);
● a variable short-term cash-based incentive (STI), of which 25% of any award is deferred into equity for 12-
months; and
● a variable long-term share-based incentive (LTI), measured over a 3-year horizon.
The below graph depicts the fixed and ‘at risk’ components of the Managing Director’s and Chief Financial
Officer’s remuneration.
24
Service Stream Limited
Directors' report
The below table describes the maximum total performance-based remuneration (as a percentage of total
remuneration) that may be payable to the Managing Director and Chief Financial Officer.
Executive Position
Target STI %
of fixed
remuneration
Maximum STI
% of fixed
remuneration
Target LTI %
of fixed
remuneration
Maximum LTI
% of fixed
remuneration
Maximum
total
performance-
based pay as
a % of fixed
remuneration
Managing Director
Chief Financial
Officer
50
45
60
54
75
60
75
60
135
114
Details of each component of the Managing Director’s and Chief Financial Officer’s remuneration packages
are outlined below.
5.1 Fixed Remuneration
Fixed remuneration consists of base compensation and the direct cost of providing employee benefits
including superannuation contributions and fringe benefits tax.
The Managing Director’s and Chief Financial Officer’s remuneration is reviewed annually and benchmarked
against peer companies.
In FY23, the Managing Director’s remuneration was increased to $1,050,000 (inclusive of Superannuation) due
to the complexity of the enlarged Company following the acquisition of Lendlease Services Pty Ltd and the
expanded duties and responsibilities of the Managing Director. Other than for statutory changes to
superannuation contributions, the Managing Director’s fixed remuneration had not been adjusted since 2019.
No adjustment was made to the Chief Financial Officer’s fixed remuneration in FY23 other than for statutory
changes to superannuation contributions. The Chief Financial Officer’s remuneration was last adjusted to
$720,000 in February 2022.
5.2 Short Term Incentive (STI)
5.2.1 STI Overview
The STI plan provides for an annual payment which varies depending on the performance achieved over the
assessment period. The incentive plan is designed to reward participants for the delivery of financial and
operational performance which is key to the success of Service Stream.
The award of any STI related incentives are first subject to Group performance meeting or exceeding the
‘Minimum Group Performance Threshold’; that being the achievement of at least 90% of the Group’s EBITDA
from Operations target for the financial year. The minimum Group Performance Threshold exists as a gate
and is applicable to all STI senior management participants regardless of their individual performance.
Where 90% or more of the Group’s EBITDA from Operations target is achieved, the STI is payable based on
Group, Divisional and Individual performance against measurable targets. For Senior Management, a stretch
opportunity may be available for the Group and Divisional EBITDA components only of the STI, should
challenging stretch targets be met or exceeded.
For Executive Management, 75% of any STI award is paid in cash after finalisation of the annual audited
results. The remaining 25% of the STI award is deferred for 12-months and remunerated in the form of
performance rights.
The Board retains discretion over the payment of any STI.
25
Service Stream Limited
Directors' report
5.2.2 Group Performance
Group Performance is set annually and is reflected as the Group’s EBITDA from Operations target for the
financial year. Each year the Board assesses the proposed budgets put forward by Management, aligned to
the Group’s strategic plan. Following detailed analysis and discussion a target is agreed which reflects the
Group’s annual EBITDA budget.
5.2.3 Individual Performance
Individual performance goals are tied to the annual objectives of the Group, linked directly to the overall
Group strategy and depending on the individual, can be categorised into four quadrant measures of
Financial Performance, Market & Customer, Safety & People and Risk & Governance.
The Performance Quadrants applicable to the Managing Director for the FY23 STI are outlined in section
6.
5.2.4 STI summary table
The key terms of the FY23 STI, including those applicable to the Managing Director and CFO, are summarised
as follows:
Feature
Program detail
Purpose of short- term
incentive plan
Reward participants for the delivery of financial and operational
performance that are key to the success of Service Stream.
Minimum performance
threshold
Achievement of 90% or more against annual Group EBITDA target for
senior management before the award of incentives under the Group,
Divisional or Individual Performance will be considered.
Performance requirements
All STIs have performance criteria set across two separate areas:
1. Group Financial Performance
2. Individual Performance can be set across the following areas:
● Financial Performance
● Market & Customer
● Safety & People
● Risk & Governance
Target STI Opportunity
50% of total fixed remuneration for the Managing Director
Stretch STI Target Opportunity
45% of total fixed remuneration for the Chief Financial Officer
The stretch award will commence at 101% of the Group’s EBITDA from
Operations target being met and will increase with 2.5% incremental STI
paid for each 1% in EBITDA delivered up to 120% of the EBITDA from
Operations target.
The stretch is applicable to financial performance only (being Group /
Divisional EBITDA) and will be capped at up to 150% of the applicable
financial targets.
Maximum STI opportunity
60% of total fixed remuneration for the Managing Director
54% of total fixed remuneration for the Chief Financial Officer
Performance period
1 July 2022 to 30 June 2023
Assessment period
August 2023, following the audit of the Group's financial statements.
Payment form
Payment timing
75% cash based payment, 25% performance rights payment for deferred
component.
September 2023 for the cash payment of 75% of the award. The 25%
deferred component will be paid one year following the award in the
form of performance rights.
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Service Stream Limited
Directors' report
Feature
Program detail
Board Discretion
Eligibility
The Board has discretion to adjust STI payments upwards and
downwards including to nil in certain circumstance e.g. where an
executive has acted inappropriately.
The Managing Director and CFO are eligible to participate in the STI
program in the year in which they commence their position with the
Company.
Termination of employment
On cessation of employment with the Group prior to the end of the
assessment period, there is no STI payable.
Treatment of significant items
Change in control
From time to time the Group’s performance may be impacted by
significant items. When this occurs, the Board has the discretion to
adjust for the impact (positively or negatively) on a case-by-case basis.
If a change of control event occurs, the Board in its absolute discretion
may determine if a cash STI payment will be made and the treatment of
unvested deferred awards. Where the Board does not exercise a
discretion if a change of control event occurs, all unvested STI deferred
awards will vest.
5.3 Long-Term Incentive (LTI)
5.3.1 LTI Overview
The LTI is an equity-based plan that provides for an incentive award that vests subject to Company
performance over a three-year performance period. A three-year measure of performance is considered to be
the most appropriate and reasonable time period which is consistent with market practice, the average term
of our customer contracts and Service Stream’s specific industry dynamics.
The LTI operates within the shareholder approved Employee Share Ownership Plan (ESOP), which is overseen
by the RNC. The extent of individual participation and the associated number of performance rights offered is
recommended by the Managing Director and reviewed by the RNC, which will then make recommendations
to the Board for approval.
Any LTI award will be in the form of performance rights which are issued to participating employees, with
each performance right converting into one ordinary share of Service Stream Limited on meeting the vesting
criteria. No amounts are paid or payable by the participant on receipt of the performance rights, and the
performance rights do not carry rights to dividends or voting.
The number of performance rights granted is based on the employee’s long-term incentive opportunity,
which is expressed as a percentage of the participant’s total fixed remuneration, and the volume-weighted
average market price (VWAP) of the Group’s shares over 10-days of trading following the release of full-year
results.
5.3.2 LTI summary table
The key terms of the FY23 LTI Tranche, including those applicable to the Managing Director and CFO, are
summarised as follows:
Feature
Program detail
Purpose of
long- term
incentive
plan
Performance
period
Assessment
period
Objective of rewarding Management for delivering outcomes that contribute to the long-
term, sustainable performance and success of the business.
1 July 2022 to 30 June 2025
August 2025, following the audit of the Group’s financial statements.
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Service Stream Limited
Directors' report
Feature
Program detail
Performance
rights grant
date
Payment
form
Issue Price
Target LTI
Opportunity
Maximum LTI
Opportunity
Issued in September 2025
Performance rights
$0.7951 per share, being the volume-weighted average market price (VWAP) of the Group’s
shares over 10-days of trading following the release of the FY22 full-year results.
● 75% of total fixed remuneration for the Managing Director
● 60% of total fixed remuneration for the Chief Financial Officer
● 75% of total fixed remuneration for the Managing Director
● 60% of total fixed remuneration for the Chief Financial Officer
Performance
conditions
The performance rights granted will each vest where the following vesting conditions are
met:
● 50% of the performance rights granted will vest where the EPS CAGR over the three
financial years ending 30 June 2025 (Performance Period) meet the growth targets (EPS
Target); and
● 50% of the performance rights granted will vest where the Company’s Total Shareholder
Return (TSR) over the Performance Period is such that it would rank in the top quartile of
a relevant peer group of companies (being the ASX200 Industrials).
The performance rights are subject to proportional vesting according to the tables below
where the vesting conditions specified above are not fully met.
Earnings Per Share (50% weighting)
The growth performance condition is based on the Company’s EPS CAGR over the
Performance Period. The tranche of performance rights will vest on a pro-rata basis upon
achieving annual EPS CAGR growth of between 5% and 10%.
The performance vesting scale that will apply to the performance rights which are subject to
the EPS Target is outlined in the table below:
EPS CAGR
< 5%
5%
Percentage of performance rights which qualify for vesting
subject to the EPS conditions
0%
50%
Above 5% and less than
10%
Straight-line vesting (i.e., 10% incremental vesting for each 1% of
EPS CAGR delivered)
10% or more
100%
Relative Total Shareholder Return (TSR) (50% weighting)
The relative TSR performance condition is based on the Company’s TSR performance
relative to the TSR of comparative companies, as at the start of the Performance Period and
measured over the Performance Period. If the TSR in the comparison group is ranked from
highest to lowest, the median TSR is the percentage return to shareholders that exceeds the
TSR for half of the comparison companies. The 75th percentile TSR is the percentage return
required to exceed the TSR for 75% of the comparison companies.
The comparator companies for the purposes of the TSR is the ASX200 Industrials. The Board
considers this the most appropriate comparator group as it includes Service Stream’s peer
competitor companies.
The performance vesting scale that will apply to the performance rights which are subject to
the TSR test is outlined in the table below:
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Service Stream Limited
Directors' report
Feature
Program detail
The Company’s TSR
ranking
Percentage of performance rights which qualify for vesting
subject to the TSR condition
< 50th percentile
50th percentile
0%
50%
Above 50th and below
75th percentile
straight-line vesting (i.e., 2% incremental vesting for each
percentile ranking achieved)
75th percentile and
above
100%
Eligibility
Eligible participants must remain an employee of the Company on 30 June 2025.
Ceasing
Executive
If an executive resigns from the Company or a subsidiary, the Board has discretion to issue
shares to that executive in respect of financial years during the Performance Period which
ended before the executive’s employment ceased, where the directors determine that the
executive performed consistently at an outstanding level.
Further, if an executive ceases their employment with the Company or a subsidiary because
of his or her death or permanent disability, or because the executive is aged 55 or older and
retires from permanent employment, or because the executive’s contract of employment is
terminated due to genuine redundancy, the performance rights relating to the financial
years during the Performance Period which ended before the executive’s employment
ceased that have not vested will not be forfeited.
Trading
Board
discretion
Vested shares may only be traded in accordance with the Company’s Securities Trading
Policy.
The Board has the power to make and vary such arrangements, guidelines and/or
regulations (not being inconsistent with the LTI / LTI Rules) for the implementation and
administration of the LTI, as they may think fit.
Change in
control
If there is an event which results in the Change of Control of the Company, then the Service
Stream Board retains discretion to determine the treatment of unvested Rights.
Where the Board does not exercise a discretion in a Change of Control event, a pro-rata
amount of unvested Rights (reflecting the portion of the Performance Period completed up
to the Change of Control event) will be tested against the Performance Conditions at the
time of Change of Control (subject to the Board’s discretion noted above to determine
another treatment) and vest subject to achievement of the Performance Conditions.
5.4 Cessation of single year testing mechanism
The Board is aware of the concerns raised by some of our stakeholders regarding the single year testing
mechanism that was contained within the Company's FY21 and FY22 LTI plans. Following consultation, the
Board removed the single year re-testing mechanism from the FY23 LTI plan.
For the FY23 LTI plan, the Board introduced a point-to-point compound annual growth rate (CAGR) for
measuring the Company’s Adjusted Earnings Per Share (EPS) performance over a 3-year horizon.
Management will therefore be rewarded to the extent that the Group's performance over the entire period of
review meets the set targets for that period.
The Board remains of the view that a 3-year horizon is appropriate as it accords with the average length of the
Group’s annuity and panel client contracts, thereby enabling performance under the full term of each
contract to be recognised.
The FY21 LTI performance period concluded on 30 June 2023. The FY22 LTI performance period will conclude
on 30 June 2024.
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Service Stream Limited
Directors' report
6. Executive Remuneration
6.1 Fixed Remuneration and Incentive Outcomes
6.1.1 FY23 Remuneration
Table 1 below provides remuneration information prepared in accordance with Australian accounting
standards.
Table 1 – statutory remuneration table
Short-term employee benefits
Post-
employment and
Long-term
benefits
Share-based
payments
Year
Salary
$
1,024,708
878,997
696,432
627,928
-
159,666
-
176,332
1,721,140
1,842,923
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Termin-
ation
benefits
$
-
-
-
-
-
-
-
-
-
-
Short-term
incentives
$
-
449,744
-
302,789
-
-
-
58,019
-
810,552
Non-
moneta
ry
$
-
-
-
-
-
8,128
-
-
-
8,128
Super
LSL
Performance
rights
Total
Fixed
At Risk
$
$
25,292 63,827
16,599
23,568
13,853
25,292
1,764
31,246
-
-
3,177
7,856
-
-
7,856
7,920
50,585 77,680
29,460
70,526
$
424,658
13,977
232,884
51,179
-
(37,525)
-
2,389
657,541
30,020
$
1,538,485
1,382,884
968,461
1,014,906
-
141,302
-
252,516
2,506,946
2,791,608
%
72%
66%
76%
65%
-
127%
-
76%
74%
70%
%
28%
34%
24%
35%
-
(27%)1
-
24%
26%
30%
L Mackender
L Kow
P McCann1
K Smith2
Total
1P McCann ceased as KMP as of 1 November 2021. His reported remuneration is for the period from 1 July 2021 to that date. During FY22, P McCann
resigned, forfeiting his existing performance rights.
2K Smith ceased as a KMP as of 1 November 2021. His reported remuneration is for the period from 1 July 2021 to that date.
6.1.2 FY23 STI performance outcomes
A minimum of 90% or more against the annual Group EBITDA target must be achieved before the award of
an STI under the Group, Divisional or Individual Performance will be considered for KMP.
In FY23, the minimum of 90% against the annual Group EBITDA target was not achieved and accordingly no
STI was awarded to the Executive KMP. Refer to section 3.1 for more detail on Group Performance.
The table below summarises the performance of the Managing Director against the individual elements of
his scorecard.
Measure Weighting
Target
Outcome
Financial
60%
Delivery of Group EBITDA
from Operations target
Below
threshold
Partially
achieved
Fully
achieved
Above
target
Delivery of Group OCFBIT
target
Delivery
30%
Delivery Group organic &
strategic growth targets
Below
threshold
Partially
achieved
Fully
achieved
Above
target
Development and
endorsement of 5-year
strategic plan
Deliver integration phase 2
FY23 Annual Group HPIFR
Target of < 2.52 is met or
exceeded
Safety &
People
10%
Below
threshold
Partially
achieved
Fully
achieved
Above
target
Specific financial, commercial and operational targets remain commercially sensitive and as such, have not
been disclosed.
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Service Stream Limited
Directors' report
6.1.3 LTI performance outcomes
The FY21 LTI performance period concluded on 30 June 2023. Table 1 below table summarises the LTI
performance measures tested, with the outcome being that the EPS growth target was not achieved. While
the TSR performance measure has not yet been determined, it is unlikely that this measure will be achieved.
Therefore, no FY21 LTI performance rights are expected to vest for the Executive KMP.
Table 1 - FY21 LTI performance
Executive(s)
LTI Measure
LTI
Outcome
Performance
% LTI tranche that vested
L Mackender
EPS growth target
Not achieved
L Kow
TSR Ranking relative to
ASX200 Industrials
yet
Not
unlikely to be achieved
determined,
0%
N/A
Table 2 below summaries the LTI grants balance for the Managing Director and the Chief Financial Officer at
the end of the FY23 financial year. Note that the balance at the end of the financial year excludes rights where
the performance criteria has not been met in relation to their performance period but they have not yet
reached their vesting date.
Table 2 - Summary of grants under LTI
Name
Plan
Balance
as at 1
July
2022
Awarded
but not
vested
Vested
% of total
vested
Forfeited
Balance as
at 30 June
2023
Fair value
per right
Unamortised
value
Number
Number
Number
%
Number
Number
$
L Mackender
47,709
FY20 LTI
FY21 LTI
361,879
FY22 LTI 794,792
-
FY23 LTI
-
-
-
990,441
L Kow
-
FY20 LTI
FY21 LTI
193,076
FY22 LTI 424,491
-
FY23 LTI
-
-
-
544,629
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(47,709)
(180,940)
-
-
-
180,940
794,792
990,441
-
(96,538)
-
-
-
96,538
424,491
544,629
2.20
1.80
0.65
0.48
-
1.80
1.74
0.50
$
-
-
165,570
316,941
-
-
88,429
181,543
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Directors' report
6.2 Shareholdings of Managing Director and Chief Financial Officer
The table below sets out the equity holdings in fully paid ordinary shares in Service Stream of the Managing
Director and Chief Financial Officer for the 2023 and 2022 financial years:
Balance
at 1 July
Received on
vesting of
performance
rights
(Disposed)
/ Acquired
during the
year
Balance at
date of
appointment
Balance at
date of
resignation
Balance at
30 June
Name
2023
L Mackender
1,567,601
L Kow
2022
1,237,660
L Mackender
1,100,700
L Kow
70,000
-
-
-
-
145,000
136,950
466,901
1,167,660
-
-
-
-
-
-
-
-
1,712,601
1,374,610
1,567,601
1,237,660
6.3 Employment Contracts
The below table identifies the key terms of the employment contracts for the Managing Director and Chief
Financial Officer.
Position
Term
Detail
Managing Director
Chief Financial
Officer
Term
No fixed end date
Until terminated by either party
$1,050,000 (inclusive of Superannuation)
Total Fixed
Remuneration
Incentives
● STI: 50% of total fixed remuneration up to a maximum of
total 60% of fixed remuneration
● LTI: 75% of total fixed remuneration
Termination
● 6 months either party (or payment in lieu)
●
Immediate for serious misconduct or breach of contract
● Statutory requirements only for termination with cause
Term
No fixed end date
Until terminated by either party
$721,724(inclusive of superannuation)
Fixed
Remuneration
Incentives
● STI: 45% of total fixed remuneration up to a maximum of
total 54% of fixed remuneration
● LTI: 60% of total fixed remuneration
Termination
● 6 months either party (or payment in lieu)
●
Immediate for serious misconduct or breach of contract
● Statutory requirements only for termination with cause
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7 Non-Executive Director Remuneration
The RNC is responsible for reviewing and making recommendations to the Board on the remuneration for
the Non-Executive Directors. Non-Executive Directors are remunerated by way of fixed fees (inclusive of
superannuation where applicable). To preserve independence and impartiality, Non-Executive Directors do
not receive any performance related compensation.
The current maximum aggregate fee pool for the Non-Executive Directors is $1,300,000 as approved by
shareholders on 19 October 2022. Board and Committee fees (inclusive of superannuation where applicable)
are included in the aggregate pool.
Fees are reviewed annually taking into account comparable roles and market data provided by the Board’s
independent remuneration advisor. In FY23, no adjustments were made to the Non-Executive Director fees
other than for compulsory superannuation increases.
7.1 Non-Executive Director Fees
The fees payable to the Non-Executive Directors of Service Stream are summarised in the below table.
Role
Fees
Chairman of the Board
$201,826 per annum (inclusive of superannuation)
Base Fee Non-Executive Director
$118,536 per annum (inclusive of superannuation)
Additional Fee as Chair of a Board Sub-Committee
$12,594 per annum; taking that Director’s total to
$131,187 (inclusive of superannuation)
33
7.2 FY23 Non-Executive Directors' remuneration
The below Table lists the fees by Non-Executive Directors in FY23 that are measured in accordance with
Australian Accounting Standards.
Service Stream Limited
Directors' report
Name
B Gallagher
P Dempsey
E Ward1
M Monro2
S Wiggins3
D Page4
G Adcock5
T Coen6
Total
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Board and
Committee fees
Super
Total
182,648
182,648
115,859
118,722
114,905
88,175
91,585
-
78,372
-
108,333
130,000
39,140
130,000
-
80,822
730,842
730,367
19,178
18,264
12,165
11,872
12,065
8,818
9,616
-
-
-
-
-
-
-
-
8,082
53,024
47,036
201,826
200,912
128,024
130,594
126,970
96,992
101,201
-
78,372
-
108,333
130,000
39,140
130,000
-
88,904
783,866
777,402
1E Ward’s remuneration for 2022 was paid from her start date of 6 September 2021. Her remuneration was adjusted following her appointed as
Chair of the Health, Safety, Environment & Sustainability Committee on 1 November 2022 .
2M Monro’s remuneration was paid from his start date of 3 October 2022. His remuneration was adjusted following his appointment as Chair of
the Remuneration and Nomination Committee on 1 March 2023.
3S Wiggins’ remuneration was paid to Pigeon Pty Ltd as Trustee for the Pigeon Trust (a trust in which Ms Wiggins has a beneficial interest), from
her start date of 7 November 2022. Her remuneration was adjusted following her appointment as Chair of the Audit & Risk Committee on 1 May
2023.
4D Page’s remuneration was paid up to the date of her retirement on 30 April 2023.
5G Adcock’s remuneration was paid to Ausadcock Pty Ltd up to the date of his retirement on 19 October 2022 (a company in which Mr Adcock
has a beneficial interest).
6T Coen’s remuneration was paid up to the date of his retirement on 10 March 2022.
34
Service Stream Limited
Directors' report
7.3 Non-Executive Directors’ Shareholding
The table below sets out the equity holdings in fully paid ordinary shares in Service Stream of the Non-
Executive Directors for the 2023 and 2022 financial years.
Name
Balance at
1 July 2022
B Gallagher
4,000,000
P Dempsey
1,400,000
E Ward
M Monro1
S Wiggins2
D Page3
G Adcock4
-
-
-
646,801
93,333
Received on
vesting of
performanc
e rights
(Disposed)
/ Acquired
during the
year
Balance at
date of
appointme
nt
Balance at
date of
resignation
Balance at
30 June 2023
-
-
-
-
-
-
-
130,000
80,901
40,000
66,000
27,019
-
-
-
-
-
-
-
-
-
-
-
-
-
673,820
93,333
4,000,000
1,530,000
80,901
40,000
66,000
-
-
1M Monro was appointed as a Non-Executive Director effective 3 October 2022.
2S Wiggins was appointed as a Non-Executive Director effective 7 November 2022.
3D Page retired as a Non-Executive Director effective 30 April 2023.
4G Adcock retired as a Non-Executive Director effective 19 October 2022.
7.4 Related Party and Other Transactions
There were no other transactions entered into with KMP and their related parties during FY23.
35
Service Stream Limited
Directors' report
The Directors’ report is signed in accordance with a resolution of the Directors made pursuant to s.298(2)
of the Corporations Act 2001.
On behalf of the Directors
Brett Gallagher
Chairman
22 August 2023
Leigh Mackender
Managing Director
22 August 2023
36
Auditor’s Independence Declaration
As lead auditor for the audit of Service Stream Limited for the year ended 30 June 2023, I declare that
to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Service Stream Limited and the entities it controlled during the period.
Andrew Cronin
Partner
PricewaterhouseCoopers
Melbourne
22 August 2023
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
37
Consolidated statement of profit or loss and other comprehensive income
for the financial year ended 30 June
Service Stream Limited
Notes
3
4
6
14
5
25
7
Revenue from continuing operations
Revenue from contracts with customers
Other income
Expenses
Employee salaries and benefits
Subcontractor fees
Raw materials and consumables used
Consulting and temporary staff fees
Company administration and insurance expenses
Occupancy expenses
Technology and communication services
Motor vehicle expenses
Depreciation and amortisation
Impairment
Net finance costs
Other expenses
Share of profits from investment in joint ventures
and associates
Profit / (loss) before tax
Income tax expense
Profit / (loss) for the year
Total comprehensive income / (loss) for the year
Profit / (loss) attributable to the equity holders of
the parent
2023
$'000
2,048,658
4,109
2,052,767
(503,466)
(1,193,670)
(159,217)
(28,831)
(17,544)
(10,041)
(28,112)
(18,925)
(68,050)
-
(13,605)
(10,745)
4,662
5,223
(761)
4,462
4,462
4,462
2022
$'000
1,513,804
2,733
1,516,537
(381,866)
(901,477)
(88,111)
(20,058)
(11,359)
(5,280)
(29,772)
(13,278)
(53,322)
(38,206)
(7,163)
(2,919)
2,192
(34,082)
(2,242)
(36,324)
(36,324)
(36,324)
Total comprehensive income / (loss) attributable to equity
holders of the parent
4,462
(36,324)
Earnings per share
Basic (cents per share)
Diluted (cents per share)
8
8
0.72
0.71
(6.09)
(6.09)
Notes to the financial statements are included on pages 42 to 85
38
Service Stream Limited
Consolidated statement of financial position
at 30 June
Notes
2023
$'000
2022
$'000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Accrued revenue
Other assets
Current tax asset
Total current assets
Non-current assets
Investments accounted for using the equity
method
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Current tax liabilities
Total current liabilities
Non-current liabilities
Deferred tax liability (net)
Provisions
Borrowings
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves
Contributed equity
Reserves
Accumulated losses
Total equity
20
9
10
11
12
7
25
13
15
14
16
17
15
7
7
17
20, 21
15
18
84,267
186,120
16,445
254,436
11,038
-
68,677
105,011
14,738
273,841
9,992
7,889
552,306
480,148
8,567
5,606
43,017
50,189
437,028
538,801
59,643
52,529
451,729
569,507
1,091,107
1,049,655
301,780
72,540
19,487
3,096
396,903
69,671
6,806
118,612
33,757
228,846
267,472
62,350
18,304
-
348,126
38,253
7,117
148,907
39,156
233,433
625,749
581,559
465,358
468,096
499,682
(9,988)
(24,336)
465,358
499,682
(12,024)
(19,562)
468,096
Notes to the financial statements are included on pages 42 to 85
39
Service Stream Limited
Consolidated statement of changes in equity
for the financial year ended 30 June
Contributed
equity
$'000
Employee
equity-settled
benefits reserve
$'000
Retained earnings/
(accumulated
losses)
$'000
Total
$'000
Balance at 30 June 2021
318,721
(12,151)
16,762
323,332
Loss for the period
Total comprehensive loss for the
year
Equity-settled share-based
payments, inclusive of tax
adjustments
Issue of shares (net of transaction
costs)
Acquisition of treasury shares
Issue of treasury shares to
employees
-
-
-
180,961
(204)
204
-
-
331
-
-
(204)
(36,324)
(36,324)
(36,324)
(36,324)
331
180,961
(204)
0
-
-
-
-
Balance at 30 June 2022
499,682
(12,024)
(19,562)
468,096
Profit for the period
Total comprehensive income for
the year
Equity-settled share-based
payments, inclusive of tax
adjustments
Dividends paid
Acquisition of treasury shares
Issue of treasury shares to
employees
-
-
-
-
-
-
4,462
4,462
4,462
4,462
2,036
-
2,036
-
-
-
(9,236)
(9,236)
-
-
-
-
Balance at 30 June 2023
499,682
(9,988)
(24,336)
465,358
Notes to the financial statements are included on pages 42 to 85
40
Consolidated statement of cash flows
for the financial year ended 30 June
Notes
Cash flows from operating activities
Receipts from customers (including GST)
Payments to suppliers and employees (including GST)
Interest received
Interest and facility costs paid
Income taxes refunded / (paid)
Dividends from joint venture associates
Net cash provided by operating activities
20
Cash flows from investing activities
Payments for plant and equipment
Proceeds from the sale of plant and equipment
Payments for intangible assets
Payment for businesses (net of cash acquired)
29
Net cash used in investing activities
Cash flows from financing activities
Purchase of shares (net of transaction costs)
Proceeds from issue of shares (net of transaction costs)
Principal elements of lease payments
Dividends paid
Proceeds from borrowings
Repayment of borrowings
Net cash (used in) / provided by financing activities
Net increase in cash held
Cash at the beginning of the year
Cash at the end of the year
20
Service Stream Limited
2023
$'000
2022
$'000
2,194,683
1,647,293
(2,135,149)
(1,572,048)
1,822
(12,711)
44,466
1,701
94,812
99
(6,839)
(10,783)
825
58,547
(5,286)
3,970
(2,698)
(3,014)
1,175
(2,365)
(12,896)
(313,537)
(16,910)
(317,741)
-
-
(23,064)
(9,236)
141,324
(204)
179,228
(16,739)
-
500,013
(171,336)
(385,000)
(62,312)
277,298
15,590
18,104
68,677
84,267
50,573
68,677
Notes to the financial statements are included on pages 42 to 85
41
Notes to the consolidated financial statements
Service Stream Limited
Service Stream Limited
Notes to the consolidated financial statements
Index to Notes
Overview
1 General information
Page 43
Section A: Business performance
Section B: Operating assets & liabilities
2
Segment information
Page 43
9
Trade and other receivables
Page 50
3 Revenue from contracts with
Page 45
10
Inventories
customers
4 Other income
5 Net finance costs
6 Other expense items
7
Income tax expense
8 Earnings per share
Page 46
Page 46
Page 46
Page 47
Page 49
13 Property, plant and equipment
Page 51
11 Accrued revenue
12 Other assets
14
Intangible assets
15
Leases
16
Trade and other payables
17 Provisions
Section C: Capital and financing
Section D: Group structure
18 Contributed equity
Page 57
24
Subsidiaries
19 Dividends
Page 58
25
Joint arrangements
20 Notes to the consolidated statement
of cash flows
Page 59
26 Deed of cross guarantee
Page 68
21 Financial instruments
Page 60
27 Related party transactions
Page 69
22 Capital risk management
Page 63
28 Parent entity information
Page 69
23 Share-based payments
Page 63
29 Business combinations
Page 71
Section E: Unrecognised items
Section F: Other
30 Contingent assets and liabilities
Page 71
32 Remuneration of auditors
Page 72
31 Events after the reporting period
Page 71
33
Significant accounting policies
Page 72
34 Critical accounting judgements
and key sources of estimation
Page 85
42
Page 50
Page 50
Page 51
Page 52
Page 54
Page 56
Page 56
Page 65
Page 66
Notes to the consolidated financial statements
Service Stream Limited
1 General information
Service Stream Limited (the Company) is a limited company incorporated in Australia and listed on the Australian
Securities Exchange (ASX: SSM).
Service Stream Limited's registered office and its principal place of business is Level 4, 357 Collins Street,
Melbourne, Victoria 3000.
The principal activities of the Company and its subsidiaries (the Group) are described in note 2.
2 Segment information
(a) Products and services from which reportable segments derive their revenues
The Group's operating segments have been determined based on the nature of the business activities
undertaken by the Group and by reference to the structure of internal reporting that is prepared and provided to
the chief operating decision maker, being the Managing Director, who provides the strategic direction and
management oversight of the Group in terms of monitoring results and approving strategic planning for the
business.
The principal services of the Group's reportable segments are as follows:
Telecommunications
Telecommunications provides a wide range of operations, maintenance,
installation, design and construction services to the owners of fixed-line and
wireless telecommunication networks in Australia. Service capability includes
customer connections, service and network assurance, site acquisition,
engineering, design, construction and installation of broadband, wireless and
fixed-line project services, as well as minor projects for asset remediation,
augmentation and relocation.
Utilities
Utilities provides a broad range of operations, maintenance, design and
construction services to gas, water and electricity network owners, industrial asset
owners and other customers in Australia. Service capability includes asset
maintenance, upgrades and replacement, engineering, design and construction
of network assets, meter reading and network assurance, as well as specialist
inspection, auditing and compliance services.
Transport
Transport provides long-term operational support and maintenance services to
public and private road and tunnel asset owners. Service capabilities include road
network maintenance, control room operations, minor civil construction services
and installation and operation of intelligent transport systems (ITS).
Performance is measured on the segment result which is EBITDA from Operations (earnings before depreciation
and amortisation, interest, taxation, non-operational costs* and adjustments for equity accounted joint ventures)
as included in the internal management reports that are reviewed by the Managing Director.
The segment results include the allocation of overheads that can be directly attributable to an individual
business segment. Costs relating to certain head office functions and non-operational activities are managed at
Group level and not allocated to the Group's segments. The information presented to the Managing Director
does not report on segment assets and liabilities and as such is not presented in this report.
*Non-operational cost items represent acquisition, integration and restructuring costs (refer note 6 (c)).
43
Notes to the consolidated financial statements
Service Stream Limited
2 Segment information (continued)
(b) Segment revenue and results
30 June 2023
Segment revenue
Other income
Share of revenue from joint
ventures
Total revenue (including joint
venture)1
Telecomm-
unications
$'000
970,373
7
-
Utilities
Transport
$'000
886,164
2,264
$'000
192,940
1,292
-
98,015
Eliminations
/
Unallocated
$'000
(819)
546
-
Total
$'000
2,048,658
4,109
98,015
970,380
888,428
292,247
(273)
2,150,782
EBITDA from Operations2
85,460
8,284
14,791
(14,578)
93,957
30 June 2022
Segment revenue
Other income
Share of revenue from joint
ventures
Total revenue (including joint
venture)1
Telecomm-
unications
$'000
639,898
70
-
Utilities
Transport
$'000
695,354
1,633
$'000
171,977
871
-
47,230
Eliminations
/
Unallocated
$'000
6,575
159
-
Total
$'000
1,513,804
2,733
47,230
639,968
696,987
220,078
6,734
1,563,767
EBITDA from Operations2
61,509
19,533
9,864
208
91,114
1This is a non-statutory disclosure as it includes other income and Service Stream's share of revenue from equity accounted joint ventures.
2Performance is measured using EBITDA from Operations. Non-operational cost items include acquisition and integration costs associated with the
Lendlease Services transaction (refer note 6(c)).
Reconciliation of EBITDA from Operations to net profit after tax
EBITDA from Operations
Adjustments for joint ventures
Depreciation and amortisation
Impairment expense
Non-operational costs (before tax) (refer note 6 (c))
Net finance costs
Income tax expense
Net (loss) / profit after tax
(a) Information about major customers
2023
$'000
93,957
(1,998)
(68,050)
-
(5,081)
(13,605)
(761)
4,462
2022
$'000
91,114
(968)
(53,322)
(38,206)
(25,537)
(7,163)
(2,242)
(36,324)
In 2023 and 2022, a customer in the Telecommunication segment contributed more than 10% of the Group’s total
revenue.
Except as disclosed above, no other customers contributed to more than 10% of the Group’s total revenue in 2023
or 2022.
44
3 Revenue from contracts with customers
(a) Revenue from contracts with customers
Revenue
(b) Disaggregation of segment revenue
Notes to the consolidated financial statements
Service Stream Limited
2023
$'000
2,048,658
2,048,658
2022
$'000
1,513,804
1,513,804
The Group derives revenue from the transfer of goods and services over time and at a point in time. The table
below provides a disaggregation of reportable segment revenues from contracts with customers.
30 June 2023
Segment revenue
Intra / Inter-segment
revenue
Revenue from contracts
with customers
Timing of revenue
recognition
At point in time
Over time
Revenue from contracts
with customers
30 June 2022
Segment revenue
Intra / Inter-segment
revenue
Revenue from contracts
with customers
Timing of revenue
recognition
At point in time
Over time
Revenue from contracts
with customers
Telecomm-
unications
$'000
970,373
Utilities
Transport
$'000
886,164
$'000
192,940
Other
$'000
1,741
Total
$'000
2,051,219
-
-
-
(2,560)
(2,560)
970,373
886,164
192,940
(819)
2,048,659
402,744
567,629
453,489
432,675
17,511
175,429
432
(1,251)
874,177
1,174,482
970,373
886,164
192,940
(819)
2,048,659
Telecomm-
unications
$'000
639,898
Utilities
Transport
Other
Total
$'000
695,354
-
-
$'000
171,977
-
$'000
7,126
(551)
$'000
1,514,355
(551)
639,898
695,354
171,977
6,575
1,513,804
335,861
304,037
264,855
430,499
639,898
695,354
7,596
164,381
171,977
5,593
982
6,575
613,905
899,899
1,513,804
(c) Assets and liabilities related to contracts with customers
Revenue recognised that was included in contract liability balance at the
beginning of the period
Revenue (reversed) from performance obligations satisfied in previous
periods
2023
$'000
21,491
2022
$'000
8,511
(1,800)
(1,339)
45
Notes to the consolidated financial statements
Service Stream Limited
3 Revenue from contracts with customers (continued)
(d) Significant estimates
The Group's revenue is recognised when and as the control of the goods and services are transferred to its
customers.
Schedule of rates and cost reimbursable contracts
Revenue is recognised based on the transaction price as specified in the contract, net of estimated achievements
of the variable considerations. Judgement is required in determining the Group's total transaction price.
Accumulated experience is used to estimate and provide for the variable considerations applicable, and revenue
is only recognised to the extent that it is highly probable that a significant reversal will not occur.
Project delivery
Revenue is recognised based on the proportion of contract costs incurred for work performed to date relative to
the estimated total contract costs (percentage of completion method). Judgement is required in determining
the Group's total progress and total contract costs, net of variable considerations on each project delivery.
Accumulated experience is used to estimate this progress and total contract costs. Revenue is only recognised to
the extent that it is highly probable that a significant reversal will not occur.
No element of financing is deemed present as sales are generally made with credit terms of 30 days, which is
consistent with market practice. The Group's obligation to warranty claims under the standard warranty terms is
recognised as a provision, see note 17.
4 Other income
Gain on disposal of assets
Other
5 Net finance costs
Interest income
Interest expense: leases
Interest expense: borrowings
Facility establishment costs
6 Other expense items
(a) Depreciation and amortisation expense
Depreciation of plant and equipment
Depreciation of right-of-use assets
Amortisation of software
Amortisation of customer contracts / relationships
Write-off of software assets
Notes
13
15
14
14
2023
$'000
1,248
2,861
4,109
2023
$'000
(1,822)
2,332
12,364
731
13,605
2023
$'000
19,196
21,180
5,919
15,411
6,344
68,050
2022
$'000
470
2,263
2,733
2022
$'000
(99)
1,624
4,865
773
7,163
2022
$'000
15,196
17,296
6,806
14,024
-
53,322
46
Notes to the consolidated financial statements
Service Stream Limited
6 Other expense items (continued)
(b) Employee benefit expense
Superannuation expense
Equity-settled share-based payments
(c) Non-operational expenses
Individual non-operational items included in profit / loss before income tax
Acquisition and integration costs1
Non-operational cost excluded from EBITDA from Operations
Write-off of software assets and other expense2
Total non-operational costs (before tax)
Tax on non-operational costs
Non-operational costs after tax
1Cost associated with the acquisition and integration of Lendlease Services Pty Ltd (refer to note 29).
2Mainly relates to write-off of software assets decommissioned during integration of the business.
7 Income tax expense
(a) Income tax recognised in profit or loss
Tax expense comprises:
Current tax expense
Over provision in prior years
Deferred tax expense
Income tax expense
(b) Reconciliation of income tax expense to tax payable
Profit / (Loss) before income tax
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible / (taxable) in calculating
taxable income
Goodwill impairment
Other non-deductible expenses
Franking credits on dividends received
Current year deferred tax revaluations against tax expense
Over provision in prior years
Income tax expense as per consolidated statement of profit or loss and
other comprehensive income
Over provision in prior years
Movement through deferred tax (note: 7c)
Tax payable
Less current year tax instalments paid during the year
Net income tax payable / (refundable)
2023
$'000
43,799
1,470
45,268
2022
$'000
32,237
332
32,569
2023
$'000
5,081
6,594
11,675
(4,254)
7,421
2023
$'000
6,248
(638)
(4,849)
761
2023
$'000
5,223
1,567
-
776
(510)
(434)
(638)
761
638
4,849
6,248
(3,152)
3,096
2022
$'000
25,537
-
25,537
(5,703)
19,834
2022
$'000
-
(806)
3,048
2,242
2022
$'000
(34,082)
(10,225)
11,462
2,014
(203)
-
(806)
2,242
806
(3,048)
-
(7,889)
(7,889)
Effective tax rate
15%
7%
47
Notes to the consolidated financial statements
Service Stream Limited
7 Income tax expense (continued)
(b) Reconciliation of income tax expense to tax payable (continued)
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate
entities on taxable profits under Australian tax law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
(c) Deferred tax balances
Deferred tax balances arise from the following:
2023
Temporary differences
Trade and other receivables
Accrued revenue
Trade, other payables and
provisions
Black hole expenditure
Tax Losses
Employee benefits
Plant and equipment
Customer contracts / relationships
Right of use assets
Lease liabilities
Other
2022
Temporary differences
Trade and other receivables
Accrued revenue
Trade, other payables and
provisions
Share issue costs
Tax Losses
Employee benefits
Plant and equipment
Customer contracts / relationships
Right of use assets
Lease liabilities
Other
Openin
g
balance
$'000
Timing
differenc
e related
to prior
periods1
$'000
DTL (Net)
Acquired
through
Acquisitio
n
$'000
Charged
to
Income
Charged
to equity
Closing
balance
$'000
$'000
$'000
268
(61,879)
9,291
1,768
38,585
18,737
64
(46,194)
(15,759)
17,238
(372)
(38,253)
Openin
g
balance
$'000
175
(15,150)
1,936
1,081
-
8,734
(346)
(17,131)
(8,989)
10,114
612
(18,964)
-
(11,784)
1,444
862
(27,895)
(352)
(171)
285
-
(89)
(1,394)
(39,094)
-
(516)
(704)
0
0
263
(712)
4,290
-
89
(185)
2,523
(124)
9,080
(3,339)
(625)
(3,900)
(238)
803
4,566
702
(1,265)
(811)
4,849
-
-
-
-
-
302
-
-
-
-
-
302
144
(65,098)
6,692
2,005
6,788
18,711
(16)
(37,052)
(15,057)
15,973
(2,760)
(69,671)
Timing
differenc
e related
to prior
periods 1
$'000
DTL (Net)
Acquired
through
Acquisitio
n
$'000
Charged
to
Income
Charged
to equity
Closing
balance
$'000
$'000
$'000
-
-
649
(520)
-
-
-
-
-
-
(261)
(132)
105
178
(12)
(46,907)
5,773
933
-
-
8,788
712
(33,270)
-
84
(212)
(17,842)
(511)
38,585
1,200
(302)
4,207
(6,770)
7,040
(511)
(3,048)
-
-
-
1,718
-
15
-
-
-
-
-
1,733
268
(61,879)
9,291
1,768
38,585
18,737
64
(46,194)
(15,759)
17,238
(372)
(38,253)
1 The prior period timing difference arose from a true-up of deferred tax and tax payable position at balance date to the subsequent tax return
lodgement date.
Deferred tax assets and liabilities have been offset by the Group and are presented in the Consolidated
statement of financial position as a net deferred tax liability.
48
Notes to the consolidated financial statements
Service Stream Limited
7 Income tax expense (continued)
(d) Tax consolidation
Tax consolidation of the Group
The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under
Australian taxation law. Service Stream Limited is the head entity in the tax-consolidated group. The members of
the tax-consolidated group are identified in note 24. A tax funding arrangement and a tax sharing agreement
have been entered into between the entities. As such a notional current and deferred tax calculation for each
entity as if it were a taxpayer in its own right has been performed (except for unrealised profits, distributions
made and received and capital gains and losses and similar items arising on transactions within the tax
consolidated group which are treated as having no tax consequences). Current tax liabilities and assets and
deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group
are recognised by the Company (as the head entity in the tax consolidation group).
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax arrangement and a tax sharing agreement
with the head entity. Under the terms of the tax funding arrangement, Service Stream Limited and each of the
other entities in the tax- consolidated group have agreed to pay or receive a tax equivalent payment to or from
the head entity, based on the current tax liability or current tax asset of the entity.
8 Earnings per share
Basic earnings / (loss) per share:
Total basic earnings / (loss) per share
Diluted earnings / (loss) per share:
Total diluted earnings / (loss) per share
Basic and diluted earnings per share
2023
Cents per
share
2022
Cents
per share
0.72
(6.09)
0.71
(6.09)
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share
are as follows:
Profit / (Loss) for the year attributable to owners of the
Company
Earnings / (Loss) used in the calculation of basic EPS
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
Shares deemed to be issued for no consideration in respect of employee
share schemes
Weighted average number of ordinary shares for the purposes of diluted
earnings per share
2023
$'000
4,462
2022
$'000
(36,324)
4,462
(36,324)
2023
$'000
2022
$'000
615,953
596,100
9,328
-
625,281
596,100
49
Notes to the consolidated financial statements
Service Stream Limited
9 Trade and other receivables
Current
1 Month
2 Months
3 Months
Over 3 months
Other receivables
Trade
receivables
2023
$'000
142,813
32,477
4,304
3,386
3,054
186,034
Expected
credit loss
2023
$'000
(76)
(74)
(74)
(183)
(74)
(481)
Trade
receivables
2022
$'000
82,988
10,854
2,692
2,077
6,433
105,044
Expected
credit loss
2022
$'000
(173)
(125)
(138)
(283)
(177)
(896)
Total
2023
$'000
142,737
32,403
4,230
3,203
2,980
185,553
567
186,120
Total
2022
$'000
82,815
10,729
2,554
1,794
6,256
104,148
863
105,011
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. All new customers are subject to credit checks using external credit reporting agency information to
ascertain their risk profile against both internal and industry benchmarks and are used in determination of
appropriate credit limits. They are generally due for settlement within 30 days and therefore are all classified as
current. Trade receivables are recognised initially at the amount of consideration that is unconditional, unless
they contain significant financing components, then they are recognised at fair value. The Group holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently
at amortised cost using the effective interest method. Details about the Group's impairment policies and the
calculation of the loss allowance are provided at note 21(c).
10 Inventories
Inventories
2023
$'000
16,445
16,445
2022
$'000
14,738
14,738
Inventories recognised as an expense during the year ended 30 June 2023 amounted to $159,217,000 (2022:
$88,111,000). These were included in the raw materials and consumables used line item in the consolidated
statement of profit and loss and other comprehensive income.
There were no write-downs of inventories to net realisable value amounted during the year (2022: $348,000).
11 Accrued revenue
Accrued revenue
2023
$'000
254,436
254,436
2022
$'000
273,841
273,841
Accrued revenue is defined as a contract asset under AASB 15. The accrued revenue balance represents revenue
which has yet to be invoiced to customers due to work not yet reaching a stage where it can be invoiced and
where the Group's customers require payment claims to be submitted and approved prior to invoices being
issued. The Group adopts the principle that is consistent with AASB 15 and will not recognise revenue until it is
considered to be highly probable which has historically resulted in a high level of recoverability of amounts
invoiced. Where work has not yet reached a stage where it can be invoiced, revenue is accrued in line with the
Group's accounting policies as outlined at note 33(e) revenue recognition. Details about the Group's impairment
policy and assessment of the loss allowance are provided in note 21(c).
The Group is not subject to any significant financing component and the transaction price within the customer
contracts has not been adjusted. The Group has opted to apply the practical expedient available under AASB
15.121 whereby the financing component of the performance obligations is not disclosed further as having an
original expected duration of one year or less.
50
Notes to the consolidated financial statements
Service Stream Limited
2023
$'000
10,024
1,014
11,038
2022
$'000
9,356
636
9,992
Land
$'000
Leasehold
improvement
s
$'000
Plant and
equipmen
t
$'000
Motor
vehicles
Total
$'000
$'000
-
2,150
-
-
-
2,150
2,150
-
2,150
2,150
-
-
-
2,150
2,150
-
2,150
620
278
-
-
(310)
588
9,326
44,460
2,651
(488)
(10,188)
45,761
3,224
12,472
363
(217)
(4,698)
11,144
13,170
59,360
3,014
(705)
(15,196)
59,643
9,936
(9,348)
588
74,262
(28,501)
45,761
16,532
(5,388)
11,144
102,880
(43,237)
59,643
588
770
-
(300)
1,058
45,761
4,501
(2,642)
(13,405)
34,215
11,144
15
(74)
(5,491)
5,594
59,643
5,286
(2,716)
(19,196)
43,017
10,705
(9,647)
1,058
73,369
(39,154)
34,215
13,739
(8,145)
5,594
99,963
(56,947)
43,017
12 Other assets
Prepayments
Other assets
13 Property, plant and equipment
Year Ended 30 June 2022
Opening net book value
Acquired through business
combination
Additions
Disposals1
Depreciation charge
Closing net book value
At 30 June 2022
Cost
Accumulated depreciation
Net book value
Year Ended 30 June 2023
Opening net book value
Additions
Disposals1
Depreciation charge
Closing net book value
At 30 June 2023
Cost
Accumulated depreciation
Net book value
1Disposals are net of accumulated
depreciation.
51
Notes to the consolidated financial statements
Service Stream Limited
14 Intangible assets
Year Ended 30 June 2022
Opening net book value
Acquired through business combination
Additions
Amortisation charge
Goodwill impairment
Software
$'000
Customer
contracts
and
relationships
$'000
19,661
8,291
2,365
(6,806)
-
57,102
102,700
-
(14,024)
-
Closing net book value
23,511
145,778
Goodwill
Total
$'000
$'000
229,983
90,663
-
-
(38,206)
282,440
306,746
201,654
2,365
(20,830)
(38,206)
451,729
At 30 June 2022
Cost
Accumulated amortisation & impairment
Net book value
Year Ended 30 June 2023
Opening net book value
Additions
Asset written off
Amortisation charge
Net acquired through finalisation of business
combination
Closing net book value
At 30 June 2023
Cost
Accumulated amortisation & impairment
Net book value
(a) Impairment tests for goodwill
65,907
(42,396)
23,511
189,471
(43,693)
145,778
320,646
(38,206)
282,440
576,024
(124,295)
451,729
23,511
2,698
(6,443)
(5,919)
145,778
282,440
-
-
(15,411)
-
-
-
451,729
2,698
(6,443)
(21,330)
-
(6,097)
16,471
10,374
13,847
124,270
298,911
437,028
59,537
(45,690)
13,847
183,371
(59,101)
124,270
298,911
-
298,911
541,820
(104,791)
437,028
Goodwill and indefinite life intangible assets are tested annually for impairment. An impairment loss is
recognised if the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount. It is
Management's judgement that the CGU is at its lowest level of aggregation and no further distinctions can be
made. The judgements and assumptions used in such determination are Management's best estimates based
on the current market dynamics, business operations, service offerings, interactions with its customers and
operational synergies achieved. Changes impacting these assumptions could result in changes in the
determination of CGUs and recognition of impairment charges in future periods.
Goodwill is monitored at the level of operating segments. The Group on 1 July 2022 made an assessment of the
organisational structure following the acquisition and integration of Lendlease Services resulting in the Group
reassessing its cash generating units (CGUs). This assessment has resulted in changes to the CGU construct,
including:
● The disbandment of the Ex-Lendlease Services CGU;
● Consolidation of the legacy Telecommunications CGU and the ex-Lendlease Services Telecommunications
business to form the new Telecommunications CGU;
● Consolidation of the legacy Comdain and Energy and Water CGUs with the ex-Lendlease Services Utilities
business to form a new CGU group – Utilities which will be used for monitoring of goodwill associated with
the Utilities segment; and
● Creation of a new separate Transport CGU.
52
Notes to the consolidated financial statements
Service Stream Limited
14 Intangible assets (continued)
The revised CGU composition and goodwill allocation are as follows:
CGU
Telecommunication
Utilities
Transport
CGU
Telecommunications
Energy and Water
Comdain
Service Stream Maintenance
2023
$’000
159,665
129,947
9,299
298,911
2022
$’000
71,450
20,042
100,285
90,663
282,440
(b) Key assumptions used the calculation of recoverable amount
The recoverable amount of an asset or CGU is the greater of its value in use or its fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to their present value using a discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset or
CGU. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants in its principal or most advantageous market at the measurement
date. It is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest. A fair value measurement of a non-
financial item assumes it is put to its highest and best use.
The recoverable amount of all CGUs was determined through a fair value less costs to sell calculation using a
detailed 5-year cash flow financial model with revenue and earnings forecasts, discount rate and costs to sell
reflective of a market participant's view of valuing the business. The fair value measurement was categorised as a
Level-3 fair value based on the inputs in the valuation technique used (refer note 21 for further details on fair
value measurements).
The cash flows are based on the Board approved budget covering a one-year period together with management
prepared cash flows through to FY2028 with a terminal growth rate applied thereafter. Management's
determination of cash flow projections is based on past performance and its expectations for the future. The cash
flows assume that all businesses continue to undertake significant work with new and existing customers. This
assumes existing contracts are extended, new contracts are awarded, and margins remain relatively stable.
The following table sets out the key assumptions for all CGUs with goodwill allocated to them:
CGU
Terminal growth rate
Pre-tax discount rate
Telecommunication
Utilities
Transport
2.5%
13.0%
2.5%
12.6%
2.5%
12.6%
A post-tax discount rate to post-tax cash flows has been applied as the valuation calculated using this
method closely approximates applying pre-tax discount rates to pre-tax cash flows.
The terminal growth rate represents estimates of the CGUs’ growth to perpetuity.
53
Notes to the consolidated financial statements
Service Stream Limited
14 Intangible assets (continued)
(b) Key assumptions used the calculation of recoverable amount (continued)
Impact of possible changes in key assumptions
For the Utilities CGU, the recoverable amount approximates its carrying value. As such, any reasonable possible
change in the key assumptions would cause the carrying value of the CGU to exceed its recoverable amount
leading to an impairment.
The Utilities business has had a challenging year with inflationary pressures, significant weather events
impacting operations and additional costs incurred to close-out unprofitable projects. Revenue and profit growth
assumptions applied in the impairment assessment are outlined below and assume a recovery in FY24 as the
business repositions itself to strategically pull back from large high-risk fixed price design and construct projects,
invest in high growth sectors and internally focus on improving operating margins.
Growth rate1
Revenue
EBITDA from Operations
Utilities
5.0%
17.8%
1Compound annual growth rate over the 5-year forecast period from FY23 to FY28. EBITDA from Operations assumes a recovery in FY24 coming off
a lower base in FY23 due to the challenges outlined above, with moderate growth assumed thereafter.
Other than as disclosed above, the Group believes that for the remaining CGUs, any reasonable possible
change in the key assumptions would not cause the carrying value of the CGUs to exceed their
recoverable amount.
15 Leases
(a) Amount recognised in the Consolidated statement of financial position
The consolidated statement of financial position shows the following amounts relating to leases:
Properties
Motor vehicles
Equipment
Total right-of-use assets
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
2023
$'000
15,012
29,964
5,213
50,189
19,487
33,757
53,244
2022
$'000
21,732
26,629
4,168
52,529
18,304
39,156
57,460
The Group's weighted average incremental borrowing rate applied to the lease liabilities as at 30 June 2023 was
4.17% (2022: 3.24%).
Additions and remeasurements to the right-of-use assets during the 2023 financial year were $18.8 million (2022:
$40.5 million).
(b) Amount recognised in the consolidated statement of profit or loss and other comprehensive income
The consolidated statement of profit and loss and other comprehensive income shows the following amounts
relating to leases:
Depreciation of right-of-use assets
Properties
Motor vehicles
Equipment
Interest expense (included in interest expense and other finance costs)
Expense relating to short-term leases (included in the occupancy and motor
vehicle expenses)
Income from sub-leasing of right-of-use assets
The total cash outflow for leases in 2023 was $25.1 million (2022: $18.4 million).
2023
$'000
9,275
10,274
1,631
21,180
2,332
3,233
380
2022
$'000
10,053
6,264
979
17,296
1,624
3,044
847
54
Notes to the consolidated financial statements
Service Stream Limited
15 Leases (continued)
(c) The Group's leasing activities and how these are accounted for:
The Group leases various properties, equipment and motor vehicles. Rental contracts are typically made for fixed
periods of two to five years but many have extension options as described in (ii) below. Lease terms are
negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of
the asset's useful life or the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
● amounts expected to be payable by the Group under residual value guarantees;
●
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
● variable lease payments that are based on an index or a rate; and
● the exercise price of a purchase option if the Group is reasonably certain to exercise that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions.
Right-of-use assets are measured at cost comprising the following:
● the amount of the initial measurement of lease liability
● any lease payments made at or before the commencement date less any lease incentives received; and
● any initial direct costs.
(i) Variable lease payments
There are no variable lease payments requiring estimations.
(ii) Extension and termination options
Extension and termination options are included in a number of properties, equipment and motor vehicles leases
across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The
majority of extension and termination options held are exercisable only by the Group and not by the respective
lessor.
(d) Critical judgements
In determining the lease term, management consider all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated). Potential future cash outflows of approximately $44,342,000 (undiscounted) have not been
included in the lease liability because it is not reasonably certain that the leases will be extended or not
terminated.
55
16 Trade and other payables
Trade creditors
Sundry creditors and accruals
Goods and services tax payable
Income in advance
Notes to the consolidated financial statements
Service Stream Limited
2023
$'000
74,996
120,096
11,601
95,087
301,780
2022
$'000
76,677
148,222
2,312
40,261
267,472
Income in advance is defined as contract liabilities under AASB 15. A contract liability pertains to the Group's
obligation to transfer services to its customer for which it has already received payment. The amounts included
in income in advance reflect a significant portion of the aggregate performance obligation amounts not yet
satisfied as at the end of the reporting period. The Group has opted to apply the practical expedient available
under AASB 15.121 whereby the performance obligations are not disclosed further as they have an original
expected duration of one year or less.
17 Provisions
Current
Employee benefits 1
Provision for contractual obligations 2
Provision for onerous contracts 3
Other provisions 4
Non-current
Employee benefits 1
Total provisions
2023
$'000
2022
$'000
49,157
13,608
6,929
2,846
72,540
6,806
6,806
79,346
49,547
3,594
7,202
2,007
62,350
7,117
7,117
69,467
1 The provision for employee benefits represents annual leave, sick leave, rostered day-off and long service leave entitlements.
2 The provision for contractual obligations represents the present value of estimated future outflows of economic benefit that may be required
under the Group's obligations for warranties, rectification and rework with its various customers.
3 The provision for onerous contracts represents best estimation on loss-making projects where that cost is expected to exceed total
revenue.
4 Other provisions include make good provisions on premises, restructuring costs and redundancy provisions as required.
The Group does not offer its customers the option to purchase warranties as a separate service. Warranties
simply relate to rectifications and rework required to be performed on completed services. These assurance-type
warranties are accounted for in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent
Assets.
56
17 Provisions (continued)
(a) Movement in provisions
Balance at 1 July 2021
Additions recognised through business combinations
Additional provisions recognised
Unused amounts reversed
Amounts used during the year
Balance at 30 June 2022
Balance at 1 July 2022
Additional provisions recognised
Unused amounts reversed
Amounts used during the year
Balance at 30 June 2023
(b) Significant estimates
Notes to the consolidated financial statements
Service Stream Limited
Contractual
obligations
$'000
Onerous
contracts
$'000
Other
provisions
$'000
3,782
343
-
3,662
1,095
(2,464)
(2,481)
3,594
2,901
6,569
(152)
-
2,007
-
(2,459)
-
7,202
2,007
Contractual
obligations
$'000
Onerous
contracts
$'000
Other
provisions
$'000
3,594
7,202
2,007
10,373
(357)
30,761
(472)
(2)
(30,562)
13,608
6,929
2,525
(790)
(896)
2,846
Management estimates the provisions for future claims based on the value of work historically performed and
the claims of any on-going disputes. Actual claim amounts in the next reporting period are likely to vary from
Management's estimates. Amounts may be reversed if it is determined they are no longer required.
18 Contributed equity
Fully paid ordinary shares
(a) Fully paid ordinary shares
Balance at 1 July 2021
Issue of shares
Balance at 30 June 2022
Balance at 30 June 2023
Number of shares
2023
No.'000
615,953
615,953
2022
No.'000
615,953
615,953
Share capital
2023
No.'000
499,682
499,682
2022
No.'000
499,682
499,682
Number
of shares
$'000
410,393
205,560
615,953
615,953
Share
capital
$'000
318,721
180,961
499,682
499,682
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
57
Notes to the consolidated financial statements
Service Stream Limited
18 Contributed equity (continued)
(b) Employee share schemes
Information relating to the employee share schemes is set out in note 23.
(c) Treasury shares
Treasury shares are shares in Service Stream Limited that are held by the Service Stream Employee Share Trust
for the purpose of issuing shares under various share-based incentives plans. Shares issued to employees are
recognised on a first-in-first-out basis.
Balance at 1 July 2021
Acquisition of treasury shares (average prices; $0.89 per share)
Share issued under employee share schemes
Balance at 30 June 2022
Balance at 30 June 2023
Number
of shares
$'000
-
(229)
229
-
-
Share
capital
$'000
-
(204)
204
-
-
19 Dividends
Recognised amounts
Fully paid ordinary shares
Interim dividend
Fully paid ordinary shares
Final dividend
2023
Cents per
share
2022
Cents per
share
2023
$'000
2022
$'000
0.50
0.50
-
-
3,077
3,077
-
-
2023
Cents per
share
2022
Cents per
share
2023
$'000
2022
$'000
1.00
1.00
1.00
1.00
6,160
6,160
6,160
6,160
A final dividend of 1.0 cent per share has been declared by the Board for the year ended 30 June 2023 (2022: 1.0
cent).
Franking credits available for subsequent reporting periods based on a tax rate of 30%
(2022: 30%)
Company
2023
$'000
5,279
2022
$'000
42,209
The above amounts are calculated from the balance of the franking account as at the end of the reporting
period, adjusted for franking credits and debits that will arise from the settlement of liabilities or
receivables for income tax after the end of the year. The balance excludes the impact on franking credits
associated with the final dividends declared at year-end.
58
Notes to the consolidated financial statements
Service Stream Limited
20 Notes to the consolidated statement of cash flows
(a) Reconciliation of cash and cash equivalents
Cash and cash equivalents
Balance per consolidated statement of cash
flows
2023
$'000
84,267
84,267
2022
$'000
68,677
68,677
(b) Reconciliation of profit for the year to net cash flows from operating activities
Profit / (Loss) for the year
Gain on sale of disposal of non-current assets
Impairment loss
Depreciation and amortisation
Equity-settled share-based payments expense
Increase/(Decrease) in tax balances & other tax adjustments
Movement in working capital net of balances acquired through
business combinations:
Decrease / (increase) in trade and other receivables
Decrease / (Increase) in accrued income
(Increase) in other assets
(Increase) in inventories
Increase in trade and other payables
Increase in provisions
Net cash provided by operating activities
(c) Liabilities from financing activities
$'000
Balance as at 30 June 2021
Acquired through business combinations
Additions
Remeasurements
Financing cash flows
Interest expense
Interest payments
Balance as at 30 June 2022
$'000
Balance as at 30 June 2022
Additions
Financing cash flows
Interest expense
Interest payments
Balance as at 30 June 20231
2023
$'000
4,462
(1,248)
-
68,050
2,051
42,403
2022
$'000
(36,324)
(470)
38,206
53,322
332
(8,541)
(81,124)
19,405
(1,046)
(1,707)
33,687
9,879
94,812
20,872
(46,706)
(1,930)
(1,835)
38,817
2,804
58,547
Borrowing
s
33,783
-
-
111
115,013
5,638
(5,638)
148,907
Borrowing
s
148,907
-
(30,012)
13,063
(10,379)
121,579
Lease
liabilities
33,713
26,090
13,555
841
(16,739)
1,624
(1,624)
57,460
Lease
liabilities
57,460
18,848
(23,064)
2,332
(2,332)
53,244
1 Bank borrowings as at 30 June 2023 consist of borrowing of $118.6 million and accrued interest of $2.9 million, which is classified as trade and other
payables.
59
Notes to the consolidated financial statements
Service Stream Limited
21 Financial instruments
(a) Overview
The Group's activities expose it to a variety of financial risks including interest rate, credit and liquidity risk
exposures. The Group's risk management program looks to identify and quantify these exposures and where
relevant reduce the sensitivity to potential adverse impacts on its financial performance. The Group operates a
centralised treasury function which manages all financing facilities and external payments on behalf of the
Group. Compliance with financial risk management policies, financial exposures and compliance with risk
management strategy are reviewed by senior management and reported to the Group's Audit and Risk
Committee and Board on a regular basis.
(b) Market risk - interest rate risk management
Based upon a 100 basis point increase in prevailing market interest rates as applied to the Group's net cash
balance at 30 June 2023 the Group's sensitivity to interest rate risk would be equivalent to a $343,000 per annum
unfavourable impact to profit before tax (2022: $802,000 unfavourable).
(c) Credit risk management
Credit risk of the Group arises predominately from outstanding receivables and unbilled accrued revenue to its
customers. Refer below for details of the Group's impairment of financial assets assessment.
The Group will not recognise revenue until it is considered to be highly probable. Historically unbilled accrued
revenue has led to a high level of recoverability.
Receivable balances are monitored on an ongoing basis and the Group has a policy of only dealing with
creditworthy counterparties and where appropriate, obtaining credit support as means of mitigating the risk of
financial loss from credit defaults.
Credit reporting information is supplied by independent credit rating agencies where available and the Group
uses publicly available information and its own internal trading history to credit-assess customers.
Impairment of financial assets
The Group has two types of financial assets that are subject to the expected credit loss model:
● trade receivables; and
● accrued revenue (contract assets) relating to its customer contracts.
While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the expected credit
loss is immaterial.
Trade receivables and accrued revenue
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and accrued revenue.
The expected loss rates on trade receivables are based on the payment profiles of sales over a period of 12 months
and the corresponding historical credit losses experienced within this period. This historical loss rate is adjusted
to reflect current and forward-looking information affecting the ability of specific customers to settle their
receivables. The nature of the Group's customers, which includes government enterprises and large private
sector corporations, is such that the risk of default of receivables is low.
When applying the impairment requirement of AASB 9 to accrued revenue, the Group recognises that the
ageing of accrued revenue is not indicative of its recoverability profile, rather the ability to complete work in
progress and/or pending customers' approval in order to invoice. Under the expected credit loss principle
adopted, the Group assessed that the accrued revenue balance carries a similar expected loss profile as those
trade receivables aged as current, before adjusting for any specific forward-looking factors. Applying the
associated expected loss rate to the accrued revenue balance results in an impairment loss.
60
Notes to the consolidated financial statements
Service Stream Limited
21 Financial instruments (continued)
(c) Credit risk management (continued)
On that basis, the loss allowance as at 30 June was determined as follows.
2023
Expected loss rate
Gross carrying amount - trade
receivables
Loss allowance
2022
Expected loss rate
Gross carrying amount - trade
receivables
Loss allowance
Current
$'000
0-30
days
$'000
31-60
days
$'000
61-90
days
$'000
91 days
+
$'000
Total
$'000
0.05%
0.23%
1.73%
5.40%
2.42%
142,813
32,477
4,304
3,386
3,054
186,035
76
74
74
183
74
481
Current
$'000
0-30
days
$'000
31-60
days
$'000
61-90
days
$'000
91 days
+
$'000
Total
$'000
0.21%
82,988
1.15%
10,854
5.13%
2,692
13.63%
2,077
2.75%
6,433
105,044
173
125
138
283
177
896
The loss allowances for trade receivables at 30 June 2023 reconciles to the opening loss allowances as follows:
Opening balance
Acquired through business combination
Additional provision recognised
Unused amount reversed
Closing balance
(d) Liquidity risk management
2023
$'000
2022
$'000
583
352
537
(576)
896
896
-
-
(415)
481
Management of the Group's liquidity risk exposure is undertaken daily by the Group's treasury and finance
functions via monitoring of the Group's actual cash flows and regularly updated forecasts of payable and
receivable profiles.
In order to maintain adequate liquidity, the Group typically maintains an at-call cash buffer as well as having
access to overdraft facilities and syndicated funding lines.
Included in note 21(d)(ii) are details of the financing facilities available to the Group at 30 June 2023.
(i) Liquidity and interest rate risk tables
The following table detail the Group's maturity profile for financial liabilities.
The amount disclosed in the table represent the undiscounted cash flows of financial liabilities based on the
earliest date on which the Group is contracted to repay principal. Where applicable, these amounts represent
both interest and principal cash flows.
61
Notes to the consolidated financial statements
Service Stream Limited
21 Financial instruments (continued)
(d) Liquidity risk management (continued)
Carrying
amount
Contractual
cash flow
6 months
or less
6 - 12
months
1 - 2
years
2 - 5
years
5 +
years
Weighted
average
interest
rate
$'000
$'000
$'000
$'000
$'000
$'000
$'000
4.17%
(53,244)
(57,498)
(11,505)
(9,759)
(14,223)
(18,955)
(3,057)
4.84%
(118,612)
(133,964)
(2,930)
(2,882)
(5,764)
(122,388)
N/A
(301,780)
(301,780)
(301,780)
-
-
-
-
-
(473,637)
(493,242)
(316,215)
(12,641)
(19,987)
(141,343)
(3,057)
Weighted
average
interest
rate
Carrying
amount
Contractual
cash flow
6 months
or less
6 - 12
months
1 - 2
years
2 - 5
years
5 +
years
$'000
$'000
$'000
$'000
$'000
$'000
$'000
3.24%
1.76%
N/A
(57,460)
(148,907)
(267,472)
(59,897)
(153,718)
(267,472)
(10,723)
(1,315)
(267,472)
(9,643)
(1,307)
-
(15,790)
(151,096)
-
(18,661)
-
-
(5,080)
-
-
(473,839)
(481,087)
(279,510)
(10,950)
(166,886)
(18,661)
(5,080)
2023
Financial
liabilities
Lease liabilities
Borrowings1
Trade and other
payables
2022
Financial
liabilities
Lease liabilities
Borrowings1
Trade and other
payables
1Borrowings maturity has been updated to reflect the underlying facility expiry.
(ii) Financing facilities
Bank guarantee
Surety bonds
Borrowings
Amount used
2023
$'000
113,355
21,835
2022
$'000
112,863
-
120,000
148,907
255,190
261,770
During the period, the Group refinanced and extended its syndicated debt facilities of $395 million for a further 2
years, expiring in November 2025. There were no material changes to the terms and conditions of the
agreement. The refinancing during the period was treated as a non substantial modification, and the transaction
costs attributable to the refinancing have been netted off against the loan.
As at 30 June 2023, the Group had undrawn committed loan facilities of $161.6 million across bank guarantees,
borrowings and bank overdraft, of which the overdraft has a maximum draw down of $25 million available. In the
prior year, the Group had unused facilities of $132 million mainly attributable to borrowings, bank guarantees,
bank overdraft and cash advances.
62
21 Financial instruments (continued)
(e) Categories of financial instruments
Financial assets at amortised cost
Cash and cash equivalents
Accrued revenue
Trade and other receivables
Financial liabilities at amortised cost
Lease liabilities
Borrowings
Trade and other payables
Notes to the consolidated financial statements
Service Stream Limited
2023
$'000
2022
$'000
84,267 68,677
254,436 273,841
105,011
186,120
447,529
524,823
2023
$'000
2022
$'000
53,244
118,612
301,780
57,460
148,907
267,472
473,637 473,839
The Group consider that the carrying amounts of financial assets and liabilities recognised at amortised
cost in the financial statements approximate their fair value.
22 Capital risk management
The Group manages its capital to ensure that it is able to continue as a going concern and to maximise returns to
shareholders. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
and return capital paid to shareholders or issue new shares. Capital is managed in order to maintain a strong
financial position and ensure that the Group's funding needs can be optimised at all times in a cost-efficient
manner to support the goal of maximising shareholder wealth.
The Board and Senior Management review the capital structure of the Group at least annually considering any
restrictions or limitations that may exist under current financing arrangements with regard to mix of capital.
The Group is subject to various financial covenants under its Syndicated Facilities Agreement regarding
minimum levels of equity, gearing, fixed charge cover and borrowing base; all of which are regularly monitored
and reported upon. The Group has complied with all of the financial covenants of its borrowing facilities during
the 2023 and 2022 financial reporting periods.
23 Share-based payments
(a) Long-Term Incentive (LTI) Plan
Recognition and measurement
From time to time, employees in Senior Management roles may be invited, with approval from the Board, to
participate in the LTI plan. The LTI operates within the shareholder-approved Employee Share Ownership Plan
(ESOP), under the administration of the Remuneration and Nomination Committee (RNC). The extent of
individual participation and the associated number of performance rights offered is recommended by the
Managing Director and reviewed by the RNC, which will then make recommendations to the Board for approval.
In accordance with the provisions of the ESOP, certain employees in Senior Management roles were invited to
participate in the LTI which entitles them to receive a number of performance rights in respect of the year
ending 30 June 2023 (FY23 LTI). Each performance right converts into one ordinary share of Service Stream
Limited on vesting. No amounts are paid or payable by the participant on receipt of the performance rights, and
the performance rights carry neither rights to dividends nor voting rights. The number of performance rights
granted is based on the employee's long-term incentive participation rate, which is expressed as a percentage of
the participant's total fixed remuneration (TFR), and the volume-weighted average market price of the Group's
63
Notes to the consolidated financial statements
Service Stream Limited
23 Share-based payments (continued)
(a) Long-Term Incentive (LTI) Plan (continued)
shares over a prescribed period of time or other issue price as deemed appropriate by the Board. The key terms
of the LTI plans are disclosed in the Directors’ report.
The amount recognised as expense over the vesting period is adjusted to reflect management estimate of actual
number of performance rights that vest except where forfeiture is due to failure to achieve market-based
performance indicators.
The following LTI performance rights arrangements were in existence at the end of the current period:
Tranch
e
Number
Grant date
FY21
720,587
FY22
3,182,182
FY23
4,965,711
FY23 -
CEO
990,441
21 October
2020
29 October
2021
17 November
2022
19 October
2022
Fair value per
right at grant
date
TSR - 166.9cps
EPS - 193.8 cps
TSR - 55.2 cps
EPS - 74.7 cps
TSR - 34.90 cps
EPS - 64.93 cps
TSR - 33.50 cps
EPS - 61.77 cp
Rights
vesting date
Share grant
date
Performance
period
June 2023
June 2024
June 2025
June 2025
September
2023
September
2024
September
2025
September
2025
1 July 2020 -
30 June 2023
1 July 2021 - 30
June 2024
1 July 2022 - 30
June 2025
1 July 2022 - 30
June 2025
Fair value of performance rights
The FY23 LTI performance rights with the relative TSR hurdle vesting condition have been valued by an
independent expert using a Monte-Carlo simulation. The FY23 LTI performance rights with the Adjusted EPS
hurdle vesting condition have been valued using a Binominal tree methodology. Both valuation methodologies
are underpinned by a 'risk-neutral' probability framework with lognormal share prices, the share price at grant
date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate
for the term of the option and the correlations and volatilities of the peer group companies. Key assumptions of
the framework that underpin the valuations performed are: arbitrage free markets, complete and liquid markets,
stationary lognormal share price return distributions, no trading costs or taxes, risk-neutral probability
framework, short selling is possible, continuous trading and perfectly divisible securities.
Key inputs into the model
The table below details the key inputs to the valuation models.
Tranche
Share
price at
grant
date
Expected
life
Volatility
1
FY21
FY22
$2.19
$0.88
2.90 years
2.67 years
40%
40%
Risk-
free
interest
rate
0.11%
1.07%
Divid
end
yield
4.63%
4.96%
Rights vesting
date
Share grant
date
June 2023
June 2024
September 2023
September 2024
FY23
FY23 – CEO
1The expected volatility is based on historic volatility (based on the remaining life of the options), adjusted for any expected changes in future
volatility due to publicly available information.
June 2025
June 2025
2.67 years
2.70 years
4.99%
5.16%
3.19%
3.46%
$0.74
$0.71
September 2025
September 2025
40%
40%
64
Grant date
weighted
avg FV
$
1.863
0.650
-
1.470
1.047
Notes to the consolidated financial statements
Service Stream Limited
Movements in the LTI performance rights during the year
The following table reconciles the outstanding performance rights granted under the LTI at the beginning and
end of the financial year:
Number of
rights
2023
Grant date weighted
avg FV
$
2022
Number of
rights
Balance at start of the financial year
Granted during the year
Vested during the year
Forfeited during the year
Balance at end of the financial year
5,177,639
6,155,835
-
(1,474,553)
9,858,921
1.047
0.497
-
1.456
0.642
3,005,626
4,112,340
-
(1,940,327)
5,177,639
The balance at the end of the financial year excludes rights where the performance criteria has not been met in
relation to their performance period but they have not yet reached their vesting date.
The balance of performance rights outstanding at the end of the year have a remaining contractual life of two
years (FY23 Tranches), one year (FY22 Tranche) and 3 months (FY21 Tranche)
24 Subsidiaries
Details of the Company's subsidiaries at 30 June 2023 are as follows:
Name of entity
Parent entity
Service Stream Limited
Subsidiaries
Service Stream Holdings Pty Ltd (i)
Service Stream Fixed Communications Pty Ltd (i)
Service Stream Mobile Communications Pty Ltd (i)
Service Stream Customer Care Pty Ltd (i)
Radhaz Consulting Pty Ltd (i)
Service Stream Infrastructure Services Pty Ltd (i)
Service Stream Energy & Water Pty Ltd (i)
Service Stream Nominees Pty Ltd (i)
Service Stream Operations Pty Ltd (i)
TechSafe Australia Pty Ltd (i)
TechSafe Management Pty Ltd (i)
Ayrab Pty Ltd (i)
Service Stream Utilities Pty Ltd (formerly Comdain Infrastructure Pty
Ltd) (i)
Comdain Civil Constructions Pty Ltd (i)
Comdain Civil Constructions (QLD) Pty Ltd (i)
Comdain Services Pty Ltd (i)
Comdain Asset Management Pty Ltd (i)
Comdain Gas (Aust) Pty Ltd (i)
Comdain Services (AMS) Pty Ltd (i)
Comdain Corporate Pty Ltd (i)
Comdain Assets Pty Ltd (i)
Service Stream Maintenance Pty Ltd (formerly Lendlease Services Pty
Ltd) (i)
Westlink (Services) Pty Limited
EnerSafe Pty Ltd
Ownership interest
Country of
incorporation
2023
%
2022
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(i)
These wholly-owned subsidiaries have entered into a deed of cross guarantee with Service Stream Limited pursuant to ASIC Corporations
(wholly-owned companies) Instrument 2016/785 (Instrument) and are relieved of the requirement to prepare and lodge an audited financial and
Directors' report.
65
Notes to the consolidated financial statements
Service Stream Limited
25 Joint arrangements
(a) Joint Operations
Delivering for Customers (D4C)
D4C is an unincorporated jointly controlled entity between Service Stream Utilities Pty Ltd (formerly Comdain
Infrastructure Pty Ltd), Service Stream Maintenance Pty Ltd (SSM) (previously Lendlease Services Pty Ltd), John
Holland Pty Ltd and WSP Australia Pty Ltd (WSP). This arrangement was established on 18 December 2019. The
principal place of business of the joint operation is in Australia. Service Stream Utilities Pty Ltd and Service
Stream Maintenance Pty Ltd are wholly owned subsidiaries of Service Stream Holdings Pty Ltd. Collectively, they
hold 60% beneficial interest in D4C.
The Joint Venture Deed in relation to the D4C requires unanimous consent from all joint venture parties for all
relevant activities. All partners have direct rights to the assets of the partnership and are jointly and severally
liable for the liabilities incurred by the partnership.
The Intelligent Freeways Alliance (IFA)
SSM, WSP and NRW Holdings Ltd entered into incorporated Alliance (The Intelligent Freeways Alliance (IFA)) to
deliver the Smart Freeway Mitchell Southbound Reid Highway to Vincent Street contract for The Main Roads
Western Australia in Dec 2021.
The alliance is undertaking works to improve traffic flow and safety on the Mitchell Freeway, including freeway
entry ramps, installation of coordinated ramp signals managing the flow of traffic entering the freeway,
improving safety and cutting travel times for commuters.
The Intelligent Freeways Alliance requires unanimous consent from all joint venture parties for all relevant
activities. All partners have direct rights to the assets of the partnership and are jointly and severally liable for the
liabilities incurred by the partnership. Service Stream Maintenance Pty Ltd holds 42.1% beneficial interest in IFA.
Recognition and measurement
In accordance with AASB 11 Joint Arrangements, both entities above are therefore classified as joint operations
and the group recognises its direct right to the jointly held assets, liabilities, revenues and expenses as described
in note 33(b).
(b) Details of joint ventures and associates
Ownership interest
June 2023
June 2022
Measurement
basis
Principal place of
business and country of
incorporation
LT Joint Venture Pty Ltd
50%
50%
ConnectSydney Pty Ltd
50%
50%
South Australian Road Services Pty
Ltd
50%
50%
Brisbane Motorway Services Pty Ltd
50%
50%
Equity
Accounted
Equity
Accounted
Equity
Accounted
Equity
Accounted
Victoria, Australia
New South Wales,
Australia
South Australia, Australia
Queensland, Australia
66
Notes to the consolidated financial statements
Service Stream Limited
25 Joint arrangements (continued)
(c) Summarised financial information for joint ventures and associates (continued)
Reconciliation of carrying amount in joint ventures and associates:
LT Joint
Venture
Connect-
Sydney
$’000
$’000
South
Australian
Road
Services
$’000
Brisbane
Motorway
Services
Total
$’000
$’000
-
465
199
(625)
39
39
12
-
51
-
3,570
1,649
-
5,219
5,219
4,610
(1,701)
8,128
-
-
343
-
343
343
40
-
383
-
204
1
(200)
5
5
-
-
5
-
4,239
2,192
(825)
5,606
5,606
4,662
(1,701)
8,567
Opening balance as at 1 Jul 2021
Acquired through business
combinations
Total share of profit
Dividends received
Closing balance as at 30 Jun 2022
Opening balance as at 1 Jul 2022
Total share of profit
Dividends received
Closing balance as at 30 Jun 2023
(i) LT Joint Venture Pty Ltd
The LT Joint Venture Pty Ltd is a 50-50 joint venture between Service Stream Maintenance Pty Ltd and Tyco
Projects (Australia) Pty Ltd. Whilst the company operated for seven years predominately under a core contract,
this contract did conclude operational obligations on 30 June 2021. The principal activity of the Company was
providing specialist road maintenance and asset management services under an Intelligent Transport Systems
maintenance contract with Transport for NSW. It is expected that the company will be wound up in FY24.
(ii) ConnectSydney Pty Ltd
ConnectSydney Pty Ltd was incorporated on 16 December 2020, commencing delivery obligations under a
Strategic Road Asset Performance Contract (SRAPC) with Transport for NSW on 1 July 2021. The core contract the
joint venture undertakes is to provide specialist road and Intelligent Transport Systems (ITS) asset maintenance
and asset management services to the client within the Harbour Zone of Sydney. The company is a joint venture
between Service Stream Maintenance Pty Ltd, Bitupave Ltd and Tyco Australia Group Pty Ltd. SRAPC has an
initial nine year contract term, with two options to extend of three years each.
(iii) South Australian Road Services Pty Ltd
South Australian Road Services Pty Limited (SARS) was incorporated on 1 July 2020, commencing operations on 2
November 2020. The Company is responsible for the maintenance of infrastructure on behalf of the Department
of Infrastructure and Transport (DIT). Core activities consist primarily in the maintenance of sealed and unsealed
roads through regional South Australia, asset management and minor capital project scope in the region. SARS
is a 50-50 joint venture between Service Stream Maintenance Pty Ltd and Bitumax Pty Ltd. The regional contract
with the DIT has an initial seven year contract term, with two options to extend of three years each.
(iv) Brisbane Motorway Services Pty Ltd
Brisbane Motorway Services Pty Ltd (BMS) is a 50-50 joint venture between Service Stream Maintenance Pty Ltd
and Ventia Pty Ltd. The company has been dormant for a period of time having successfully completed all
contractual obligations. The company is in the process of being liquidated and will be wound up in FY24.
67
Notes to the consolidated financial statements
Service Stream Limited
26 Deed of cross guarantee
The Australian wholly owned subsidiaries listed in note 24 (excluding Westlink (Services) Pty Limited and
Enersafe Pty Ltd), are parties to a deed of cross guarantee under which each company guarantees the debts of
the others.
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 , the wholly-owned subsidiaries
listed in note 24 (excluding Westlink (Services) Pty Limited and Enersafe Pty Ltd) are relieved from the
Corporations Act 2001 requirements for preparation, audit and lodgment of financial reports, and Directors'
report.
A Consolidated statement of profit or loss and other comprehensive income and Consolidated statement of
financial position for the year ended 30 June 2023 for the deed of cross guarantee group are set out below:
(a) Consolidated Statement of Profit or Loss and Other Comprehensive Income of the deed of
cross guarantee group
Revenue
Expenses
Share of profits from investment in
associates
Profit / (Loss) before tax
Income tax expense
Profit / (Loss) profit for the year
Total comprehensive loss for the year
2023
$'000
2022
$'000
2,028,129
1,500,191
(2,030,535)
(1,537,733)
4,662
2,192
2,255
(761)
1,494
1,494
(35,350)
(1,712)
(37,062)
(37,062)
(b) Consolidated statement of financial position of the deed of cross guarantee group
ASSETS
Current assets
Non-current assets
Total assets
LIABILITIES
Current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves
Contributed equity
Reserves
Retained earnings / (accumulated losses)
Total equity
2023
$'000
2022
$'000
545,481
538,801
475,716
574,557
1,084,282
1,050,273
399,278
229,085
628,363
455,919
350,383
233,059
583,442
466,831
499,667
(9,973)
(33,775)
455,919
499,682
(12,024)
(20,827)
466,831
68
Notes to the consolidated financial statements
Service Stream Limited
27 Related party transactions
The immediate parent and ultimate controlling party of the Group is Service Stream Limited.
Balances and transactions between the Group and its controlled entities, which are related parties of the Group,
have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the
Group and other related parties are disclosed below.
(a) Key management personnel compensation
The aggregate compensation made to key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments1
2023
$
2022
$
2,451,982
3,391,970
103,609
77,680
657,541
117,562
29,460
30,020
3,290,812
3,569,012
1 The fair value of performance rights issued under the LTI plan allocated on a pro-rata basis to the current financial year.
The compensation of each member of the key management personnel of the Group is set out in the
remuneration report.
(b) Other transaction with key management personnel of the Group
In the prior year, Tom Coen had a beneficial interest in two of the commercial properties that the Group
occupied, of which total rental paid was approximately $767,000 by the group. Tom Coen retired in March 2022
and there were no other transactions with key management personnel of the Group for the financial year ended
30 June 2023.
28 Parent entity information
The accounting policies of the parent entity, which have been applied in determining the financial information of
the parent entity shown below, are the same as those applied in the consolidated financial statements. Refer to
note 33 for a summary of the significant accounting policies relating to the Group.
(a) Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves - equity-settled employee benefits
Accumulated losses
Equity
2023
$'000
-
451,216
451,216
6,704
-
6,704
2022
$'000
7,863
430,298
438,161
-
-
-
444,512
438,161
478,132
(9,972)
478,148
(9,908)
(23,648)
(30,079)
444,512
438,161
69
28 Parent entity information (continued)
(b) Financial performance
Profit / (Loss) for the year
Total comprehensive income
(c) Determining the parent entity financial information
(i) Investment in subsidiaries
Notes to the consolidated financial statements
Service Stream Limited
2023
$'000
15,666
15,666
2022
$'000
(389)
(389)
Investments in subsidiaries are accounted for at cost in the financial statements of Service Stream Limited.
Dividends received from associates are recognised in the parent entity's profit or loss when its right to receive the
dividend is established.
(ii) Guarantees entered into by parent entity
The parent entity is party to the Group's financing facilities as a security provider under the Security Trust Deed.
In addition, the parent entity provides cross guarantees as described in notes 24 and 26, and the parent entity
guarantees to certain clients in relation to subsidiary contract performance obligations.
(iii) Share-based payments
The grant by the Group of shares over its equity instruments to the employees of subsidiaries is treated as a
capital contribution to that subsidiary. The fair value of employee services received, measured by reference to the
grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to the equity.
70
Notes to the consolidated financial statements
Service Stream Limited
29 Business combination – Lendlease Services Pty Ltd and its controlled entities
In the prior year, the Group acquired 100% of the issued share capital of Lendlease Services Pty Ltd and its wholly-
owned subsidiaries under the terms of a Share sale agreement (SSA). Subsequently, it changed its name to
Service Stream Maintenance Pty Ltd.
The acquisition was provisionally accounted for as at 30 June 2022 pending finalisation of the Completion
adjustment. This amount was finalised during FY23, resulting in a change to consideration paid, and a change in
the fair values of certain assets and liabilities acquired.
The final fair value of the cash consideration paid is tabled below:
Purchase consideration
Cash paid
Deferred cash consideration1
Total consideration
$'000
316,566
12,896
329,462
1The deferred cash consideration represents the Completion adjustment payment for the finalised fair value of assets and liabilities acquired
as determined by the Independent Expert as disclosed in the 2022 annual report, Note 30. This consideration was paid in January 2023.
The final and provisional fair values attributable to the net assets acquired and goodwill recognised in the current
year and prior year respectively are as reported below.
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Inventories
Other assets
Property, plant and equipment
Right-of-use assets
Investments accounted for using the equity method
Intangible assets
Trade and other payables
Provisions
Lease liabilities
Deferred tax liability (net)
Net identifiable assets acquired
Add: Goodwill
Total consideration
Provisional
Final
30 Jun 2022
$’000
30 Jun 2023
$’000
Change
$'000
3,029
79,062
138,717
6,066
4,422
59,360
25,476
4,239
110,991
(125,246)
(36,281)
(26,090)
(17,842)
225,903
90,663
316,566
3,029
79,062
138,717
6,066
4,422
59,360
25,476
4,239
104,891
(125,246)
(36,281)
(26,090)
(15,319)
222,326
107,136
329,462
-
-
-
-
-
-
-
-
(6,100)
-
-
-
2,523
(3,577)
16,473
12,896
30 Contingent assets and liabilities
At the date of this report there are no contingent assets and liabilities that are expected to materially impact,
either individually or in aggregate, the Group’s financial position or results from operations (2022: nil).
31 Events after the reporting period
There have not been any matters or circumstances occurring subsequent to the end of the financial year that
has significantly affected, or may significantly effect, the operations of the Group, the results of those operations,
or the state of affairs of the Group in future financial years.
71
32 Remuneration of auditors
Audit and review of the financial report
Other assurance services
Tax services
Notes to the consolidated financial statements
Service Stream Limited
2023
$
1,208,000
60,000
219,599
2022
$
1,171,000
100,000
31,000
1,487,599
1,302,000
The auditor of Service Stream Limited is PricewaterhouseCoopers.
33 Significant accounting policies
This note provides a list of significant accounting policies adopted in the preparation of these consolidated
financial statements. These policies have been consistently applied to all the years presented. The financial
statements are for the consolidated entity consisting of Service Stream Limited and its subsidiaries.
(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. Service Stream Limited is a for-profit entity for the purpose of preparing the financial statements.
The financial statements were authorised for issue by the Directors on 22 August 2023.
i. Compliance with IFRS
The consolidated financial statements of the Group also comply with International Financial Reporting
Standards as issued by the International Accounting Standard Board.
ii. Historical cost convention
The consolidated financial statements have been prepared on the basis of historical cost, except for
certain assets and liabilities that are measured at revalued amounts or fair values, as explained in the
accounting policies below. Historical cost is generally based on the fair values of the consideration given in
exchange for assets. All amounts are presented in Australian dollars.
iii. New and amended standards adopted by the Group
The group has applied AASB 2020-3 Amendments to Australian Accounting Standards – Annual
Improvements 2018–2020 and Other Amendments [AASB 1, AASB 3, AASB 9, AASB 116, AASB 137 & AASB
141] for the first time for their annual reporting period commencing 1 July 2022. The amendments above
did not have any impact on the amounts recognised in prior periods and are not expected to significantly
affect the current or future periods.
iv. New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been
published that are not mandatory for 30 June 2023 reporting periods and have not been early adopted by
the group. These standards, amendments or interpretations are not expected to have a material impact
on the group in the current or future reporting periods and on foreseeable future transactions.
v. Changes in accounting policy
There were no changes in accounting policies during the period.
vi. Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statement, are disclosed in note 34.
72
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(a) Basis of preparation (continued)
The consolidated financial statements incorporate the financial statements of the Group and entities controlled
by the Group (its subsidiaries).
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
When the Group ceases to consolidate an entity, any retained interest in the entity is remeasured to its fair value
with the change in carrying amount recognised in profit or loss. In addition, any amounts previously recognised
in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed
of the related assets or liabilities. This means that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
(b) Joint arrangement
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or
joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than
the legal structure of the joint arrangement.
Investments in joint ventures
A joint venture is an arrangement in which Service Stream has joint control and Service Stream has rights to the
net assets of the arrangement, rather than right to its assets and obligations for its liabilities. Investments in joint
ventures are accounted for using the equity method.
Under the equity method of accounting, the investments in joint ventures are initially recognised in the
Consolidated statement of financial position at cost and adjusted thereafter to recognise the group's share of
profits or losses of the joint venture. Dividends received or receivable from joint ventures are recognised as a
reduction in carrying amount of the investment.
Where the group's share of losses in an equity accounted investment equals or exceeds its interest in the joint
venture, including any other unsecured long-term receivables, the group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the joint venture.
Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of
the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the
policy described in note 33 (m).
Joint operations
The Group recognises its direct right to the assets, liabilities, revenue and expenses of joint operations and
its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been
incorporated in the financial statements. Details of the joint arrangements are set out in note 25.
73
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(c) Goodwill
Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of
the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities recognised at the date of the acquisition. Goodwill is subsequently measured at its
cost less any impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash generating units, or
groups of cash generating units, expected to benefit from the synergies of the business combination. Cash
generating units or groups of cash generating units to which goodwill has been allocated are tested for
impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might
be impaired. If the recoverable amount of the cash generating unit (or group of cash generating units) is
less than the carrying amount of the cash generating unit (or groups of cash generating units), the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash
generating units and then pro-rata on the basis of the carrying amount of each asset in the cash generating
unit (or groups of cash generating units). An impairment loss for goodwill is recognised immediately in the
profit or loss and is not reversed in a subsequent accounting period.
On disposal of the relevant cash generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
(d) Segment reporting
Operating segments are determined based on the nature of the business activities undertaken by the Group
and by reference to the structure of internal reporting provided to the chief operating decision maker. The
chief operating decision maker is responsible for allocating resources and assessing performance of the
operating segments. Where operating segments have been assessed as bearing similar economic
characteristics and being similar in terms of each of the aggregation criteria set out in AASB 8 Operating
Segments including the nature of services, the type of customers and the method by which services are
provided, they may be aggregated into a single reportable segment. Details of the Group’s segment
reporting is set out in note 2.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.
(e) Revenue recognition
The Group has three distinct revenue streams, being (i) revenue from the provision of ticket of work services, (ii)
revenue from the delivery of projects and (iii) revenue from cost reimbursable contracts.
Ticket of work services
Ticket of work services are repetitive, high volume tasks performed by the Group such as the provision of:
● operations and maintenance services to the owners and operators of telecommunications, gas and water
networks including customer connections and service assurance;
● specialist metering, in-home and new energy services in respect of electricity, gas, power and water networks;
●
inspection, auditing and compliance services to electricity network owners and regulators, government
entities and electrical contractors; and
● contact centre services and workforce management support for key contracts.
The benefits provided to customers under this category of work type do not transfer to the customer until the
completion of the service and as such revenue is recognised upon completion (At point in time).
74
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(e) Revenue recognition (continued)
Project delivery
Project works relate primarily to:
● turnkey services associated with the engineering, design and construction of infrastructure projects in the
telecommunications, utilities and transport sectors. Service capability includes program management, site
acquisition, town planning, design, engineering and construction management for projects in
telecommunications, gas, power, road, intelligent transport services (ITS) and water utilities networks;
●
lump sum term maintenance contracts, typically associated with infrastructure networks. Under these
contracts delivery obligations may consist of programme management, asset management, routine
maintenance and periodic maintenance tasks; and
● minor work services such as asset remediation, augmentation and relocation.
The benefits provided to customers under this category of work transfers to the customer as the work is
performed and as such revenue is recognised over the duration of the project based on percentage of
completion. The Group’s performance obligation is fulfilled over time and as such revenue is recognised over
time (Over time).
Percentage of completion is measured according to the proportion of contract costs incurred for work
performed to date relative to the estimated total contract costs, except where this would not be representative
of the stage of completion. Where this is the case, stage of completion is measured on a milestone basis.
As work is performed on the assets being constructed, they are controlled by the customer and have no
alternative use to the Group, with the Group having a right to payment for performance to date. Project revenue
earned is typically invoiced monthly or in some cases on achievement of milestones. Payment of invoices is
typically subject to customer approval/certification. Invoices are paid on standard commercial terms, which may
include the customer withholding a retention amount until finalisation of the construction.
Where recognised project revenues exceed progress billings, the surplus is shown in the Consolidated statement
of financial position as an asset, under accrued revenue. Where progress billings exceed recognised revenues,
the surplus is shown in the Consolidated statement of financial position, as a liability, as income in advance under
trade and other payables. Amounts billed for work performed but not yet paid by the customer are included in
the Consolidated statement of financial position, as an asset, under trade and other receivables.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as
an expense and onerous contract provision as set out in note 17.
Cost reimbursable
The Group recognises revenue (and its associated margins) on all direct, indirect and overhead related costs, as
prescribed under the cost reimbursable contract.
The work performed has no alternative use for the Group and there is an enforceable right to payment, including
a profit margin, when the costs are incurred, as such revenue is recognised over time (Over time).
Overhead recovery
Certain customer contracts allow for the recovery of specified overhead costs.
These are recognised on a straight-line basis over the life of the contract or recovered based on an actual cost
basis.
75
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(e) Revenue recognition (continued)
Variable consideration
It is common for contracts to have variable considerations such as variations, performance bonuses or penalties
and other performance constraints related KPIs. The expected value of revenue is only recognised when the
uncertainty associated with the variable consideration is subsequently resolved, or when it becomes highly
probable. The Group assesses the variable consideration to be included in the transaction price periodically. This
assessment involves judgement and is based on all available information including historical performance and
any variations that are entered into.
Contract assets and liabilities
AASB 15 uses the terms contract assets and contract liabilities to describe what the Group refers to as accrued
revenue and income in advance respectively. Trade receivables represent receivables in respect of which the
Group's right to consideration is unconditional subject only to the passage of time. Accrued revenue represent
the Group's right to consideration for services provided to customers for which the Group's right remains
conditional on something other than the passage of time. Income in advance arise where payment is received
prior to the work being performed. Accrued revenue and income in advance are recognised and measured in
accordance with this accounting policy.
Contract fulfilment costs
Costs incurred prior to the commencement of a contract may arise due to mobilisation/site set-up costs,
feasibility studies, environmental impact studies and preliminary design activities as these are costs incurred to
fulfil a contract. Where these costs are expected to be recovered, they are capitalised and amortised over the
course of the contract consistent with the transfer of service to the customer. Where the costs, or a portion of
these costs, are reimbursed by the customer, the amount received is recognised as deferred revenue and
allocated to the performance obligations within the contract and recognised as revenue over the course of the
contract.
Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods
or services to the customer represents a financing component. As a consequence, the Group does not adjust any
of the transaction prices for the time value of money.
Warranties and defect periods
Construction and services contracts generally include defect and warranty periods following completion of the
project. These obligations are not deemed to be separate performance obligations and therefore estimated and
included in the total costs of the contracts. Where required, amounts are recognised accordingly in line with
AASB 137 Provision, Contingent Liabilities and Contingent Assets.
(f) Leases
The Group recognises leases in line with AASB 16 Leases, measuring lease liabilities measured at the present
value of the remaining lease payments, discounted using the Group’s incremental borrowing rate. The Group’s
leasing policy is described in note 15(c).
Right-of-use assets
Right-of-use assets are initially recognised at cost, comprising the amount of the initial measurement of the
lease liability, any lease payments made at or before the commencement date of the lease, less any lease
incentives received, any initial direct costs incurred by the Group, and an estimate of costs to be incurred by the
Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the
underlying asset to the condition required by the terms and conditions of the lease.
76
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(f) Leases (continued)
Subsequent to initial recognition, right-of-use assets are measured at cost (adjusted for any remeasurement of
the associated lease liability), less accumulated depreciation and any accumulated impairment loss. Right-of-use
assets are depreciated over the shorter of the lease term and the estimated useful life of the underlying asset,
consistent with the estimated consumption of the economic benefits embodied in the underlying asset.
Lease liabilities
Lease liabilities are initially recognised at the present value of the future lease payments (i.e., the lease payments
that are unpaid at the commencement date of the lease). These lease payments are discounted using the
interest rate implicit in the lease, if that rate can be readily determined, or otherwise using the Group’s
incremental borrowing rate.
Subsequent to initial recognition, lease liabilities are measured at the present value of the remaining lease
payments (i.e., the lease payments that are unpaid at the reporting date). Interest expense on lease liabilities is
recognised in profit or loss (presented as a component of finance costs). Lease liabilities are remeasured to reflect
changes to lease terms, changes to lease payments and any lease modifications not accounted for as separate
leases.
Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when
incurred.
Leases of 12-months or less and leases of low value assets
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease
asset and a lease liability has not been recognised) are recognised as an expense on a straight-line basis over the
lease term.
(g) Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and
long service leave when it is probable that settlement will be required and they are capable of being
measured reliably.
Liabilities recognised in respect of employee short-term benefits are measured at their nominal values using
the remuneration rate expected to apply at the time of the settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the
estimated future cash outflows in respect of services provided by employees up to reporting date. Expected
future payments falling due more than 12 months after the end of the reporting period are discounted using
corporate bonds market yields. Remeasurements as a result of employment status and changes in actuarial
assumptions are recognised in profit or loss.
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits when it is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal or to providing termination
benefits as a result of an offer made to encourage voluntary redundancy where applicable.
The obligations are presented as current liabilities in the consolidated statement of financial position if the
entity does not have an unconditional right to defer settlement for at least 12 months after the reporting
period, regardless of when the actual settlement is expected to occur.
77
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(h) Share-based payments
Equity-settled share-based payments to Senior Executives are measured at the fair value of the equity
instrument at the grant date. Details regarding the determination of the fair value of the equity instruments are
set out in note 23.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period. At the
end of each reporting period the Group revises its estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled
employee benefits reserve.
(i) Taxation
Current tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by any changes in the deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted by the
end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulations are subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other
than the recognition of leases) of other assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities, when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to
items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in
which case the tax is also recognised outside profit or loss, or where they arise from the initial accounting for a
business combination. In the case of a business combination, the tax effect is included in the accounting for the
business combination.
78
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(j) Property, plant and equipment
Plant and equipment, leasehold improvements and motor vehicles are stated at cost less accumulated
depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition. In the
event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting
the amount payable to their present value as at the date of acquisition.
Depreciation is calculated on a straight-line basis so as to write-off the net costs or other revalued amount of
each asset over its expected useful life to its estimated residual value. Depreciation methods, estimated useful
lives and residual values are reviewed at the end of each annual accounting period, with the effect of any
changes recognised on a prospective basis.
Plant and equipment is de-recognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of plant and
equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and
is recognised in profit or loss.
The following estimated useful lives are used in the calculation of depreciation:
● Leasehold improvements: 3 - 13 years
● Plant and equipment: 1 -10 years
● Motor vehicles: 5 - 10 years
(k) Intangible assets
Costs incurred in developing products or systems and costs incurred in acquiring software and licences that the
Group controls and that will contribute to future period financial benefits through revenue generation or cost
reduction are capitalised as software. A software is assessed as being controlled by the Group if it has the power
to obtain the future economic benefits flowing from the software itself and to restrict others’ access to those
benefits. Any costs associated with maintaining this software are recognised as an expense as incurred. IT
development costs include only those costs directly attributable to the development phase and are only
recognised following completion of technical feasibility and where the Group has an intention and ability to use
the asset. The amount initially recognised includes direct costs of materials and
service and direct payroll and other payroll-related costs of employees’ time spent on the project.
Customer contracts and relationships acquired in a business combination are initially recognised at their fair
value at the acquisition date, which is regarded as their cost.
Software, customer contracts and relationships have finite lives and are carried at cost less any accumulated
amortisation and any impairment losses.
Amortisation is recognised on a straight-line basis over each asset’s estimated useful life. The estimated useful
life and amortisation method are reviewed at the end of each annual accounting period, with the effect of any
changes in estimate being accounted for on a prospective basis.
The estimated useful lives used in the calculation of amortisation range from 3 to 8 years for software, 1 to 15
years for customer contracts and 15 years for customer relationships.
79
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(l) Impairment of tangible and intangible assets excluding goodwill
At the end of each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those assets have incurred an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). 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. Where a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
cash generating units, or otherwise they are allocated to the smallest group of cash generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment annually, and whenever there is an indication that the asset may be impaired.
The recoverable amount is the higher of the fair value less costs of disposal and value-in-use. In assessing value-
in-use, the estimated future cash flows are discounted to their present value using the pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit or loss unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
(m) Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to inventories by the
method most appropriate to the particular class of inventory, with the majority being valued on a first in, first out
basis. The inventory balance is comprised of purchased inventory, the cost of which is determined after
deducting rebates and discounts.
(n) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
80
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(o) Financial instruments
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual
provisions of the instrument.
(i)
Classification
The Group classifies its financial assets and liabilities in the following measurement categories:
● those to be measured subsequently at fair value (either through other comprehensive income (OCI) or profit
or loss), and
● those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and liabilities and the
contractual terms of the cash flows.
For assets and liabilities measured at fair value, gains and losses will either be recorded in profit or loss or OCI.
(ii)
Recognition and derecognition
Purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has transferred substantially all the risks
and rewards of ownership.
(iii)
Measurement
At initial recognition, the Group measures a financial asset at its fair value, plus transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss (FVPL) are expensed in profit or loss.
Changes in the fair value of financial assets at FVPL are recognised in other gains/losses in the statement of profit
or loss and other comprehensive income as applicable. Impairment losses (and reversal of impairment losses) on
equity investments measured at fair value through other comprehensive income (FVOCI) are not reported
separately from other changes in fair value.
(iv)
Impairment
The Group assesses, on a forward-looking basis, the expected credit losses associated with its financial assets
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been
a significant increase in credit risk.
For trade receivables and contracts assets, the group applies the simplified approach permitted by AASB 9,
which requires expected lifetime losses to be recognised from the date of initial recognition, see note 21(c) for
further details.
(v)
Borrowings
Borrowings are initially measured at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of
the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the
period of the facility to which it relates.
81
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(o) Financial instruments (continued)
Borrowings are removed from the consolidated statement of financial position when the obligation specified in
the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another party and the consideration paid, including any
non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
(vi)
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of
the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct
issue costs.
Financial guarantee liabilities
A financial guarantee is a contract that requires the issuer of the guarantee to make a specified payment to the
holder of the guarantee in the event that it suffers a loss due to the guarantee drawer’s failure to make payment
or otherwise satisfy its contractual obligations under an agreement with the holder. The drawer of the guarantee
is required to reimburse the issuer for any loss suffered in satisfaction of the guarantee obligation to the holder.
Financial guarantee liabilities are initially measured at their fair values and are subsequently measured at the
higher of:
● the amount of the obligation under the contract, as determined in accordance with AASB 137 Provisions,
Contingent Liabilities and Contingent Assets; and
(vi)
Financial liabilities and equity instruments (continued)
● the amount initially recognised, less where appropriate, cumulative amortisation recognised in accordance
with the revenue recognition policies.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss (FVTPL) or other
financial liabilities.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial liability, or, where appropriate, a
shorter period, to the net carrying value on initial recognition.
82
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(o) Financial instruments (continued)
De-recognition of financial liabilities
The Group de-recognises financial liabilities only when the Group’s obligations are fully discharged, cancelled or
otherwise expire. The difference between the carrying amount of the financial liability de-recognised and the
consideration paid or payable is then recognised in profit or loss.
(p) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less loss allowance. See note 21(c) for an assessment of the Group's impairment
methodology.
(q) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of
financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from
the reporting date. They are recognised initially at their fair value and are not discounted if the effect of
discounting is immaterial.
(r) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition
of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation authority is included with other receivables or other
payables in the Consolidated statement of financial position as applicable.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the taxation authority are presented as
operating cash flows.
(s) Cash and cash equivalents
Cash comprises cash on hand and outstanding deposits less any unpresented cheques. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to
an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition.
Bank overdrafts are shown within borrowings in current liabilities in the Group's Consolidated statement of
financial position.
(t) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company
purchases the Company’s equity instruments, for example as the result of a share buy-back or a share-based
incentive scheme, the consideration paid, including any directly attributable incremental costs (net of
income taxes) is deducted from equity attributable to the owners of Service Stream Limited as treasury
shares until the shares are cancelled or reissued.
Where such ordinary shares are subsequently reissued, any consideration received, net of any directly
attributable incremental transaction costs and the related income tax effects, is included in equity
attributable to the owners of Service Stream Limited.
Shares held by the Service Stream Employee Share Trust are disclosed as treasury shares and deducted from
contributed equity.
83
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(u) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the
reporting period.
(v) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
● profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares; and
● by the weighted average number of ordinary shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
● the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares; and
● the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(w) Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors' reports)
Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the
‘rounding off’ of amounts in the Directors' report and the financial report. Amounts in the Directors' report
and the financial report have been rounded off to the nearest thousand dollars, in accordance with that
Instrument.
(x) Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
●
●
fair values of the assets transferred;
liabilities incurred to the former owners of the acquired business;
● equity interests issued by the group; and
●
fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date.
84
Notes to the consolidated financial statements
Service Stream Limited
33 Significant accounting policies (continued)
(x) Business combinations (continued)
Acquisition-related costs are expensed as incurred.
The excess of the:
● consideration transferred;
● amount of any non-controlling interest in the acquired entity; and
● acquisition-date fair value of any previous equity interest in the acquired entity;
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit
or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
34 Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s
accounting policies as described in note 33.
The areas involving a higher degree of judgement or estimates are:
● Recognition of revenue from contracts with customers - note 3(d);
● Testing of goodwill for impairment - notes 14(b);
● Estimation uncertainties and judgements made in relation to lease accounting - note 15(d);
● Estimation of provision for contractual obligations, contractual disputes and onerous contracts - note 17(b);
and
● Business combinations - note 29.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to
be reasonable under the circumstances.
85
Service Stream Limited
Directors' declaration
Directors' declaration
In the Directors' opinion:
(a) the financial statements and notes thereto are in accordance with the Corporations Act 2001, including:
(b) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
(c) giving a true and fair view of the consolidated entity's financial position as at 30 June 2023 and of its
performance for the year ended on that date, and
(d) 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
(e) at the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed Group identified in note 24 will be able to meet any obligations or liabilities to which
they are, or may become, subject by virtue of the deed of cross guarantee described in note 26
Note 33 confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Brett Gallagher
Chairman
22 August 2023
Leigh Mackender
Managing Director
22 August 2023
86
Independent auditor’s report
To the members of Service Stream Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Service Stream Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2023 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2023
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999
Liability limited by a scheme approved under Professional Standards Legislation.
87
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
•
For the purpose of our audit we used overall Group materiality of $10.1 million, which represents
approximately 0.5% of the Group's revenue from continuing operations.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
• We chose revenue from continuing operations because, in our view, it is an appropriate benchmark against
which to measure the performance of the Group.
• We utilised a 0.5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
• Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit
and Risk Committee.
88
Key audit matter
How our audit addressed the key audit matter
Revenue recognition
(Refer to note 3) $2,048.7m
We evaluated the design of relevant key internal
controls over the recognition of revenue.
For the year ended 30 June 2023, the Group
recognised $2,048.7 million of revenue from contracts
with customers, of which $254.4 million was accrued at
30 June 2023.
For revenue from the provision of ticket of work
services, amongst other procedures and for a sample
of transactions, we obtained evidence supporting the
amount of revenue recognised in the current year.
Revenue from the provision of ticket of work services
involves a high volume of transactions and is
recognised at a point in time once services or activities
have been completed. Additionally, due to contractual
terms and certain customers requiring payment claims
to be submitted and approved prior to invoices being
issued, this process can extend the time that revenue
is classified as accrued. Judgement is required to
determine if accrued revenue will be recoverable. Only
revenue that is highly probable of not reversing can be
recorded.
Revenue recognition in relation to the delivery of
projects is complex because it is based on the Group’s
estimates of:
•
•
•
the stage of completion of the contract activity
total forecast contract costs, and
variable consideration
This was a key audit matter because of its significance
to profit, the high volume of revenue transactions
associated with ticket of work services and the
estimation required in recognising revenue from the
delivery of projects.
For revenue from the delivery of projects, amongst
other procedures and for a sample of contracts, we:
•
•
•
obtained an understanding of the terms and
conditions of contracts
obtained an understanding, and agreed to
supporting documents, the estimates of total
contract revenue and forecast contract costs
and evaluated the percentage of completion
based on the actual costs incurred to date and
the estimated costs to complete; and
assessed the Group’s forecasting accuracy by
comparing historical actual costs incurred
relative to the forecast of those costs.
In addition, for revenue that was accrued at 30 June
2023 we evaluated the appropriateness of
management's recoverability assessment.
For all categories of revenue our procedures included
identifying a sample of journal entries impacting
revenue based on specific criteria and obtaining source
documents to determine if the journals were
reasonable.
89
Key audit matter
How our audit addressed the key audit matter
To evaluate the recoverable amount of the Utilities
CGU, with assistance from PwC valuation experts in
aspects of our work, we performed the following
procedures, amongst others:
•
•
•
•
assessed the appropriateness of the discount
rate in consideration of the forecast cash
flows;
evaluated the Group’s historical ability to
forecast future cash flows by comparing
forecast cash flows with reported actual
performance;
evaluated the underlying cash flow
assumptions for key customer contracts with
reference to historical results and expected
project pipelines on a sample basis; and
considered whether the allocation of corporate
costs between CGUs was appropriate.
We considered the adequacy of the disclosures relating
to the Group’s goodwill impairment assessment in light
of the requirements of Australian Accounting
Standards.
Goodwill impairment assessment - Utilities
(Refer to note 14) $129.9m
The Group is required by Australian Accounting
Standards to test goodwill annually for impairment at
the cash generating unit (CGU) level.
The consolidated statement of financial position at 30
June 2023 includes goodwill relating to the Utilities
CGU group ($129.9 million).
The determination of the recoverable amount of each
CGU, being the higher of value-in-use (“VIU”) and fair
value less costs of disposal (“FVLCD”), requires
judgement and estimation on the part of management.
In undertaking impairment testing, the following
assumptions require estimation:
•
•
•
expected cash flows, as taken from Board
approved budgets and strategic plans,
including assumptions regarding extending
existing and winning new contracts.
discount rates used to discount the estimated
cash flows.
the long-term growth rate to be applied to the
forecast cash flows in the terminal year.
This was a key audit matter because of the level of
estimation required by the Group in determining the
assumptions used to perform the impairment testing.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2023, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the directors' report. We expect the remaining other information to
be made available to us after the date of this auditor's report.
90
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon through our opinion on the financial
report. We have issued a separate opinion on the remuneration report.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
91
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 20 to 35 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the remuneration report of Service Stream Limited for the year ended 30 June 2023
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.
PricewaterhouseCoopers
Andrew Cronin
Partner
Melbourne
22 August 2023
92
Service Stream Limited
ASX Additional Information
ASX Additional Information
for the financial year ended 30 June 2023
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere
in this report.
A. Distribution of Shareholders Number as at 17 August 2023
Category (size of holding)
1-1,000
1,001- 5,000
5,001-10,000
10,001-100,000
100,001+
Holders
2,060
3,065
1,573
2,799
275
9,772
B. There are 9,772 holders of fully paid ordinary shares.
The Company has no other class of shares issued.
C. The number of shareholdings held in less than marketable parcels is 1,209.
D. The names of the substantial shareholders listed in the holding company’s
register, and their shareholdings (including shareholdings of their
associates), as at 17 August 2023 are:
Shareholder
Allan Gray Australia Pty Ltd1
Thorney Investment Group (UBS Nominees)2
Thorney Opportunities Ltd2
Thorney Opportunities Ltd (USB Nominees)2
Jasforce Pty Ltd (as trustee for the Alex Waislitz Retirement Plan)2
Waislitz Charitable Corporation Pty Ltd (as trustee for the Waislitz Family
Foundation)2
Ordinary
%
122,816,502
33,784,835
4,000,000
4,500,000
2,350,000
19.90%
5.50%
0.60%
0.70%
0.40%
1,200,000
0.20%
1Number of shares is based on the most recent Nasdaq report (21 July 2023).
2The Company treats Thorney Investment Group, Thorney Opportunities Ltd, Jasforce Pty Ltd (as trustee for the Alex Waislitz Retirement Plan) and Waislitz Charitable
Corporation Pty Ltd (as trustee for the Waislitz Family Foundation) with an aggregated holding of 7.4%, as associated entities as defined in the Corporations Act.
E. Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or
by proxy has one vote on a show of hands.
Options
These securities have no voting rights.
F. Net Tangible Assets
The net tangible assets per security is $0.0460 (2022: $0.0266)
G. 20 Largest Shareholders as at 17 August 2023 - Ordinary Shares
Service Stream Limited
ASX Additional Information
Name of 20 largest shareholders in each class of share
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
UBS NOMINEES PTY LTD
COMDAIN NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
MR KENNETH JOSEPH HALL
RUBI HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DR ROGER GRAHAM BROOKE + MRS SALLY ANN BROOKE
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NETWEALTH INVESTMENTS LIMITED
THORNEY OPPORTUNITIES LTD
TELUNAPA PTY LTD
MR KEVIN ASHLEY SMITH
JASFORCE PTY LTD
INVESTMENT HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
CRISTATUS PTY LTD
Ordinary
shares Fully
paid number
of shares
held
107,601,684
86,041,908
67,103,916
50,893,117
38,456,195
26,589,617
19,003,184
7,109,288
7,000,000
5,688,347
4,706,162
4,594,341
4,217,244
4,000,000
3,000,000
2,453,002
2,300,000
2,000,000
1,673,234
1,530,000
% Held
17.47
13.97
10.89
8.26
6.24
4.32
3.09
1.15
1.14
0.92
0.76
0.75
0.68
0.65
0.49
0.40
0.37
0.32
0.27
0.25
445,961,239
72.40
Service Stream Limited
Corporate Directory
Corporate Directory
Directors
Brett Gallagher
Leigh Mackender
Peter Dempsey
Elizabeth Ward
Martin Monro
Sylvia Wiggins
Company Secretaries
Chris Chapman
Jamie O’Brien
Registered Office
Level 4
357 Collins Street
Melbourne Victoria 3000
Tel: +61 3 9677 8888
Fax: +61 3 9677 8877
www.servicestream.com.au
Bankers
Australia & New Zealand Banking Group
Commonwealth Bank of Australia
HSBC Bank Australia Limited
Westpac Banking Corporation
Share Registry
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnson Street
Abbotsford Victoria 3067
Tel: 1300 850 505 (within Australia)
+61 3 9415 4000 (outside Australia)
Fax: +61 3 9473 2500
Auditor
PricewaterhouseCoopers
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2023
Annual Report
Keeping communities connected
ABN: 46 072 369 870
Level 4, 357 Collins Street, Melbourne, Victoria 3000
servicestream.com.au