More annual reports from SKF:
2021 ReportSkyfii Limited
ABN 20 009 264 699
2016 ANNUAL REPORT
For personal use only Table of Contents
Chairman’s Letter
Review of Operations
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
Corporate Directory
4
5
11
14
18
19
22
23
24
25
26
45
46
48
50
3
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Thank you
The Board and myself would like to thank our
shareholders for the tremendous support and
confidence they continue to show in the Company.
We would also like to thank and acknowledge
the support of all our employees, customers and
technology partners, and we look forward to
continuing this journey with you.
Yours faithfully,
James Scott
Chairman
Skyfii Limited
Chairman’s Letter
Dear Shareholder,
The Board of Skyfii limited is pleased to present to
shareholders Skyfii’s Annual Report for the year
ended 30 June 2016 (FY16).
The Company experienced another year of strong
growth across all metrics in FY16 and I’d like to
take this opportunity to highlight some of the
key milestones the Company has achieved and
also acknowledge the valued contribution of our
shareholders, staff, customers and channel partners
in continuing to support us along this exciting journey.
Effective use of technology and data analytics is the
cornerstone of all successful companies in today’s
economy. As Group Executive Director, Technology
& Innovation at Seven Group Holdings I understand
the role that data and innovative technologies play
in driving improvement in operations, sales and
services functions. I also understand the importance
of innovation and early adoption of emerging
technologies that can help companies solve the
problems of today and the future.
During FY16 and in keeping with its objectives,
Skyfii has significantly grown its venue base across
existing and new customers, predominantly in the
retail vertical, but has also begun to unlock growth
in new and exciting verticals, such as municipalities,
hospitality, transit and education. In addition to
its continued footprint growth, the Company has
maintained strong retention of existing customers
and also growth in customer penetration via new
product and service offerings.
The most exciting progression for me this last
financial year has been the advancement of the
Skyfii service offering into data science where we are
beginning to unlock our customer’s data to solve real
world operational, sales and service issues, further
entrenching our products and services within these
organisations and opening up new and exciting
revenue channels for the business as we build into
FY17 and beyond.
I am also particularly buoyed by the strong appetite
for our product and services in the North American
markets and anticipate significant growth for Skyfii as
we build into a truly global market leader.
4
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only Review of Operations
Skyfii’s business model
During FY16 the Company refined the categorisation of its
revenue channels to accommodate for the Company’s growing
product and service capabilities and to align those categories
with industry and market expectations. Previously in FY15, the
Company described its revenues as being derived through 3
channels, namely: Analytics; Advertising; and Data Services.
The Company now categorises those key revenue channels in the
context of: Subscriptions; Services; and Transactions.
Subscriptions
The Company’s core recurring revenue base is derived from
subscriptions to its software as a service (SaaS) products
including guest WiFi, analytics and content delivery platform
modules, which are typically contracted on 1, 3 or 5 year terms.
The Company has remained focussed on its core target vertical
within the retail sector and the Company’s footprint growth in
FY16 has predominantly been through increased penetration
across its existing and new shopping centre customers.
The Company’s subscription revenues vary based on the size
of venue its SaaS products are deployed into, however typically
range between $1,500 - $4,000 per month per large venue.
During Q4 FY16 the Company introduced a new marketing and
content delivery product which has begun to gain traction across
its existing customer base which the Company anticipates will
deliver incremental recurring revenues from existing customers
in FY17 and beyond. Those marketing tools are being sold as an
additional monthly subscription on a per account basis, ranging
between $500 - $2,000 per month per account, and typically on
12 month terms.
Services
The Company’s current Services capabilities include network
design and data science which underpin and complement the
Company’s Subscriptions.
The Company provides its network design services in order
to ensure its customers’ investment in wireless and other
infrastructure provides an optimal level of accurate and insightful
data collection for Skyfii’s core data analytics and content delivery
service offerings. These services are charged as a one-off fee,
on a per venue basis, and forms a critical part of the Company’s
implementation revenues.
In addition, the Company’s internal data science capability has
become a key value added differentiator by providing bespoke
data consultancy projects for the Company’s existing customers
using, in many cases, additional third party data sources. The
Company has begun to deliver consultancy engagements on
a project by project basis to solve specific objectives such as
Precinct analysis, Competitor impact analysis, Impact of new
tenants on customer behaviour and more, which are outlined
further in this report.
The Company’s data science capability provides a clear
differentiator from its competitors and importantly provides
an additional stickiness factor for the Company’s subscription
products and services.
Transactions
As the adoption of mobile increases and the ability for advertisers
to deliver location based, contextualised marketing within physical
spaces becomes more prominent, Skyfii has the ability to drive
additional revenues through the delivery of location data into
a multitude of external platforms such as a loyalty and rewards
applications, digital outdoor and other media buying platforms.
In this exchange, Skyfii has the potential to earn transaction and/
or a share of campaign revenues.
This performance based revenue approach is currently being
explored by several of the Company’s customers and prospective
media partners, and represents a significant revenue opportunity
in the future.
Skyfii’s target verticals
The Company continued to focus on large venue deployments
within its core retail vertical throughout FY16, with a specific focus
on its shopping centre penetration in Australia and internationally.
As an enterprise product, engineered for scalability and multi-
data ingestion, the Company has begun to unlock growth in
adjacent verticals including education (universities), councils,
hospitality and transit (airports) during FY16. The Company has
initiated a number of pilots within medium sized venues such
as Supermarkets, Sports good retailers, Department stores
and Cinema forecourts and as such the Company looks forward
to updating the market on specific pilot and contract wins in
these verticals in FY17. In addition, the Company looks forward
to investing in further product development to more effectively
service smaller venue customer requirements in FY17.
Skyfii’s target verticals by venue size
Large
Medium
Small
1
Malls
Airports
Hospitals
Councils
Universities
Supermarkets
Clubs
Cinemas
Dept. Stores
Bars
Restaurants &
Fast Food Chains
Multi-site
Retailers
CORE
SECONDARY
Skyfii’s geographic focus
In FY16, the Company continued to focus on growth within
Australia & New Zealand, Brazil and South Africa. In Australia, the
Company experienced significant growth from the addition of new
customers and increased contribution from existing customers
due to increased penetration across their portfolios and the
provision of additional services including the Company’s new
marketing tools and increased data science capabilities. Due to
the Company’s strong market position within the Australia retail
landscape, additional verticals including transit, education and
councils are being targeted in FY17 and beyond.
The Company entered the North American market in Q3 FY16,
following extremely high inbound enquiries for the Company’s
core subscription services across the retail, transit and hospitality
verticals. The entry into North America was followed by an
expansion into the UK & Ireland markets in Q4 FY16, where the
Company’s focus is predominantly within the retail, education
and hospitality sectors. Both markets are beginning to yield very
large, progressed pipelines and with strong teams now in place
in those markets, the Company looks forward to converting and
announcing some significant contract wins in the near future.
5
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only
Skyfii’s international sales and execution strategy
The Company’s international sales strategy centres around
delivery through a network of channel partners whilst ensuring
adequate resource are present in each regional market to
support channel partners and direct client contact. The Company
continued to build its channel partnerships locally and globally
throughout FY16. Channel partners can be categorised as follows
in order of strategic priority:
• Solution partners: Solution partners enable delivery of
Skyfii’s solutions or increase our capabilities using a “better
together” go-to-market approach.
• Managed service providers (MSPs): MSPs purchase direct
from Skyfii, retain title and provide a fully managed solution
to customers that may also be bundled up with a managed
WiFi solution. MSPs can provide critical go-to-market
capabilities such as technical assistance centre support
(TAC), managed network operations centres (NOC), proof
of concept support and enterprise customer deployment
capabilities.
• Value added resellers (VARs): VARs can provide a route
to market for opportunistic and SMB opportunities. They
provide varying degrees of professional services (e.g., design,
installation, integration) but many have limited capabilities to
provide NOC and TAC support services.
Key performance highlights
The Company commenced FY16 with the strategic aim of
capitalising on its competitive advantage in the retail mall
segment. With this strategic focus in FY16 and the continued
investment in product development, staff and international
growth opportunities, the Company experienced an incredibly
strong uptake of its services and deployments across the retail
mall segment across several major retail property groups.
At year end the Company had deployed and was billing for
Analytics and Guest WiFi services across 74 predominantly large
format retail malls, up 335% from 17 venues at the end of the
prior year.
Significant growth in key operating metrics in FY16
In line with the Company’s continued growth in contract
deployments, all key operating metrics continue to experience
significant growth, lending strong user validation of Skyfii’s
services:
• Significant growth in total registered user base of +346%
year on year from 0.9 million to 3.9 million unique users
• Significant growth in new unique registered
users of +405% year on year
REVIEW OF OPERATIONS
Total User Registrations (millions)
4.0
2.0
–
80
40
–
7.0
3.5
–
4
1
-
n
u
J
4
1
-
p
e
S
4
1
-
c
e
D
5
1
-
r
a
M
5
1
-
n
u
J
5
1
-
p
e
S
5
1
-
c
e
D
6
1
-
r
a
M
6
1
-
n
u
J
Quarterly Customer Visits (millions)
4
1
-
n
u
J
4
1
-
p
e
S
4
1
-
c
e
D
5
1
-
r
a
M
5
1
-
n
u
J
5
1
-
p
e
S
5
1
-
c
e
D
6
1
-
r
a
M
6
1
-
n
u
J
Quarterly WiFi Sessions (millions)
4
1
-
n
u
J
4
1
-
p
e
S
4
1
-
c
e
D
5
1
-
r
a
M
5
1
-
n
u
J
5
1
-
p
e
S
5
1
-
c
e
D
6
1
-
r
a
M
6
1
-
n
u
J
• Significant growth in WiFi sessions of +446% year on year
Quarterly Data Transfer (terabytes)
• Significant growth in customer venue
visits of +468% year on year
• Significant growth in data transferred of +638% year on year.
250
125
–
4
1
-
n
u
J
4
1
-
p
e
S
4
1
-
c
e
D
5
1
-
r
a
M
5
1
-
n
u
J
5
1
-
p
e
S
5
1
-
c
e
D
6
1
-
r
a
M
6
1
-
n
u
J
6
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
Key operating highlights
New contract wins in FY16
The Company secured some notable contract wins in FY16,
including:
• Mirvac property group: Skyfii was selected as the Analytics
and Guest WiFi partner by Mirvac, through its relationship
with Optus Business. Skyfii’s services have since been rolled
out across 2 retail shopping centres on a 3 year contract
term, with the potential to roll out across further Mirvac
portfolio assets.
• The Blackstone Group: Following a successful pilot, Skyfii
was selected as Blackstone’s preferred Analytics and Guest
WiFi partner. The Company deployed its services in 5 retail
shopping centres on 3 year contract terms, and expects to
deploy into an additional 4 retail shopping centres in FY17.
• Waverley Council: Following a competitive tender process,
Skyfii was selected as the preferred Analytics and Guest WiFi
partner to deploy its services across 4 public precincts on an
initial 12 month contract term, including Bondi Beach, Bronte
and Tamarama beach precincts which will commence in FY17.
• The Merivale Hospitality Group: Skyfii deployed its
Analytics and Guest WiFi services in 3 major Merivale venues
including The Ivy, Establishment and The Newport.
• Barangaroo’s south precinct: Following a competitive
tender and successful pilot, Skyfii was selected as the
preferred Guest WiFi provider at Barangaroo’s south
precinct.
• The Lederer Group: Skyfii successfully deployed its Analytics
and Guest WiFi services at the Imperial Gosford shopping
centre on a 3 year contract term, with the potential to extend
its rollout across an additional 5 shopping centres.
In addition to the strong conversion of pilots to contracts and
continuing to significantly grow its retail shopping centre portfolio
in Australia, the Company has also unlocked new verticals within
hospitality, municipalities (councils) and leagues clubs, all of which
represent significant growth potential for the Company in FY17.
Skyfii’s sales pipeline as at FY16
Presentation & Demonstration
Pilot Phase
(4 weeks+)
Submissions
Tendered
Existing customer growth in FY16
In addition to new contract wins and opening up new and exciting
verticals, the Company also delivered additional growth from
existing customers.
• Scentre Group (contract delivered through Optus
Business): Skyfii’s services were deployed in an additional 21
shopping centres during FY16, bringing the total number of
live venues to 29.
• The GPT Group: Skyfii’s services were deployed in an
additional 10 retail and office property venues during FY16,
bringing the total number of live venues to 17.
• World Square: Skyfii successfully renewed its existing
contract for its services at World Square in FY16, and
subsequent to the acquisition of the asset by ISPT has
extended its services and doubled its recurring revenues at
the venue in early FY17.
•
IPOH: Skyfii successfully renewed its existing contract for its
services at the QVB, Chifley Plaza, Strand Arcade and Galeries
retail centres in FY16.
Strong growth in Skyfii’s sales pipeline
The Company’s total advanced stage pipeline grew 83% in FY16 on
the prior year, from $29 million to $53 million (assuming full rollout
and 5 year contract terms).
The Company continues to build and progress its sales pipeline,
noting that the speed to conversion in the previous two financial
years has been influenced by relatively long enterprise sales
cycles (typically 12-18 months) and delays where customers have
had a lack of, or inadequate, wireless infrastructure to support the
Company’s services.
The Company is extremely pleased that a large proportion of
its existing early stage sales pipeline from FY15 and early FY16
remains live and is progressing towards conversion, with an
annual recurring revenue potential of $14 million, and growing.
Vertical
Market
Property Groups
Transport
Other: Conf. Centre
Govt.
AU
Asia
AU
Asia
Property Groups
AU/Asia/US
Retailers
AU/Asia
Entertainment
Hospitality
AU
UK
Property
Banking
Hospitality
Retail
AU/US
AU
AU
South Africa
Sites
1215
130
1
1100
71
1579
77
220
122
35
30
398
Est. Ann. Rev.
$1.5m
$3.7m
$60k
$1.32m
$6.6m
$1.45m
$2.4m
$395k
$160k
$4.4m
$1.5m
$210k
$540k
$720k
$3m
Current advanced stage pipeline – $14m in recurring revenues per annum
7
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only REVIEW OF OPERATIONS
Skyfii maintains strong conversion of pilots to customer wins
Skyfii has continued to deliver a strong conversion rate of pilots
to customer wins through its direct sales efforts in Australia. The
Company delivered on 12 new pilots in FY16, leading to
7 customer wins, with 3 of those pilots still in progress. None
of the concluded pilots that failed to convert to customer wins
during FY16 were lost to a competitor.
International highlights
The Company continued to extend its global footprint in FY16,
with key strategic entries into the North American and UK markets
in Q3 and Q4 FY16.
The Company has already begun to build very strong pipelines
within the retail, transit, education and hospitality verticals across
the North American, UK and Singapore markets with notable
pilots currently underway with:
• a major retail property group, which represents a potential
40 large shopping centres (North America);
•
two major international airports (North America);
• a major university (EMEA);
• a national 300 venue coffee retail chain (EMEA); and
The two key enhancements to the Company’s offering which will
provide continued incremental revenue growth including its new
marketing tools subscriptions and data science capabilities.
Some examples of successful marketing campaigns delivered in
FY16 using the Company’s new marketing and content delivery
tools include:
• Department store launch: Skyfii’s platform was utilised to
deliver a real-time and location triggered email campaign on
the day of a department store launch to shoppers “seen” in
a shopping centre to drive them to the store opening. The
result of the campaign resulted in customers who received
the email being 26% more likely to visit the new store on that
day and stayed in the shopping centre for 14% longer than
the average customer on that day.
• Retail venue exit survey: Skyfii’s platform was utilised to
deliver an exit survey to shoppers who were “seen” to have
exited a retail venue, collecting quantitative and qualitative
shopper intent data, resulting in a high quality data set for
the retailer to understand “top of mind” shopper intent in real
time.
Some examples of the Company’s data science capabilities
delivered for its customers in FY16 include:
• a high profile 15 venue fashion retail chain (Asia Pacific).
• Elevator analysis: measuring asset utilisation to support
decision making around asset development and investment.
• Competitor impact analysis: measuring change in shopper
behaviour as a result of new anchor tenants launching at a
competitor centre in the same trade area.
• Audience segmentation: validating audience segments
based on in-centre behaviour.
• Major retail store launch impact: measuring impact of
launch of a new anchor tenant on shopper behaviour.
• Spend analysis: correlating retail spend with centre dwell
time to determine acceleration / deceleration of spend
over time.
• Precinct analysis: analysing shopper behaviour in an under-
performing precinct and comparing to rest of centre.
A summary of the key findings of the final two examples are
presented overleaf.
In addition, the Company is also in the late stages of negotiation
with a major US based telecommunications company for a city
wide wireless rollout project in North America.
Despite the challenging economic conditions in Brazil, the
Company continued to expand its footprint with 5 additional
deployments for Iguatemi, one of Brazil’s leading shopping
centre groups (FY16 total of 8 venues with an additional 6 venues
anticipated in FY17), new contract wins with Saga Malls for an
initial shopping centre and secured a small portfolio of 5 car
dealerships. In addition, a number of notable pilots currently
underway in Brazil include:
• a major international airport; and
•
two major retail property groups which represent a potential
40+ shopping malls.
Expansion of Skyfii’s product and service capabilities
During FY16 the Company increased its product and service
capabilities to extend its share of wallet from existing customer
and to build greater stickiness with its customer relationships.
There was a continuation of the rapid pace of product
development that was set in the prior year, resulting in a number
of key product milestones being met during the year. The Skyfii IO
platform and modules underwent a full visual rebuild, including a
range of improvements to the platform’s presentation layer.
These improvements led to an increase in customer engagement
including increases in the number and length of user sessions.
In addition to the considerable updates made across the entire
product suite, including new analytics reports, data mining
capabilities and improvements to the platform’s Guest WiFi
functionality, a key focus of new product development in FY16 was
expanding on the platform’s marketing and content delivery tools.
The full launch of Skyfii’s Engage product (marketing tools) has
enabled automated marketing campaigns, multiple marketing
triggers, customer contact scheduling and new delivery media
such as portal video. Bringing the enhanced Engage product to
market has provided the Company with a new channel to drive
incremental revenue growth from existing customers whilst
solidifying Skyfii’s key differentiator from its competitor’s products.
8
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only REVIEW OF OPERATIONS
Case Study 1: Objective
Understand the relationship between visit length and visit spend, and whether it accelerates or decelerates.
Solution: We analysed visitor behaviour and transaction size to identify common shopper behaviours
“Mission shopping”:
“Casual shopping”:
• Short visits (under 60 min)
• Longer visits (60 min+)
• Higher spend frequency, lower total spend
• Lower spend frequency, higher total spend
• Destinations
• Exploration
Maximum visit
duration (h:mm)
Average spent
rate Per 30 min
Average total
spend
0:30
1:00
1:30
2:00
2:30
3:00
3:30
4:00
$112
$73
$57
$44
$41
$27
$44
$43
$112
$146
$171
$176
$205
$162
$309
$345
Highest efficiency
Highest total value
Insight: We identified two common shopping behaviours, mission shopping and casual shopping, and the value
of these two distinct groups over time in centre.
Case Study 2: Objective
Diagnose why venue performance of one shopping centre precinct is better than other areas.
Solution: We compared zone correlation and visitor behaviour in Precinct X to the rest of the centre
Shoppers were
twice as likely
to remain in
Precinct X
compared to
other precincts
Visitors who start
in Precinct X:
Visitors who start
in other precincts:
12%
6.1%
End in Precinct X
End in other precincts
4.1%
End in other precincts
3.2%
End in Precinct X
Insight: We were able to identify a visitation trap, and recommend initiatives to help drive shopper pollination
across precincts.
9
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Overview of financial performance
Outlook for FY17 and beyond
REVIEW OF OPERATIONS
At the conclusion of FY15, the Company committed to focussing
on a number of strategic objectives in FY16, including:
• Continued roll-out of new and existing contracts
• Continued focus on converting mall pipeline prospects into
trials and full service contracts
• Continued focus on new verticals outside of retail malls
• Securing further distribution and reseller agreements
globally
• Continued product development focus on marketing
automation and associated media/advertising partnerships
• Development of new data source integrations and data
services products.
The Company is pleased to have delivered on these strategic
objectives in FY16, having delivered on new contracts in Australian
and internationally, driving additional value from existing clients,
maintaining a strong pilot conversion rate into customer wins,
opening up new verticals in hospitality, municipal and transit,
signing new distributors and re-sellers in new markets, developed
various media partnerships including with MG Malls in the USA,
launching our marketing tools and driving incremental revenues
through its data science capabilities.
In addition to growth from the continued execution of these
strategic objectives, the Company is excited by the significant
growth potential in FY17 and FY18 from its investment in
international markets such as North America. In the space of a
few recent months the Company has grown a significant pipeline
of prospects and pilots in North America, the pace of which is far
exceeding the Company’s original expectations.
The Company achieved operating revenues of $2.3 million in FY16,
representing 256% growth on the previous corresponding period
(FY15: $0.7 million).
Underlying the growth in operating revenues in FY16 was an
increase in recurring subscription revenues of 362% to $1.1 million
(FY15: $0.2 million).
Significant growth in recurring revenues in FY16
)
m
$
(
2.5
2.0
1.5
1.0
0.5
-
FY14
FY15
FY16
Recurring subscriptions
Non-recurring revenues
In line with the Company’s continued investment to support
the future growth and roll-out of its services internationally, the
Company reported an operating net loss after tax of $2.3 million
(FY15: $2.0 million loss) and operating loss before interest, tax,
depreciation and amortisation of $1.9 million (FY15 operating
EBITDA: $2.0 million loss).
Reported net loss after tax of $5.4 million in FY16 (FY15 NPAT:
$4.8 million loss) included one-off expenses totalling $3.0 million,
including non-cash costs relating to the issue of earn out shares.
Net operating cash outflows of $2.0 million in FY16 remained in
line with the previous financial year (FY15: $2.0 million outflow),
including the receipt of an R&D tax incentive rebate of $0.8 million
(FY15: $0.5 million).
During the year, the Company also invested and capitalised $1.8
million on software development activities relating to its SaaS
platform (FY15: $1.4 million).
As at 30 June 2016, the Company held cash and equivalents of
$2.6 million. In addition, the Company expects to receive an R&D
tax incentive rebate of $0.85 million in FY17 relating to research
and development expenditures undertaken in FY16.
Successful capital raising in FY16
In November 2015, the Company conducted a placement to new
institutional and retail investors combined with strong support
from existing shareholders to raise an additional $4.1 million
(before costs) in order to accelerate the Company’s business
expansion and strengthen the Company’s balance sheet.
The placement, which was oversubscribed, was conducted at a
price of $0.15 per share, representing a 6.3% discount to the then
trading price of Skyfii’s shares.
10
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
Directors’ Report
Your Directors submit the financial report of Skyfii Limited (Skyfii or the Company) for the year ended 30 June 2016. In order to comply
with the provisions of the Corporations Act 2001, the Directors report as follows.
Directors
The names and particulars of the Directors of the Company during or since the end of the financial year (Directors) are:
Name, independence
status and qualifications
James Scott
Independent
Non-Executive Chairman
from 21 April 2016
Independent
Non-Executive Director
until 20 April 2016
(appointed 20
November 2014)
BEng. (Hons)
Andrew Johnson
Independent
Non-Executive Director
(appointed 27
November 2014)
BComm., M Sc.
Experience, interests in shares, special responsibilities and other directorships
• Mr Scott has 20 years’ experience in digital technology, network and IT business, including network
computing, server virtualisation, digital enablement and mobility solutions. He is Group Executive
Director, Technology & Innovation at Seven Group Holdings and has responsibility for the strategies
and execution of technology, processes and systems across its operating companies including
WesTrac. Prior to Seven Group Holdings, Mr Scott was a Partner in KPMG’s Business Performance and
Technology division and has also held the position of Partner & Managing Director APAC at Accenture
where he worked for 14 years.
• Member of the Audit and Risk Committee and Member (Chairman) of the Nomination and
Remuneration Committee.
• Holds a relevant interest in 785,403 shares.
• No other listed company directorships.
• Mr Johnson, a highly experienced and successful telecommunications industry executive, is currently
Chairman of bmobile-Vodafone, a mobile service provider for Papua New Guinea and the Solomon
Islands and a Director of Dataco, the PNG national transmission company. He is also Managing Partner
of Delta Systems International, a designer and builder/operator of telecommunications and defence
systems. His prior roles include Divisional Manager for Computer Science Corporation’s Australian and
NZ Communications and Defence Division, CEO of Tenix (formerly Transfield) Defence Systems, which
grew to become Australia’s largest Defence company during his tenure, and Managing Director of
Telstra’s Data and Online Division.
• Member of the Nomination and Remuneration Committee and Member (Chairman) of the Audit and
Risk Committee.
• Holds a relevant interest in 491,717 shares.
• No other listed company directorships.
Wayne Arthur
Chief Executive Officer/
Executive Director
(appointed 20
November 2014)
BComm.
Heath Roberts
Company Secretary
(appointed 20
November 2014)
Dip Law (SAB),
Grad. Dip. Legal Practice
• Mr Arthur, a co-founder of Skyfii, built a long standing career in the outdoor media sector in senior
managerial roles for companies such as Titan Media Group and EYE Corp. His experience in these
roles has spanned three international markets. He has been responsible for the delivery of key
contracts and partnerships to the Skyfii business to date.
• Holds a relevant interest in 11,626,211 shares.
• No other listed company directorships.
• Mr Roberts is a commercial solicitor with 18 years’ ASX listed company experience. He has particular
strength in corporate operations and compliance, asset due diligence and acquisitions and equity/
debt funding, focussed on the IT, resources and healthcare sectors. He has acted as a Company
Secretary and director for numerous ASX listed and private companies and was previously Secretary
of the Sydney Kings Basketball team.
• Holds a relevant interest in nil shares.
• No other listed company directorships.
Former Directors – Skyfii Limited
The names of Directors who held office from 1 July 2015 and resigned prior to the date of this report are:
• Gary Flowers (resigned 21 April 2016)
• Chris Taylor (resigned 21 April 2016)
• Anthony Dunlop (resigned 21 April 2016)
11
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Company Secretary
Mr Heath Roberts held the position of Company Secretary during and at the end of the financial year (appointed 20 November 2014).
Meetings of Directors
During the financial year, 12 meetings of Directors were held. Other matters arising during the year were resolved by circulating
resolutions.
The following persons were Directors of the Company during the financial year, with attendances to meetings of Directors as follows:
DIRECTORS’ REPORT
Directors’ meetings
Eligible to Attend
12
12
12
9
9
9
Attended
11
11
12
9
9
9
Audit and Risk
Committee meetings
Nomination and Remuneration
Committee meetings
Eligible to Attend
2
2
-
-
-
-
Attended
1
2
-
-
-
-
Eligible to Attend
-
-
-
-
1
1
Attended
-
-
-
-
1
1
James Scott
Andrew Johnson
Wayne Arthur
Gary Flowers
Chris Taylor
Anthony Dunlop
Principal activities
The principal activity of the Group during the financial year was
the provision of data analytics services.
Review of operations
The consolidated entity’s loss attributable to equity holders of the
Company, after providing for income tax, amounted to $5,415,324
(2014 loss: $4,789,482). Refer to the commentary in the Review of
Operations.
Dividends paid or recommended
In respect of the financial year ended 30 June 2016, there have
been no dividends paid or provided for (2015: nil).
Significant changes in state of affairs
The following significant changes in the state of affairs of the
parent entity occurred during the financial year:
• On 10 July 2015, the Company held a general meeting at
which shareholders ratified and approved the allotment
and issue of 12,727,276 ordinary shares at $0.22 per share
to existing and new sophisticated investors which occurred
on 19 May 2015 for the purposes of Listing Rule 7.4 and the
issue of 200,000 ordinary shares at $0.22 per share to a non-
executive director, Gary Flowers.
• On 29 July 2015, the Company incorporated a wholly-owned
subsidiary in the Republic of South Africa, Skyfii South Africa
(Pty) Ltd, for the purposes of conducting operations in that
country.
• On 11 August 2015, the Group entered into various
commercial agreements for the leasing of new commercial
office premises for the Group’s head office.
• On 22 February 2016, the shares to be issued pursuant to the
Earn Out Variation Deeds were approved at an Extraordinary
General Meeting and subsequently on 26 February 2016, the
Company issued 22,342,028 ordinary shares to Skyfii Vendor
Shareholders pursuant to various Earn Out Variation Deeds.
• On 19 April 2016, the Company incorporated a wholly-owned
subsidiary in the United Kingdom, Skyfii UK Operations
Limited, for the purposes of conducting operations in that
country.
• On 21 April 2016, the Company announced a number of
changes to its Board of directors and management structure,
including the resignation of Messrs Gary Flowers, Chris Taylor
and Anthony Dunlop.
• On 28 April 2016, the Company incorporated a wholly-owned
subsidiary in the United States, Skyfii US Operations, LLC., for
the purposes of conducting operations in that country.
Subsequent events
On 15 July 2016, the Company announced that certain conditions
precedent to the share subscription agreement with Chapmans
Opportunities Limited had not been fulfilled and the COL
Transaction had been terminated. Refer to Note 24(d) for further
details on the terms of the COL Transaction.
Other than the above matters there are no other matters or
circumstances that have arisen since 30 June 2016 that have
significantly affected, or may significantly affect:
•
•
•
the Group’s operations in the future financial years, or
the results of those operations in future financial years, or
the Group’s state of affairs in the future financial affairs.
• On 21 January 2016, the Company announced that it had
Future developments
entered into agreements with the majority (by shareholding) of
the Skyfii Vendor Shareholders to provide certainty in relation to
the dilutionary impact of the Earn Out Shares and the intentions
and continued support of the Skyfii Vendor Shareholders, which,
subject to shareholder approval, would result in:
-
the issue of up to 22,500,000 fully paid ordinary
shares to the Skyfii Vendor Shareholders and thereby
removing any further potential entitlement to Earn
Out Shares (Proposed Earn Out Shares); and
- up to 92,500,000 fully paid ordinary shares held by the
Skyfii Vendor Shareholders being placed under voluntary
escrow for an additional 12 months (New Escrow
Shares), thereby varying the terms of the Acquisition
Agreement (Earn Out Variation Deed).
Disclosure of information regarding likely developments in the
operations of the consolidated entity in future financial years
and the expected results of those operations is likely to result
in unreasonable prejudice to the Company. Accordingly, this
information has not been disclosed in this report.
Environmental regulations
The Group’s operations are not involved in any activities that have
a marked influence on the environment. As such, the Directors
are not aware of any material issues affecting the Group or its
compliance with the relevant environment agencies or regulatory
authorities.
12
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
DIRECTORS’ REPORT
Indemnification of officers and auditors
During the financial year, the Company paid premiums based on
normal commercial terms and conditions to insure all directors,
officers and employees of the Group against claims brought
against the individual while performing services for the Group.
The premium paid has not been disclosed as it is subject to the
confidentiality provisions of the insurance policy. Except as noted
below, the Company has not otherwise, during or since the financial
year, except to the extent permitted by law, indemnified or agreed
to indemnify an officer or auditor of the Company or of any related
body corporate against a liability incurred as such an officer or
auditor.
During the financial year the Company entered into a Deed of
Indemnity, Insurance and Access with each of its current Directors.
The purpose of the Deed is to:
• confirm the indemnity provided by the Company in favour of
Directors under the Company’s Constitution;
•
include an obligation upon the Company to maintain adequate
Directors and Officers liability insurance; and
• confirm the right of access to certain documents under the
Corporations Act.
Non-audit services
Amounts paid or payable to the auditor for non-audit services
provided during the year by the auditor amounted to $34,486.
The Directors are satisfied that the provision of non-audit services
in the form of tax compliance services, during the year, by the
auditor (or another person or firm on the auditors’ behalf) is
compatible with the general standard of independence for auditors
imposed by the Corporations Act.
The Directors are of the opinion that the services as disclosed
in Note 20 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 Code of Conduct APES
110 Code of Ethics for Professional Accountants issued by the
Accounting Professional & Ethical Standards Board, including
reviewing or auditing the auditors 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.
Officers of the Company who are former audit partners of Hall
Chadwick
There are no officers of the Company who are former audit
partners of Hall Chadwick.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 18
of this report and forms part of the Directors’ Report for the year
ended 30 June 2016.
Proceedings on behalf of Company
No person has applied for leave of Court to bring proceedings on
behalf of the Group or intervene in any proceedings to which the
Group is a party for the purpose of taking responsibility on behalf
of the Group for all or any part of those proceedings. The Group
was not a party to any such proceedings during the year.
13
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Remuneration Report
The Remuneration Report, which has been audited, details the
nature and amount of remuneration for each Director and the
Executives.
Key management personnel (KMP) include:
•
the following persons who were directors of Skyfii Limited
during the financial year:
-
James Scott – Non-Executive Chairman
- Andrew Johnson – Non-Executive Director
- Wayne Arthur – Chief Executive Officer
- Gary Flowers – Former Non-Executive Chairman
(resigned 21 April 2016)
- Chris Taylor – Former Non-Executive Director
(resigned 21 April 2016)
- Anthony Dunlop – Former Non-Executive Director
(resigned 21 April 2016)
•
the following persons also had the authority and
responsibility for planning, directing and controlling the
major activities of the Group, directly or indirectly, during the
financial year:
-
John Rankin – Managing Director, Australia and Chief
Operating Officer (commenced 9 May 2016)
Non-Executive Director remuneration
Fees and payments to Non-Executive Directors reflect the
demands which are made of the Directors in fulfilling their
responsibilities. Non-Executive Director fees are reviewed
annually by the Board. The constitution of the Company provides
that the Non-Executive Directors of the Company are entitled to
such remuneration, as determined by the Board, which must not
exceed in aggregate the maximum amount determined by the
Company in a general meeting. The most recent determination
was at a general meeting held on 3 December 2012 where the
shareholders approved a maximum aggregate remuneration
of $500,000. Annual Non-Executive Directors’ fees currently
agreed to be paid by the Company are $100,000 inclusive of
superannuation.
Executive and Executive Director remuneration
Fixed remuneration consists of base remuneration (which is
calculated on a total cost basis and includes any fringe benefits
tax charges related to employee benefits), as well as employer
contributions to superannuation funds.
Executive and Executive Director remuneration levels are
reviewed annually by the Nomination and Remuneration
Committee through a process that considers the overall
performance of the Group. Executive Directors are not paid any
director fees in addition to their fixed remuneration as Executives.
-
Jason Martin – Chief Technology Officer
- Brone Roze – Chief Financial Officer
- Michael Walker – Director of Channel & Operations
Performance based remuneration
Performance based remuneration, which may take the form
of cash or equity based bonuses, is at the discretion of the
Nomination and Remuneration Committee.
-
Ian Robinson – Sales Director
Remuneration policy
The performance of the Group depends upon the quality of its
directors and executives. The Group recognises the need to
attract, motivate and retain highly skilled directors and executives.
The Board of Directors, through its Nomination and Remuneration
Committee, accepts responsibility for determining and reviewing
remuneration arrangements for the Directors and Executives.
The Nomination and Remuneration Committee assesses the
appropriateness of the nature and amount of remuneration of
Directors and Executives on a periodic basis by reference to
relevant employment market conditions, giving due consideration
to the overall profitability and financial resources of the Group,
with the objective of ensuring maximum stakeholder benefit from
the retention of a high quality Board and executive team.
14
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only REMUNERATION REPORT
Remuneration of Directors and Executives
Remuneration shown below relates to the period in which the Director or Executive was a member of key management personnel.
Amounts below have either been paid out or accrued in the period.
Short-term benefits
Directors’ fees
$
Salary & fees
$
Other
$
Post employment
benefits
Superannuation
$
Share based
payments
Shares
$
FY16
Directors
J. Scott
A. Johnson
W. Arthur
G. Flowers
C. Taylor
A. Dunlop
Other KMP
J. Martin
J. Rankin
I. Robinson
B. Roze
M. Walker
Total
FY15
Directors
G. Flowers
W. Arthur
A. Dunlop
A. Johnson
C. Taylor
J. Scott
Other KMP
J. Martin
I. Robinson
B. Roze
M. Walker
G. Yeoh
Total
-
-
-
50,000
41,670
16,667
-
-
-
-
-
108,337
35,000
-
-
-
70,309
-
-
-
-
-
-
105,309
-
-
209,778
-
-
-
182,260
29,545
177,197
161,824
202,511
963,115
-
170,684
-
-
-
-
133,249
155,342
45,974
170,684
37,418
713,351
-
-
-
6,667
12,500
12,500
-
-
-
-
-
31,667
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,929
4,750
3,958
-
17,315
2,807
16,834
15,373
19,239
100,205
3,325
16,215
-
-
6,679
-
12,658
14,757
4,367
16,215
-
74,216
Total
$
50,000
50,000
237,260
81,417
58,128
29,167
205,755
32,352
200,211
183,377
50,000
50,000
7,553
20,000
-
-
6,180
-
6,180
6,180
6,180
152,273
227,930
1,355,597
12,167
-
30,417
30,417
-
30,417
-
-
-
-
-
103,418
50,492
186,899
30,417
30,417
76,988
30,417
145,907
170,099
50,341
186,899
37,418
996,294
The remuneration of key management personnel in the years ended 30 June 2016 and 2015 were 100% fixed, and there is no link between
remuneration and the market price of the Company’s shares.
15
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Ordinary shares
Details of ordinary shares in the Company held directly, indirectly or beneficially, by KMP, including their related parties, is as follows:
Balance at
start of year
Issued to
Skyfii Vendor
Shareholders 1
Received as part of
remuneration
Purchase
of shares
Sale of shares
Balance at
end of year
REMUNERATION REPORT
FY16
Directors
J. Scott
A. Johnson
W. Arthur
G. Flowers 2
C. Taylor 2
A. Dunlop 2
Other KMP
J. Martin
J. Rankin
I. Robinson
B. Roze
M. Walker
Total
Notes:
613,150
250,000
8,819,836
544,000
-
250,000
-
-
7,956,690
877,232
2,941,546
22,252,454
116,727
-
2,796,375
-
-
-
-
-
2,557,508
281,968
945,497
6,698,075
-
-
-
133,334
-
-
-
-
-
-
-
133,334
55,526
241,717
10,000
123,750
55,000
-
-
-
-
-
-
485,993
-
-
-
-
-
-
-
-
-
-
-
-
785,403
491,717
11,626,211
801,084
55,000
250,000
-
-
10,514,198
1,159,200
3,887,043
29,569,856
1. On 26 February 2016, the Company issued 22,342,028 ordinary shares to Skyfii Vendor Shareholders pursuant to various Earn Out
Variation Deeds. Further information in relation to the Earn Out Shares can be found in Note 17 to the financial statements.
2. Represents the ordinary share movements up until 21 April 2016, being the date upon which the director ceased to be a director of
the Company.
ESP Shares
Details of ESP shares in the Company held directly, indirectly or beneficially, by KMP including their related parties, is as follows:
Balance at
start of year
Granted/
Issued
Released from
restrictions
Forfeited/
Cancelled
Balance at
end of year
Balance of
unvested ESP
shares
Balance of
vested ESP
shares
FY16
Directors
W. Arthur
Other KMP
J. Martin
J. Rankin
I. Robinson
B. Roze
M. Walker
Total
-
-
-
-
-
-
-
550,000
450,000
-
450,000
450,000
450,000
2,350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
550,000
550,000
-
-
-
-
-
2,350,000
450,000
-
450,000
450,000
450,000
2,350,000
-
-
-
-
-
-
-
-
Loans to directors and KMP
The following loan balances are outstanding at the reporting date in relation to remuneration arrangements with Executive Directors and
KMP in respect of shares issued under the Employee Share Plan (ESP).
As the ESP is considered in substance to be an option, the ESP shares issued and corresponding loan receivable are not recognised by
the Group in its financial statements. The ESP shares will not be considered issued to participants until the corresponding loan has been
repaid, at which time there will be an increase in the issued capital and increase in cash. Further information relating to the ESP is set out
in Note 23 to the financial statements.
Directors
W. Arthur
Other KMP
J. Martin
J. Rankin
I. Robinson
B. Roze
M. Walker
Total
2016
$
81,400
66,600
-
66,600
66,600
66,600
347,800
2015
$
-
-
-
-
-
-
-
-
16
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only REMUNERATION REPORT
Other transactions with KMP and/or their related parties
During the full year ended 30 June 2016, the Company incurred $397,244 of expenses relating to outsourced software development
services provided by Simple Machines Pty Ltd, a company associated with Jason Martin (CTO). These services were provided under normal
commercial terms and conditions. Further information in relation to related parties can be found in Note 24 to the financial statements.
Executive service agreements
The employment terms and conditions of KMP and Group executives are formalised in service agreements.
Position
Chief Executive Officer
Key terms of service agreements
• Base salary: $200,000 excluding superannuation.
• Term: unspecified.
• Base remuneration: Reviewed annually by the Nomination and Remuneration Committee.
• Bonus entitlements: Determined annually by the Nomination and Remuneration. Committee.
• Termination notice period: 12 weeks’ notice (or 13 weeks’ notice after two years’ service and is over the
age of 45 at the time the notice is given), or without notice in the event of serious misconduct.
Other Executives
• Restraint of trade period: up to 6 months.
Other Executives are employed under individual executive services agreements. These establish amongst
other things:
•
total compensation;
• bonus entitlements;
•
variable notice and termination provisions of up to 12 weeks, or by the Group without notice in the event
of serious misconduct; and
This concludes the Remuneration Report, which has been audited.
•
restraint and confidentiality provisions.
The Directors’ Report is signed in accordance with a resolution of the Directors made pursuant to s298(2) of the Corporations Act 2001.
On behalf of the Directors
James Scott
Chairman
31 August 2016
17
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Auditor’s Independence Declaration
SKYFII LIMITED
ACN 009 264 699
AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF SKYFII LIMITED
AND CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2016
there have been no contraventions of:
i. the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit; and
ii. any applicable code of professional conduct in relation to the audit.
HALL CHADWICK
Level 40, 2 Park Street
SYDNEY NSW 2000
GRAHAM WEBB
Partner
Dated: 31 August 2016
18
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
Corporate Governance Statement
The Company’s Board of Directors is responsible for the
Corporate Governance of the Company and its controlled entities.
The Board guides and monitors the business and affairs of the
group on behalf of the shareholders by whom they are elected
and to whom they are accountable. The governance practices
adopted by the Company are structured with reference to the 3rd
Edition of the ASX Corporate Governance Council’s Principles and
Recommendations (ASX CGPR).
The Board is committed to improving its corporate governance
practices and embracing the principles published by the ASX
Corporate Governance Council, however the Board is of a view
that the adoption of the practices and principles should be
considered in line with the size, stage and nature of the business
and the industry in which it operates.
The Board aims to achieve all of the Principles and
Recommendations in stages as the Company grows and its
circumstances change over time. Subsequent to the acquisition
of Skyfii Group Pty Ltd and relisting of the Company in late
2014, significant progress in the improvement of the Company’s
Corporate Governance practices has been achieved. During
the financial year ended 30 June 2016 the Board and senior
management team was significantly re-structured to reflect the
needs of the Company moving forward.
The information provided below summarises how the Company
presently complies with the ASX CGPR, and how it intends to
comply with each of the current Principles and Recommendations
going forward. This statement is current as 30 June 2016 and has
been approved by the Board of Directors of the Company.
Principle 1 – Lay solid foundations for management and
oversight
The Company has adopted a Board Charter clearly setting
out the respective roles and responsibilities of the Board and
management. The Board Charter is available on the Company’s
website, www.skyfii.io.
The key responsibilities of the Board include:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
setting the long-term strategy and annual business plan
including objectives and milestones to be achieved;
monitoring the performance of the Company against the
financial objectives and operational goals set by the Board
and reviewing the implementation of Board approved
strategies;
assessing the appropriateness of the skill sets and the levels
of experience of the members of the Board, individually and
as a whole and selecting new members to join the Board
when a vacancy exists;
appointing, removing and determining the terms of
engagement of the Directors, Chief Executive Officer and
Company Secretary;
overseeing the delegation of authority for the day to day
management of the Company;
ensuring that the risk management systems, financial
reporting and information systems, personnel, policies and
procedures are all operating efficiently and effectively by
establishing a framework of internal controls and compliance;
approving the capital structure and major funding
requirements of the Company;
approving the Company’s half year and full year reports to
the shareholders, ASX and ASIC; and
(i)
ensuring that recruitment, retention, termination,
remuneration, performance review and succession planning
policies and procedures are in place and complied with.
The Company has established a Nomination and Remuneration
Committee to identify and make recommendations to the Board
for the appointment of new Board candidates, having regard to
their skills, experience and expertise. The Committee is currently
comprised of two independent Directors, Messrs Scott and
Johnson. Prior to 21 April 2016 the Committee was comprised of
two independent Directors, Messrs Chris Taylor (Chairman) and
Mr Anthony Dunlop. Mr Scott acts as Chairperson. The Board
requires this Committee to undertake appropriate checks on
potential Board candidates. The Nomination and Remuneration
Committee engaged the services of an external, independent
consultant to assist it and provide advice on a range of
remuneration related issues. The number of times the Nomination
and Remuneration Committee met, and the attendance at those
meetings, is set out in the Directors’ Report. The Nomination and
Remuneration Committee Charter is available on the Company’s
website, www.skyfii.io.
All Directors and senior executives have entered into written
appointment agreements with the Company, setting out the terms
and conditions of their appointment.
Under the Board Charter, each Director’s performance is
assessed when standing for re-election. Before each Annual
General Meeting, the Chairperson of the Board assesses the
performance of any Director standing for re-election and the
Board will determine their recommendation to shareholders on
the re-election of the Director (in the absence of the Director
involved). The Board (excluding the Chairperson), will conduct the
review of the Chairperson.
Under the Board Charter, senior executives’ performance will
be considered by the Nomination and Remuneration Committee
on at least an annual basis. The Chairperson is responsible for
ensuring these meetings take place.
A formal Board performance evaluation was not undertaken
during the 2016 financial year. However, the Board undertook a
Board Self-Assessment Programme concluding in January 2016.
In part as a result of that process, the Board was significantly
streamlined in early 2016, recognising that the initial re-listing
phase of the Company’s operations was complete and a smaller
Board, with increased executive support, would best position the
Company moving forward. The Board will consider conducting a
formal performance evaluation during the 2017 financial year.
During the financial year, the Nomination and Remuneration
Committee commissioned external and independent reviews of
several remuneration issues pertaining to the Company’s Board
and executives. The recommendations of these reviews were
implemented during the financial year.
The Company Secretary is accountable directly to the Board,
through the Chairperson, on all matters to do with the proper
functioning of the Board. The Board Charter sets out the
Company Secretary’s responsibilities, which include:
(a)
(b)
(c)
coordinating the timely completion and dispatch of Board
and committee papers;
ensuring the business at Board and committee meetings is
accurately captured in the minutes;
monitoring and ensuring the Board and committee policy
and procedures are followed; and
19
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only (d)
advising the Board and its committees on governance
matters.
The Board has established a Diversity Policy, which recognises
diversity to encompass ethnicity, gender, sexual orientation,
age, physical abilities, family status, religious beliefs or other
ideologies, and is committed to creating and maintaining an
inclusive and collaborative workforce. The Company understands
that encouraging diversity is not just a socially responsible
necessity, but that it is essential to the Company’s continued
growth and vital to a successful future.
Given the size and nature of the Company, the Board determined
not to establish measurable objectives for achieving diversity for
the 2016 financial year. Establishing measureable objectives for
achieving diversity will be reconsidered on an annual basis.
As at 30 June 2016, the proportion of women employed by the
Group was as follows:
• Board of Directors: 0%
• Senior Executive positions: 0%
• Total Group workforce: 7%
The Diversity Policy is available on the Company’s website,
www.skyfii.io.
Principle 2 – Structure the board to add value
The Nomination and Remuneration Committee has the authority
and power to exercise the roles and responsibilities granted to it
under the Nomination and Remuneration Committee Charter.
The Committee is comprised of two independent Directors, one
of whom acts as chairperson. The Company’s Nomination and
Remuneration Committee does not meet the recommended
minimum of three members. The Board is of the view that given
the Company’s size and stage of operations, two independent
Directors as members of the Nomination and Remuneration
Committee is sufficient to perform the relevant responsibilities of
the committee.
The Board has not, at this time, adopted a board skills matrix
given the Company’s size and stage of operations. The Board
aims to attract and maintain a Board which has an appropriate
mix of skills, experience, expertise and diversity. The names and
particulars of the Directors of the Company during or since the
end of the financial year are set out in the Directors’ Report.
The Board regularly assesses the independence of each Director
in light of the interests disclosed by them. That assessment
is made at each Board meeting in relation to matters under
consideration at the meeting, at least annually at, or around
the time that the Board considers candidates for election to the
Board, and each independent Director is required to provide the
Board with all relevant information for this purpose. If the Board
determines that a Director’s independent status has changed,
that determination will be disclosed to the market in a timely
fashion.
A majority of the Board (comprising the Chairperson of the
Board, James Scott and Andrew Johnson) are considered to be
independent Directors. Wayne Arthur, Managing Director and
CEO, and a major founding shareholder of the Company, is not
considered to be an independent Director.
CORPORATE GOVERNANCE STATEMENT
Principle 3 – Act ethically and responsibly
The Board has adopted a Code of Conduct which sets out the
values, commitments, ethical standards and policies of the
Company and outlines the standards of conduct expected of
the Company’s business and people, taking into account the
Company’s legal and other obligations to its stakeholders. The
Code of Conduct applies to all Directors, as well as all officers,
employees, contractors, consultants, other persons that act on
behalf of the Company. The Code of Conduct is available on the
Company’s website, www.skyfii.io.
Principle 4 – Safeguard integrity in corporate reporting
The Board has established an Audit and Risk Committee. This
Committee is responsible for, amongst other things, appointing
the Company’s external auditors and overseeing the integrity
of the Company’s financial reporting systems and financial
statements. The Company has adopted an Audit and Risk
Committee Charter which is available on the Company’s website,
www.skyfii.io.
The number of times the Audit and Risk Committee met, and the
attendance at those meetings, is set out in the Directors’ Report.
The Committee is comprised of two independent Directors,
Messrs Scott and Johnson. Mr Johnson acts as Chairperson. The
Audit and Risk Committee does not meet the recommended
minimum of three members. The Board is of the view that given
the Company’s size and stage of operations, two independent
Directors as members of the Audit and Risk Committee is
sufficient to perform the relevant responsibilities of the
Committee.
The Board has implemented a process to receive written
assurances from its Chief Executive Officer and Chief Financial
Officer that the declarations that will be provided under section
295A of the Corporations Act 2001 (Cth) are founded on a system
of risk management and internal control and that the system is
operating in all material respects in relation to financial reporting
risks. The Board seeks these assurances prior to approving the
annual financial statements for all half year and full year results
that follow.
Representatives from the Company’s external auditor, Hall
Chadwick, are present at the Annual General Meeting to answer
questions that shareholders might have about the scope and
conduct of the audit, the preparation and content of the auditor’s
report, the accounting policies adopted by the Company and the
independence of the auditor.
The Company has adopted a formal Disclosure and
Communication Policy, where there is an express requirement
that the external auditor will attend the Annual General Meeting
and be available to answer questions about the conduct of the
audit and the preparation and content of the auditor’s report.
Principle 5 – Make timely and balanced disclosure
The Company ensures that it complies with the requirements of
ASX listing rules and the Corporations Act in providing information
to shareholders. Consistent with the Board’s commitment
to improving its disclosure policy, the Board has adopted a
Disclosure and Communication Policy, which sets out the
Company’s commitment to the objective of promoting investor
confidence and the rights of shareholders by:
Under the Board Charter, the Directors are expected to
participate in any induction or orientation programs on
appointment, and any continuing education or training arranged
for them. The Company Secretary assists in organising and
facilitating the induction and professional development of
Directors.
(a)
(b)
complying with the continuous disclosure obligations
imposed by law;
ensuring that company announcements are presented in a
factual, clear and balanced way;
20
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only CORPORATE GOVERNANCE STATEMENT
(c)
(d)
ensuring that all shareholders have equal and timely access
to material information concerning the Company; and
communicating effectively with shareholders and making it
easy for shareholders to participate in general meetings.
Principle 8 – Remunerate fairly and responsibly
The Company’s Nomination and Remuneration Committee
is responsible for developing, reviewing and making
recommendations on:
(a)
(b)
(c)
(d)
the remuneration framework for Directors, including the
process by which any pool of Directors fees approved by
security holders is allocated to Directors;
the remuneration packages to be awarded to senior
executives;
equity based remuneration plans for senior executives and
other employees; and
superannuation arrangements for Directors, senior
executives and other employees.
The Company’s remuneration policy is disclosed in the
Directors’ Report. The policy has been set out to ensure that the
performance of Directors, key executives and staff reflect each
person’s accountabilities, duties and their level of performance,
and to ensure that remuneration is competitive in attracting,
motivating and retaining staff of the highest quality. A program
of regular performance appraisals and objective setting for
key executives and staff is in place. These annual reviews take
into account individual and company performance, market
movements and expert advice, if required.
The Constitution permits Directors, senior executives and other
officers of the Company to trade in Company shares as long as
they comply with the Company’s Share Trading Policy. The Share
Trading Policy is a code that is designed to minimise the potential
for intentional and unintentional insider trading violations. The
Company’s Share Trading Policy is available on the Company’s
website, www.skyfii.io.
Directors must notify the Chairman of the Board, before they buy
or sell shares in the Company. The details of the share trading
must be given to the Company Secretary who must lodge such
details of such changes with the ASX.
Senior executives must give prior notice to the Chief Executive
Officer, while other officers must notify the Company Secretary,
before trading in the Company shares and details of all such
transactions must be given, in writing, to the Company Secretary
within 5 business days.
Any changes in substantial shareholding of the Directors, senior
executives or other officers must be reported to the ASX within
2 business days of such trading. The policy also recommends
that trading in the Company shares only occur in certain trading
windows.
The Disclosure and Communication Policy is available on the
Company’s website, www.skyfii.io.
Principle 6 – Respect the rights of security holders
The Company recognises the rights of its shareholders and
other interested stakeholders to have easy access to balanced,
understandable and timely information concerning the operations
of the Company. Information concerning the Company and its
governance practices are made available on its website and
addressed in detail in each years’ Annual Report.
The Board has adopted a Disclosure and Communication Policy
which supports its commitment to effective communication
with its shareholders. In addition, the Company intends to
communicate with its shareholders:
(a)
by making timely market announcements;
(b)
by posting relevant information on to its website;
(c)
by inviting shareholders to make direct inquiries to the
Company; and
(d)
through the use of general meetings.
The Board encourages participation of shareholders at the Annual
General Meeting or any other shareholder meetings to ensure a
high level of accountability and identification with the Company’s
strategy and goals.
The Company’s shareholders may elect to receive information
from the Company and its registry electronically. Otherwise,
the Company and its registry will communicate by post with
shareholders who have not elected to receive information
electronically.
Principle 7 – Recognise and manage risk
The Board has established an Audit and Risk Committee to ensure
the Company has an effective risk management system in place
and to manage key risk areas.
The Company’s Audit and Risk Committee, which has two
members, does not meet the recommended minimum of three
members. The Board is of the view that given the Company’s size
and stage of operations, two independent Directors as members
of the Audit and Risk Committee is sufficient to perform the
relevant responsibilities of the Committee.
The Company has adopted an Audit and Risk Committee Charter
which is available on the Company’s website, www.skyfii.io.
Under the Board Charter, the Board ensures that the Company
has in place an appropriate risk management framework. A risk
management framework was developed during the 2015 financial
year by the Audit and Risk Committee, and approved by the
Board. The Board will review, at least annually, the Company’s risk
management framework in order to satisfy itself that it continues
to be sound. A risk review was undertaken at the end of the
financial year.
The Audit and Risk Committee is responsible for ensuring that
the Company has appropriate internal audit systems and controls
in place, and for overseeing the effectiveness of these internal
controls. The Committee is also responsible for conducting
investigations of breaches or potential breaches of these internal
controls.
21
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the financial year ended 30 June 2016
Revenue and other income
Revenue
Other income
Total revenue
Expenses
Direct costs and implementation expenses
Employee benefits expense
Contractor and consultant expenses
Marketing and promotion expenses
Data hosting expenses
Travel and accommodation expenses
Office and other expenses
Directors’ fees
Issue of Earn Out Shares
Acquisition costs
Corporate advisory services
Impairment of goodwill and domain names
Depreciation and amortisation expenses
Share based payments expense
Finance costs
Loss before tax
Income tax expense
Loss for the period
Other comprehensive income
Items that will be reclassified to profit or loss when specific conditions are met:
Exchange differences on translation of foreign operations
Total comprehensive loss for the period
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
2016
$
2015
$
5
5
6
17
13
6
23
6
7
30
30
2,339,570
1,040,309
3,379,879
658,237
877,963
1,536,200
(786,738)
(2,428,258)
(69,089)
(227,517)
(316,041)
(257,694)
(870,363)
(295,003)
(3,013,535)
-
-
-
(461,091)
(60,492)
(925)
(5,406,868)
(547,605)
(1,561,427)
(48,296)
(140,652)
(162,238)
(212,289)
(681,381)
(208,726)
-
(443,931)
(150,000)
(2,157,841)
(10,903)
-
(393)
(4,789,482)
(8,456)
(5,415,324)
-
(4,789,482)
3,588
(5,411,737)
-
(4,789,482)
Cents
(3.8)
(3.8)
Cents
(7.1)
(7.1)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
22
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
Consolidated Statement of Financial Position
As at 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Plant and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Deferred revenue
Total current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note
2016
$
2015
$
8
9
10
11
12
13
15
16
17
18
2,612,422
1,515,106
10,444
93,930
4,231,902
2,684,548
961,021
43,500
114,265
3,803,334
164,374
2,803,857
2,968,231
24,740
1,419,984
1,444,724
7,200,133
5,248,058
674,768
136,841
166,926
978,534
414,920
67,465
88,770
571,155
978,534
571,155
6,221,599
4,676,903
17,987,101
64,080
(11,829,582)
6,221,599
11,091,161
-
(6,414,258)
4,676,903
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
23
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only
Consolidated Statement of Changes in Equity
For the financial year ended 30 June 2016
Note
Contributed
equity
$
1,500,600
Share based
payments
$
-
Foreign currency
translation
reserve
$
-
Accumulated
losses
$
(1,624,776)
Total
equity
$
(124,176)
Balance at 1 July 2014
Loss for the period
Total comprehensive
loss for the year
Transactions with owners in their capacity as owners:
10,710,158
Issue of ordinary shares
(1,119,597)
Capitalised equity raising
costs (net of tax)
Balance at 30 June 2015
11,091,161
17
17
-
-
-
-
-
-
-
-
-
-
(4,789, 482)
(4,789,482)
(4,789, 482)
(4,789,482)
-
-
10,710,158
(1,119,597)
(6,414,258)
4,676,903
Note
Contributed
equity
$
11,091,161
Share based
payments
$
-
Foreign currency
translation
reserve
$
-
Accumulated
losses
$
(6,414,258)
Total
equity
$
4,676,903
Balance at 1 July 2015
Loss for the period
Exchange differences
on translation of foreign
operations
Total comprehensive
loss for the year
Transactions with owners in their capacity as owners:
7,138,535
Issue of ordinary shares
(242,595)
Capitalised equity raising
costs (net of tax)
Share based payments
Balance at 30 June 2016
-
17,987,101
17
17
23
-
-
-
-
-
-
3,588
(5,415,324)
-
(5,415,324)
3,588
3,588
(5,415,324)
(5,411,737)
-
-
-
-
7,138,535
(242,595)
60,492
60,492
-
3,588
-
(11,829,582)
60,492
6,221,599
-
-
-
-
-
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
24
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
Consolidated Statement of Cash Flows
For the financial year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Receipts from other income
Receipts from government R&D tax incentive
Interest received
Interest paid
Net cash (outflow) from operating activities
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Payments for other assets
Receipts from security deposits
Payments for acquisition costs
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Repayment of loans from shareholders
Payments for loans to shareholders
Capitalised capital raising costs
Repayment of borrowings
Net cash inflow from financing activities
Net (decrease) in cash held
Cash at the beginning of the financial year
Cash at acquisition of RKS Consolidated Limited
Cash at the end of the financial year
Note
2016
$
2015
$
29
1,845,191
(4,791,419)
145,796
791,729
43,294
(925)
(1,966,335)
834,775
(3,393,872)
64,125
480,994
22,109
(393)
(1,992,262)
(165,282)
(1,819,316)
(757)
17,159
-
(1,968,196)
(25,836)
(1,419,984)
(3,884)
-
(443,931)
(1,893,635)
4,105,000
-
-
(242,595)
-
3,862,405
4,450,090
71,667
(71,667)
(260,274)
(453,333)
3,736,483
(72,126)
(149,414)
2,684,548
-
33,175
2,800,787
8
2,612,422
2,684,548
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
25
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only
Notes to the Financial Statements
For the financial year ended 30 June 2016
Contents to the notes to the consolidated financial statements
1. Reporting entity
2. Basis of preparation
3. Significant accounting policies
4. Operating segments
5. Revenue
6. Expenses
7. Income tax
8. Cash and cash equivalents
9. Trade and other receivables
10. Inventories
11. Other assets
12. Plant and equipment
13. Intangible assets
14. Net tangible asset backing
15. Trade and other payables
16. Provisions
17. Contributed equity
18. Equity – reserves
19. Financial risk management
20. Remuneration of auditors
21. Contingent liabilities
22. Commitments for expenditure
23. Share based payments
24. Related parties
25. Parent entity information
26. Business combinations
27. Interests in controlled entities
28. Events occurring after the reporting date
29. Reconciliation of loss after tax to net cash from operating activities
30. Earnings per share (EPS)
27
27
27
32
33
33
33
34
34
34
34
34
35
35
35
36
36
37
37
39
39
39
39
41
42
43
43
43
44
44
26
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
1. Reporting entity
Skyfii Limited (the Company) is a company domiciled in Australia.
The address of the Company’s registered office and principal place
of business is Level 1, 34-36 Oxford Street, Darlinghurst NSW 2010.
The consolidated financial statements of the Company as at and
for the year ended 30 June 2016 comprise the Company and its
subsidiaries (together referred to as the Group and individually
as Group entities). The Group is a for-profit entity and primarily
is involved in providing data analytics services. The separate
financial statements of the parent entity, Skyfii Limited, have not
been presented within this financial report as permitted by the
Corporations Act 2001. The financial statements were authorised
for issue on 31 August 2016 by the Directors of the Company.
2. Basis of preparation
(a)
Compliance with International Financial Reporting
Standards
These general purpose financial statements have been prepared
in accordance with the Corporations Act 2001, Australian
Accounting Standards and Interpretations of the Australian
Accounting Standards Board and International Financial Reporting
Standards as issued by the International Accounting Standards
Board. Material accounting policies adopted in the preparation of
these financial statements are presented below and have been
consistently applied unless stated otherwise.
(b) Historical cost convention
The consolidated financial statements have been prepared on the
historical cost basis unless otherwise stated in the notes. Except
for the cash flow information, the financial statements have been
prepared on an accrual basis, modified, where applicable, by the
measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
(c) Functional and presentation currency
These consolidated financial statements are presented in
Australian dollars, which is the Company’s functional currency.
(d) 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 statements are disclosed
in Note 3(w).
(e) Going concern
The financial statements of the Group have been prepared on
a going concern basis, which contemplates the continuation of
normal business operations and the realisation of assets and
settlement of liabilities in the normal course of business.
The Group is in the research, development and commercialisation
stage of its data analytics technology and services. During the
year ended 30 June 2016 the Group incurred a loss after tax of
$5,415,324, which included a one-off cost amounting to $3,013,535
relating to the issue of Earn Out Shares and incurred cash outflows
from operating activities of $1,966,335 for the year. At 30 June
2016, the Group had a surplus in net current assets of $3,253,368
and a surplus in net assets of $6,221,599.
The Group has to date been successful in raising equity capital
since the Company’s re-listing in November 2014, having
undertaken a private placement to new and existing investors of
$2,800,000 in May 2015 and $4,105,000 in November 2015.
Management have prepared cash flow projections that support
the Group’s ability to continue as a going concern after expected
future capital raisings. This forecast acknowledges that the Group
is in the early stages of development and assumes that the
Directors will be able to raise between $2,000,000 and $4,000,000
in the next financial year and that the Group will continue to grow
sales of its products and services and successfully exploit the
Group’s technology.
The Directors of the Company consider that the cash flow
projections and assumptions will be achieved, and in the
longer term, significant revenues will be generated from the
commercialisation of intellectual property, and accordingly, the
Group will be able to continue as a going concern.
In the event that the Group cannot continue as a going concern,
it may not be able to realise its assets and settle its liabilities in
the normal course of operations and at the amounts stated in the
financial statements.
3.
Significant accounting policies
(a) Principles of consolidation
The consolidated financial statements incorporate all of the
assets, liabilities and results of Skyfii Limited and all subsidiaries.
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the
activities of the entity. A list of the subsidiaries is provided in Note
27.
The assets, liabilities and results of all subsidiaries are fully
consolidated into the financial statements of the Group from the
date on which control is obtained by the Group. The consolidation
of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or
losses on transactions between group entities are fully eliminated
on consolidation. Accounting policies of subsidiaries have been
changed and adjustments made where necessary to ensure
uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or
indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests
that are present ownership interests in subsidiaries and are
entitled to a proportionate share of the subsidiary’s net assets
on liquidation at either fair value or at the non-controlling
interests’ proportionate share of the subsidiary’s net assets.
Subsequent to initial recognition, non-controlling interests are
attributed their share of profit or loss and each component of
other comprehensive income. Non-controlling interests are shown
separately within the equity section of the statement of financial
position and statement of comprehensive income.
The consolidated financial statements have been prepared using
reverse acquisition accounting. In reverse acquisition accounting,
the cost of the business combination is deemed to have been
incurred by the legal subsidiary Skyfii Group Pty Ltd (the acquirer
for accounting purposes) in the form of equity instruments issued
to the owners of the legal parent, Skyfii Limited (the acquiree for
accounting purposes).
(b) Business combinations
Business combinations occur where an acquirer obtains control
over one or more businesses.
A business combination is accounted for by applying the
acquisition method, unless it is a combination involving entities or
businesses under common control. The business combination will
be accounted for from the date that control is attained, whereby
the fair value of the identifiable assets acquired and liabilities
(including contingent liabilities) assumed is recognised (subject to
certain limited exceptions).
27
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only NOTES TO THE FINANCIAL STATEMENTS
When measuring the consideration transferred in the business
combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial
recognition, contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability
is remeasured each reporting period to fair value, recognising any
change to fair value in profit or loss, unless the change in value can
be identified as existing at acquisition date.
In determining the amount of current and deferred tax the
Group takes into account the impact of uncertain tax positions
and whether additional taxes and interest may be due. This
assessment relies on estimates and assumptions and may involve
a series of judgements about future events. New information may
become available that causes the Group to change its judgement
regarding the adequacy of existing tax liabilities; such changes to
tax liabilities will impact the tax expense in the period that such a
determination is made.
All transaction costs incurred in relation to the business
combination are expensed to the statement of profit or loss and
comprehensive income.
The acquisition of a business may result in the recognition of
goodwill or a gain from a bargain purchase.
(c)
Income tax
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on the
applicable tax rate for each jurisdiction adjusted by changes
in 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 at the end of the reporting
period in the countries where the Company’s subsidiaries operate
and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
•
•
temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries,
associates and jointly controlled entities to the extent that
the Group is able to control the timing of the reversal of the
temporary differences and it is probable that they will not
reverse in the foreseeable future; and
•
taxable temporary differences arising on the initial recognition
of goodwill.
The measurement of deferred tax reflects the tax consequences
that would follow 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 is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax liabilities
and assets will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that
it is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
The Company and its wholly-owned Australian resident entities are
part of a tax consolidated group. As a consequence, all members
of the tax consolidated group are taxed as a single entity. Skyfii
Limited became the head entity within the tax consolidated group
on 20 November 2014 (previously Skyfii Group Pty Ltd).
Where the Group receives the Australian Government’s R&D tax
incentive, the Group accounts for the refundable tax offset under
AASB 112. Funds are received as a rebate through the parent
company’s income tax return and disclosed as such in Note 7.
(d) Inventories
Inventories are measured at the lower of cost and net realisable
value. Costs of inventories are determined on a first-in, first-out
basis. Net realisable value represents the estimated selling price
for inventories less all estimated costs of completion and costs
necessary to make the sale.
(e) Plant and equipment
Plant and equipment is stated at historical cost less depreciation,
amortisation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the
items.
The carrying amount of plant and equipment is reviewed annually
to ensure it is not in excess of the recoverable amount from
these assets. The recoverable amount is assessed on the basis
of the expected net cash flows that will be received from the
asset’s employment and subsequent disposal. The expected net
cash flows have not been discounted in determining recoverable
amounts.
Depreciation of all fixed assets is calculated using the straight-line
method to allocate their cost, net of their residual values, over their
estimated useful lives, as follows:
• Office and computer equipment: 3-10 years.
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains or losses are
recognised in the profit and loss in the period in which they
arise. When revalued assets are sold, amounts included in the
revaluation surplus relating to that asset are transferred to
retained earnings.
(f)
Intangibles
Software development
Costs relating to research and development of new software
products are expensed as incurred until technological feasibility
has been established. Costs incurred in developing new software
are recognised as intangible assets only when technological
feasibility studies identify that it is probable that the project
will deliver future economic benefits and these benefits can be
measured reliably. The expenditure capitalised comprises all
28
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
directly attributable costs, including costs of materials, services,
licenses and direct labour.
Capitalised development costs have a finite useful life and are
carried at cost less accumulated amortisation and impairment
losses. Amortisation is calculated on a systematic basis based on
the future economic benefits over the useful life of the project as
follows: Year 1: 0%; Year 2: 40%; Year 3: 40%; Year 4: 20%.
Domain names
Domain names are valued at cost of acquisition. Domain names
are tested for impairment annually or more frequently if events or
changes in circumstances indicate that it might be impaired, either
individually or at the cash generating unit level. Useful lives are also
examined on an annual basis and adjustments, where applicable,
are made on a prospective basis.
Goodwill
Goodwill is initially recorded at the amount by which the purchase
price for a business combination exceeds the fair value attributed
to the interest in the net fair value of identifiable assets, liabilities
and contingent liabilities acquired at date of acquisition. Goodwill is
not amortised. Instead, goodwill is tested for impairment annually
or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated
impairment losses.
(g) Employee benefits
Short-term obligations
Employee benefits that are expected to be settled within 12
months have been measured at the amounts expected to be paid
when the liabilities are settled, plus related on-costs.
The liability for annual leave is recognised in the provision for
employee benefits. All other short-term employee benefit
obligations are presented as payables.
Short term incentive plans
The Group recognises a liability and an expense for bonuses
payable under short term incentive plans. Short term incentive
plans are based on the achievement of targeted performance
levels that may be set at the beginning of each financial year. The
Group recognises a liability to pay out short term incentives when
contractually obliged based on the achievement of the stated
performance levels, or where there is a past practice that has
created a constructive obligation.
Other long–term employee benefit obligations
Employee benefits payable later than 12 months have been
measured at the present value of the estimated future cash
outflows to be made for those benefits. In determining the
liability, consideration is given to employee wages increases
and the probability that the employee may satisfy any vesting
requirements. Those cash flows are discounted using market
yields on national government bonds with terms to maturity that
match the expected timing of cash flows attributable to employee
benefits.
(h) Borrowing costs
All borrowing costs are recognised in profit and loss in the period
in which they are incurred.
(i) Provisions
Provisions are recognised when the Group has a legal or
constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that
outflow can be reliably measured. Provisions recognised represent
the best estimate of the amounts required to settle the obligation
at reporting date.
(j) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with banks, other short-term highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts.
(k) Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. This provision
includes amounts that are not considered to be recoverable from
debtors and amounts that are expected to be credited to debtors.
Trade receivables are generally due for settlement no more than
30 days from the date of recognition. They are presented as
current assets unless collection is not expected for more than 12
months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis.
A provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired.
In addition, the trade receivables balances are considered for
credit notes that are expected to be raised against individual
and collective balances.
(l) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group at the end of financial year which are
unpaid. The amounts are unsecured and are payable as and when
they are due. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months from the
reporting date.
(m) Revenue recognition
Revenue is measured at the fair value of the consideration received
or receivable after taking into account any trade discounts
and volume rebates allowed. When the inflow of consideration
is deferred, it is treated as the provision of financing and is
discounted at a rate of interest that is generally accepted in the
market for similar arrangements. The difference between the
amount initially recognised and the amount ultimately received is
interest revenue.
Revenue from the sale of goods is recognised at the point of
delivery as this corresponds to the transfer of significant risks
and rewards of ownership of the goods and the cessation of all
involvement in those goods.
Revenue for installation projects are recognised on the basis of
that portion of total estimated costs that have been incurred to
date in the completion of a particular project.
Interest revenue is recognised using the effective interest method.
Government grants and R&D tax incentives are recognised at
fair value where there is reasonable assurance that the grant/tax
incentive will be received and all grant/tax incentive conditions will
be met.
All revenue is stated net of the amount of goods and services tax
(GST).
(n) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Tax Office (ATO). In these
29
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only NOTES TO THE FINANCIAL STATEMENTS
circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable
from, or payable to, the ATO is included with other receivables or
payables in the statement of financial position.
Cash flows are presented in the cash flow statement on a gross
basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the
ATO are presented as operating cash flows included in receipts
from customers or payments to suppliers.
(o) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group entities is measured
using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements
are presented in Australian dollars, which is the parent entity’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at
the period-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at
the date of the transaction. Non-monetary items measured at
fair value are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of monetary items
are recognised in the profit or loss, except where deferred in
equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary
items are recognised directly in other comprehensive income to
the extent that the underlying gain or loss is recognised in other
comprehensive income, otherwise the exchange difference is
recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose
functional currency is different from the Group’s presentation
currency is translated as follows:
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
•
•
the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and
the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive
potential ordinary shares.
(q) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the entity becomes a party to the contractual provisions of the
instrument. For financial assets, this is equivalent to the date that
the Group commits itself to either purchase or sell the asset (i.e.
trade date accounting is adopted).
Financial instruments are initially measured at fair value plus
transaction costs, except where the instrument is classified “at fair
value through profit or loss”, in which case transaction costs are
expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value,
amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial
asset or financial liability is measured at initial recognition less
principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference
between that initial amount and the maturity amount calculated
using the effective interest method.
The Group does not designate any interests in subsidiaries,
associates or joint venture entities as being subject to the
requirements of Accounting Standards specifically applicable to
financial instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market
and are subsequently measured at amortised cost. Gains or losses
are recognised in profit or loss through the amortisation process
and when the financial asset is derecognised.
• Assets and liabilities are translated at year end exchange rates
prevailing at that reporting date.
Financial liabilities
•
Income and expenses are translated at average exchange
rates for the year.
• Retained earnings are translated at the exchange rates
prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations
with functional currencies other than the Australian dollar are
recognised in other comprehensive income and included in the
foreign currency translation reserve in the statement of financial
position. The cumulative amount of these differences is reclassified
into profit or loss in the period in which the operation is disposed of.
(p) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares
• by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
Non-derivative financial liabilities other than financial guarantees
are subsequently measured at amortised cost. Gains or losses are
recognised in profit or loss through the amortisation process and
when the financial liability is derecognised.
Impairment
At the end of each reporting period, the Group assesses
whether there is objective evidence that a financial asset has
been impaired. A financial asset (or a group of financial assets) is
deemed to be impaired if, and only if, there is objective evidence
of impairment as a result of one or more events (a “loss event”)
having occurred, which has an impact on the estimated future cash
flows of the financial asset(s).
In the case of financial assets carried at amortised cost, loss
events may include: indications that the debtors (or a group of
debtors) are experiencing significant financial difficulty, default
or delinquency in interest or principal payments; indications that
they will enter bankruptcy or other financial reorganisation; and
changes in arrears or economic conditions that correlate with
defaults.
30
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
For financial assets carried at amortised cost (including loans and
receivables), a separate allowance account is used to reduce the
carrying amount of financial assets impaired by credit losses. After
having taken all possible measures of recovery, if management
establishes that the carrying amount cannot be recovered by any
means, at that point the written-off amounts are charged to the
allowance account, or the carrying amount of impaired financial
assets is reduced directly if no impairment amount was previously
recognised in the allowance account.
When the terms of financial assets that would otherwise have
been past due or impaired have been renegotiated, the Company
recognises the impairment for such financial assets by taking
into account the original terms as if the terms have not been
renegotiated so that the loss events that have occurred are duly
considered.
Derecognition
Financial assets are derecognised when the contractual rights to
receipt of cash flows expire or the asset is transferred to another
party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised when the related obligations
are discharged, cancelled or have expired. The difference between
the carrying amount of the financial liability extinguished or
transferred to another party and the fair value of consideration
paid, including the transfer of non-cash assets or liabilities
assumed, is recognised in profit or loss.
(r)
Impairment of assets
At the end of each reporting date, the Group reviews the carrying
values of its tangible and intangible assets to determine whether
there is any indication that those assets have been impaired. If
such an indication exists, the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell and value
in use, is compared to the asset’s carrying value. Any excess of the
asset’s carrying value over its recoverable amount is recognised
immediately in the profit and loss.
Impairment testing is performed annually for goodwill and
intangible assets with indefinite lives.
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.
(s) Leases
Leases in which a significant portion of the risks and rewards
of ownership are not transferred to the Group as lessee are
classified as operating leases. Leases are made up of operating
leases of property. Payments made under operating leases (net
of any incentives received from the lessor) are charged to the
consolidated income statement on a straight-line basis over the
period of the lease. Benefits that are provided to the Group as an
incentive to enter into a lease arrangement are recognised as a
liability and amortised on a straight-line basis over the life of the
lease.
(t) Comparative figures
When required by Accounting Standards, comparative figures
have been adjusted to conform to changes in presentation for the
current financial year.
Where the Group has retrospectively applied an accounting policy,
made a retrospective restatement or reclassified items in its
financial statements, an additional statement of financial position
as at the beginning of the earliest comparative period will be
disclosed.
(u) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares, are shown in equity as a
deduction, net of tax, from the proceeds.
(v) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
These include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated
items comprise mainly corporate assets (primarily the Company’s
headquarters), head office expenses, and income tax assets and
liabilities. The chief operating decision maker has been identified
as the Board of Directors.
(w) Critical accounting estimates and judgments
The directors evaluate estimates and judgements incorporated
into the financial report based on historical knowledge and best
available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group.
The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and judgements that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are
discussed below.
Business combinations
Following the guidance in AASB 3: Business Combinations, the
Group has made assumptions and estimates to determine the
purchase price of businesses acquired as well as its allocation to
acquired assets and liabilities. To do so, the Group is required to
determine at the acquisition date the fair value of the identifiable
net assets acquired, including intangible assets such as brand,
customer relationships and liabilities assumed. Goodwill is
measured as the excess of the fair value of the consideration
transferred including the recognised amount of any non-
controlling interest over the net recognised amount of the
identifiable assets and liabilities.
The assumptions and estimates made by the Group have an
impact on the asset and liability amounts recorded in the financial
statements. In addition, the estimated useful lives of the acquired
amortisable assets, the identification of intangible assets and the
determination of the indefinite or finite useful lives of intangible
assets acquired will have an impact on the Group’s future profit or
loss.
Impairment of intangible assets
The Group assesses impairment at each reporting date by
evaluating conditions specific to the Group that may lead to
impairment of assets. Where an impairment trigger exists,
the recoverable amount of the asset is determined. Value-in-
use calculations performed in assessing recoverable amounts
incorporate a number of key estimates.
During the year ended 30 June 2015, the Group recognised
$2,157,841 in respect of an impairment of the entire goodwill
arising from the acquisition of RKS Consolidated Limited by Skyfii
Group Pty Ltd (in accordance with reverse acquisition accounting)
and the impairment of intangible domain name assets.
Should the software development expenditure not meet the
requirements set out in Note 3(f), an impairment loss would be
recognised up to the maximum carrying value of intangible assets
at 30 June 2016 of $2,803,857.
R&D tax incentive
The Group has established a precedent for entitlement to
grant income from the R&D tax incentive in prior periods. This
experience supports the assumption that eligibility for the grant
will continue on the same basis, and accordingly, it is appropriate
31
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only NOTES TO THE FINANCIAL STATEMENTS
to recognise entitlement to the receivable in the current period.
The value of the R&D tax incentive entitlement is determined by
notional deductions based on eligible R&D expenditures.
Earn Out Shares
The Group has assessed that the various Earn Out Variation
Deeds do not constitute part of the acquisition accounting of Skyfii
Group Pty Limited and is therefore outside the scope of AASB 3
Business Combinations. The Earn Out Shares issued pursuant to the
Earn Out Variation Deeds have been fair valued using a volume
weighted average price of the Company’s share price over the 5
days prior to 22 February 2016, being the date that shareholder
approval was obtained for the issue of the Earn Out Shares.
(x)
New Accounting Standards for application in future
periods
Accounting Standards and Interpretations issued by the AASB that
are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on
the Group when adopted in future periods, are discussed below:
» determine the transaction price;
» allocate the transaction price to the performance
obligations in the contract(s); and
»
recognise revenue when (or as) the performance
obligations are satisfied.
-
The transitional provisions of this Standard permit an
entity to either: restate the contracts that existed in each
prior period presented per AASB 108: Accounting Policies,
Changes in Accounting Estimates and Errors (subject to
certain practical expedients in AASB 15); or recognise
the cumulative effect of retrospective application to
incomplete contracts on the date of initial application.
There are also enhanced disclosure requirements
regarding revenue.
- Although the directors anticipate that the adoption of
AASB 15 may have an impact on the Group’s financial
statements, it is impracticable at this stage to provide a
reasonable estimate of such impact.
• AASB 16: Leases (applicable to annual reporting periods
• AASB 9: Financial Instruments and associated Amending
beginning on or after 1 January 2019).
Standards (applicable to annual reporting periods beginning
on or after 1 January 2018).
-
-
The Standard will be applicable retrospectively (subject to
the provisions on hedge accounting outlined below) and
includes revised requirements for the classification and
measurement of financial instruments, revised recognition
and derecognition requirements for financial instruments
and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial
application include certain simplifications to the
classification of financial assets, simplifications to the
accounting of embedded derivatives, upfront accounting
for expected credit loss, and the irrevocable election
to recognise gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income. AASB 9 also introduces a new
model for hedge accounting that will allow greater flexibility
in the ability to hedge risk, particularly with respect to
hedges of non-financial items. Should the entity elect
to change its hedge policies in line with the new hedge
accounting requirements of the Standard, the application
of such accounting would be largely prospective.
-
The directors anticipate that the adoption of AASB 9 will
not have a significant impact on the Group’s financial
statements.
• AASB 15: Revenue from Contracts with Customers (applicable to
annual reporting periods commencing on or after 1 January
2018, as deferred by AASB 2015-8: Amendments to Australian
Accounting Standards – Effective Date of AASB 15).
- When effective, this Standard will replace the current
accounting requirements applicable to revenue with a
single, principles-based model. Except for a limited number
of exceptions, including leases, the new revenue model
in AASB 15 will apply to all contracts with customers as
well as non-monetary exchanges between entities in the
same line of business to facilitate sales to customers and
potential customers.
-
The core principle of the Standard is that an entity will
recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled
in exchange for the goods or services. To achieve this
objective, AASB 15 provides the following five-step process:
»
»
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
- When effective, this Standard will replace the current
accounting requirements applicable to leases in AASB 117:
Leases and related Interpretations. AASB 16 introduces
a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or
finance leases.
-
The main changes introduced by the new Standard include:
»
recognition of a right-to-use asset and liability for all
leases (excluding short-term leases with less than
12 months of tenure and leases relating to low-value
assets);
» depreciation of right-to-use assets in line with AASB
116: Property, Plant and Equipment in profit or loss
and unwinding of the liability in principal and interest
components;
»
variable lease payments that depend on an index
or a rate are included in the initial measurement
of the lease liability using the index or rate at the
commencement date;
» by applying a practical expedient, a lessee is permitted
to elect not to separate non-lease components and
instead account for all components as a lease; and
» additional disclosure requirements.
-
The transitional provisions of AASB 16 allow a lessee to
either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect
of retrospective application as an adjustment to opening
equity on the date of initial application.
- Although the directors anticipate that the adoption of
AASB 16 will impact the Group’s financial statements,
it is impracticable at this stage to provide a reasonable
estimate of such impact.
4. Operating segments
The Group operates predominantly in one industry and
one geographical segment, being the development and
commercialisation of data analytics, marketing and advertising
services to its customers in Australia. At this stage the Group’s
overseas operations are not significant to the Group. The Group
has identified its operating segments based on the internal
reports that are reviewed and used by the Board of Directors
(chief operating decision makers) in assessing performance and
determining the allocation of resources.
32
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
5. Revenue
Revenue from operations
Other income
R&D tax incentive
Government grants
Interest income
Total other income
Total revenue
6. Expenses
Employee benefits expense
Salaries and related expenses (including superannuation)
Other employment costs
Total employee benefits expense
Depreciation and amortisation expenses
Plant and equipment
Software development amortisation
Total depreciation and amortisation expenses
Rental expense relating to operating leases
Minimum lease payments
Rent recovery from sub-lease agreements
Net rental expense relating to operating leases
2016
$
2,339,570
2015
$
658,237
851,219
145,796
43,294
1,040,309
791,729
64,125
22,109
877,963
3,379,879
1,536,200
Note
2016
$
2015
$
2,235,746
192,512
2,428,258
1,452,927
108,500
1,561,427
25,648
435,443
461,091
152,547
(64,842)
87,705
10,903
-
10,903
81,218
-
81,218
12
13
22
22
Net foreign exchange losses
27,423
16,736
Finance costs
Interest expense
7. Income tax
Income tax
(a)
Current tax
Income tax expense
Note
925
393
2016
$
8,456
8,456
2015
$
-
-
(b) Numerical reconciliation of income tax benefit to prima facie income tax payable
Loss from ordinary activities before income tax expense
Tax at the Australian rate of 30%
(5,406,868)
(1,622,060)
(6,372,939)
(1,911,882)
Tax effect amounts which are not deductible / (taxable) in calculating taxable income:
Difference in tax rates
Goodwill impairment not allowable
Share issue costs not allowable
Accounting for R&D expenditure
Accounting for reverse acquisition
Deferred tax assets not recognised
Other non-allowable items
Income tax expense
(c) Current tax liabilities
Current tax liabilities
Franking credits
Franking credits available at the reporting date based on a tax rate of 30%
963
-
904,061
331,682
-
373,787
20,024
8,456
8,456
-
-
647,352
-
783,539
(122,262)
577,325
25,928
-
-
-
33
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only The amount of deductible temporary differences and unused tax losses for which no deferred tax assets have been brought to account in the
period are as follows:
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
temporary differences: ($1,342,314) (2015: $52,994)
tax losses: operating losses $7,533,567 (2015: $4,649,757)
tax losses: capital losses $16,911 (2015: $16,911)
The benefits of the above temporary differences and unused tax losses will only be realised if the conditions for deductibility set out in Note
3(c) occur. These amounts have no expiry date.
Skyfii Limited and its wholly-owned Australian entities elected to form an income tax consolidated group as of 20 November 2014. The
accounting policy on implementation of the income tax consolidation legislation is set out in Note 3(c).
8. Cash and cash equivalents
Current
Cash at bank and on hand
Term deposits
Total cash and cash equivalents
9. Trade and other receivables
Current
Trade receivables
R&D tax incentive receivable
Other debtors
Total current trade and other receivables
(a) Ageing of trade receivables
1-30 days
31-60 days
61-90 days
90+ days
Provision for impairment
Total trade receivables net of provision for impairment
10. Inventories
Current
Equipment – at cost
Total inventories
2016
$
2015
$
2,612,422
-
2,612,422
2,679,548
5,000
2,684,548
2016
$
2015
$
682,874
823,325
8,907
1,515,106
538,282
84,672
23,516
36,403
-
682,874
2016
$
10,444
10,444
110,339
791,729
58,953
961,021
45,101
42,908
22,330
-
-
110,339
2015
$
43,500
43,500
Inventories include servers and other networking equipment which the Group sells to its customers in order to deliver data analytics
services.
11. Other assets
Current
Prepayments
Security deposits
Other
Total current other assets
12. Plant and equipment
Non-current
Office and computer equipment – at cost
Accumulated depreciation
Carrying value of office and computer equipment
2016
$
87,629
4,057
2,244
93,930
2016
$
201,773
(37,399)
164,374
2015
$
104,598
9,667
-
114,265
2015
$
36,474
(11,734)
24,740
Total carrying value of plant and equipment
164,374
24,740
34
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
Reconciliations
Reconciliations of the carrying amount of plant and equipment at the beginning and end of the current financial year are set out below:
Balance as at 1 July 2014
Additions
Depreciation
Balance at 30 June 2015
Balance at 1 July 2015
Additions
Depreciation
Balance at 30 June 2016
13. Intangible assets
Non-current
Software development – at cost
Accumulated amortisation
Carrying value of software development
Domain names – at cost
Accumulated impairment
Carrying value of domain names
Goodwill – at cost
Accumulated amortisation and impairment
Carrying value of goodwill
Total carrying value of intangible assets
Reconciliations
Office and computer equipment
$
9,807
25,836
(10,903)
24,740
24,740
165,282
(25,648)
164,374
Total
$
9,807
25,836
(10,903)
24,740
24,740
162,391
(19,719)
167,412
2016
$
2015
$
3,239,300
(435,443)
2,803,857
65,000
(65,000)
-
1,419,984
-
1,419,984
65,000
(65,000)
-
2,092,841
(2,092,841)
-
2,092,841
(2,092,841)
-
2,803,857
1,419,984
Reconciliations of the carrying amount of intangible assets at the beginning and end of the current financial year are set out below:
Balance as at 1 July 2014
Additions
Impairment
Amortisation
Balance at 30 June 2015
Balance at 1 July 2015
Additions
Amortisation
Balance at 30 June 2016
Software development
$
-
1,419,984
-
-
1,419,984
Domain names
$
65,000
-
(65,000)
-
-
Goodwill
$
-
2,092,841
(2,092,841)
-
-
1,419,984
1,819,316
(435,443)
2,803,857
-
-
-
-
-
-
-
-
Total
$
65,000
3,512,825
(2,157,841)
-
1,419,984
1,419,984
1,819,316
(435,443)
2,803,857
During the year ended 30 June 2015, the Group recognised a loss of $2,157,841 in respect of an impairment of the entire goodwill arising
from the acquisition of RKS Consolidated Limited by Skyfii Group Pty Ltd and the impairment of domain name assets.
14. Net tangible asset backing
Net tangible asset backing per share
Net assets per share
15. Trade and other payables
Current
Trade payables
Sundry payables
Total trade and other payables
35
2016
Cents per share
2.03
3.70
2015
Cents per share
2.86
4.11
2016
$
633,289
41,478
674,768
2015
$
395,937
18,983
414,920
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only
16. Provisions
Current
Employee benefits
Total provisions
17. Contributed equity
(a) Share capital
Ordinary shares
Total share capital
(b) Movements in ordinary share capital
Reconciliation to 30 June 2015:
Balance at 1 July 2014
Capitalised equity raising costs (net of tax)
Movements in ordinary shares:
Issued for cash
Issued for cash
Conversion of convertible notes to ordinary shares
Issued in settlement of a liability
Issued in settlement of a liability
Public share offer
Issue of shares to former shareholders of Skyfii Group Pty Ltd
Issued in settlement of a liability
Elimination of Skyfii Group Pty Ltd shares on issue on acquisition
Shares of Skyfii Ltd (formerly RKS Consolidated Ltd) on acquisition
Issued in settlement of a liability
Issued in settlement of a liability
Share placement
Issued in settlement of a liability
Balance at 30 June 2015
Reconciliation to 30 June 2016:
Balance at 1 July 2015
Capitalised equity raising costs (net of tax)
Movements in ordinary shares:
Share placement
Issue of ESP shares 1
Issue of Earn Out Shares
Issued in settlement of a liability
Balance at 30 June 2016
Note:
NOTES TO THE FINANCIAL STATEMENTS
2016
$
136,841
136,841
2015
$
67,465
67,465
2016
Number
168,265,551
2015
Number
113,768,522
2016
$
17,987,101
17,987,101
2015
$
11,091,161
11,091,161
Date
Number
Unit Price
$
7,500,000
-
900,000
1,224,746
530,463
58,507
112,500
17,500,000
70,000,000
2,500,000
(10,326,216)
10,000,337
850,000
100,000
12,727,276
90,909
113,768,522
113,768,522
-
27,366,667
4,655,000
22,342,028
133,334
168,265,551
22-Jul-14
22-Jul-14
22-Jul-14
22-Jul-14
22-Jul-14
14-Nov-14
17-Nov-14
17-Nov-14
20-Nov-14
20-Nov-14
10-Dec-14
16-Feb-15
19-May-15
4-Jun-15
9-Nov-15
23-Dec-15
26-Feb-16
26-Feb-16
1,500,600
(1,119,597)
90
1,046,668
453,333
50,000
150,000
3,500,000
2,000,067
500,000
-
-
170,000
20,000
2,800,000
20,000
11,091,161
11,091,161
(242,595)
4,105,000
-
3,013,535
20,000
17,987,101
$0.0001
$0.8546
$0.8546
$0.8546
$1.3333
$0.2000
-
$0.2000
-
-
$0.2000
$0.2000
$0.2200
$0.2200
$0.150
$0.148
$0.135
$0.150
1. All eligible employees who accepted an offer of ESP shares were given an interest free loan from the Company to finance the whole
of the purchase of the ESP shares they were invited to apply for (ESP Loan). The ESP Loans are provided to participants on a non-
recourse basis and upon vesting must be repaid in order to remove trading restrictions on vested ESP shares. The term of the ESP
Loan is five years however participants may forfeit their ESP shares if they do not repay the ESP Loan or leave the Company under
certain scenarios. As the ESP removes the risk to participants from decreases in the share price by limiting the maximum loan amount
repayable to the value of the ESP shares disposed and waiving the ESP Loan should the participant forfeit their ESP shares, whilst still
allowing participants the rewards of any increase in share price, the Company has effectively granted the participants an option to the
ESP shares due to the ESP Loans being non-recourse. As such, this arrangement is accounted for under AASB 2.
(c) Ordinary shares
Ordinary shares have the right to receive dividends as declared, and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle
their holder to one vote, either in person or by proxy, at a meeting of the Company.
(d) Employee Share Plan (ESP)
Information relating to the Employee Share Plan, including details of shares issued under the plan, is set out in Note 23.
36
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
(e) Earn Out Shares
In July 2014, the Company (formerly RKS Consolidated Limited and referred to in this note as RKS) entered into an agreement to acquire
100% of the issued capital of Skyfii Group Pty Ltd (SGPL) (Acquisition Agreement). As part of the Acquisition Agreement entered into
between RKS and the shareholders of SGPL, the Company agreed that on or after the fifth business day following 16 March 2017, it will
issue to those shareholders who were shareholders of SGPL as at the acquisition date (Skyfii Vendor Shareholders), additional ordinary
shares to the value of the lesser of a) $30,000,000 or b) three times the Company’s gross revenue for the year ending 31 December 2016
minus $13,500,000, at an issue price of $0.20 per share (Earn Out Shares). The minimum number of Earn Out Shares which may have
been issued pursuant to the Acquisition Agreement is nil, and the maximum number is 82,500,000 (Earn Out Mechanism).
On 21 January 2016, the Company announced that it had entered into agreements with the majority (by shareholding) of the Skyfii Vendor
Shareholders to provide certainty in relation to the dilutionary impact of the Earn Out Shares and the intentions and continued support of
the Skyfii Vendor Shareholders, which, subject to shareholder approval, would result in:
•
the issue of up to 22,500,000 fully paid ordinary shares to the Skyfii Vendor Shareholders and thereby removing any further potential
entitlement to Earn Out Shares (Proposed Earn Out Shares); and
• up to 92,500,000 fully paid ordinary shares held by the Skyfii Vendor Shareholders being placed under voluntary escrow for an
additional 12 months (New Escrow Shares),
thereby varying the terms of the Acquisition Agreement (Earn Out Variation Deed).
On 22 February 2016, the shares to be issued pursuant to the Earn Out Variation Deeds were approved at an Extraordinary General
Meeting.
Of the twenty-five (25) Skyfii Vendor Shareholders, twenty-two (22) had entered into an Earn Out Variation Deed as it related to their rights
and entitlements under the Acquisition Agreement, representing 99.3% of the Proposed Earn Out Shares and New Escrow Shares. As a
result, on 26 February 2016, 22,342,028 shares were issued in accordance with the Earn Out Variation Deeds. Costs of $3,013,535 relating
to the Earn Out Shares issued were expensed in the year ended 30 June 2016. A maximum of 579,230 Earn Out Shares may be issued in
accordance with the original Earn Out Mechanism.
18. Equity – reserves
(a) Movements
Share based payment reserve movements
Balance at the beginning of the period
Share based payments expense
Balance at the end of the period
Foreign currency translation reserve movements
Balance at the beginning of the period
Currency translation differences arising during the period
Balance at the end of the period
Total reserves
(b) Nature and purpose of reserves
Share based payments reserve
2016
$
-
60,492
60,492
-
3,588
3,588
64,080
2015
$
-
-
-
-
-
-
-
The share based payments reserve represents the value of the ESP share grants to employees under the Company’s Employee Share Plan.
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.
19. Financial risk management
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk), credit risk and liquidity risk.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management
policies are established to identify and analyse the risks faced by the Group to set appropriate risk limits and controls, and to monitor
risks and adhere to limits. Risk management is carried out by senior executives under policies approved by the Board of Directors. These
policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance
identifies, evaluates and hedges financial risks within the Group’s operating units.
37
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
NOTES TO THE FINANCIAL STATEMENTS
Note
8
9
11
15
2016
$
2015
$
2,612,422
1,515,106
93,930
4,221,458
2,684,548
961,021
114,265
3,759,835
674,768
674,768
414,920
414,920
The carrying value of the assets and liabilities disclosed in the table above closely approximates or equals their fair value. The carrying
amounts of trade receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.
(a) Market risk
Foreign currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Group has an insignificant exposure to foreign currency risk as the overseas operations are in start-up phase.
Interest rate risk
The Group is not exposed to any significant interest rate risk.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers.
Other credit risk arises from cash and cash equivalents, deposits with banks and other financial institutions, security deposits, other
receivables and GST receivable from the ATO.
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not
hold any collateral.
Credit risk is managed by a risk assessment process for all customers and counterparties, which takes into account past experience.
There have been no impairment losses recognised during the year (2015: nil).
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure, where possible, that it will always have sufficient liquidity to meet its liabilities when due.
Ultimate responsibility for liquidity management rests with the Directors. The Group ensures that, where possible, it has sufficient cash on
demand to meet expected net cash outflows, including the servicing of financial obligations; this excludes the potential impact of extreme
circumstances that cannot reasonably be predicted, such as natural disasters.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and
matching the maturity profiles of financial assets and liabilities.
Financing arrangements
The Group does not have any borrowing facilities in place at the reporting date.
Maturities of financial liabilities
The following table details the Group’s remaining contractual maturity for its financial instrument liabilities. The table has been drawn up
based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be
paid. The table includes both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals
may differ from their carrying amount in the statement of financial position.
1 year or less
$
1 to 2 years
$
2 to 5 years
$
Over 5 years
$
2016
Non-derivatives
Trade and other payables
2015
Non-derivatives
Trade and other payables
674,768
414,920
-
-
-
-
-
-
Trade and other payables are payable as and when they are due. The cash flows in the maturity analysis above are not expected to occur
significantly earlier than disclosed.
38
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
(d) Capital management
The Board’s aim is to maintain a strong capital base so as to maintain investor, creditor and market confidence to sustain future
development of the business and increase shareholder value. The Board ensures the Group has sufficient capital as required for working
capital purposes. There were no changes to the Group’s approach to capital management during the year. The Group is not subject to
externally imposed capital requirements.
20. Remuneration of auditors
During the year the following fees were accrued or paid for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
Hall Chadwick
Audit and review of financial reports
Taxation services
Total
21. Contingent liabilities
(a) Earn out shares
2016
$
50,650
34,486
85,136
2015
$
40,342
36,000
76,342
The minimum number of Earn Out Shares that may still be issued pursuant to the original Earn Out Mechanism in the Acquisition
Agreement is nil, and the maximum number is 579,230. No value has been attributed to the remaining Earn Out Shares as the likelihood of
them being issued is uncertain. Further information in relation to the Earn Out Shares can be found in Note 17 to the financial statements.
(b) Other contingent liabilities
There are no other contingent liabilities as at 30 June 2016.
22. Commitments for expenditure
(a) Non-cancellable operating leases
The Group has entered into a commercial lease for office property. Rentals paid under operating leases are charged to the income
statement on a straight line basis over the period of the lease. Future minimum rentals payable under non-cancellable operating leases as
at 30 June are as follows:
Less than one year
Later than one year
Total operating lease commitments
(b) Sub-lease arrangements
2016
$
246,223
69,470
315,694
2015
$
12,227
-
12,227
The Group has entered into several sub-lease arrangements with respect to the Group’s head office. Rentals paid to the Group under
these sub-lease arrangements are reflected as a reduction in rental expense in the profit or loss statement on a straight line basis over the
period of the sub-lease arrangements. Future minimum rentals receivable under the sub-lease arrangements as at 30 June are as follows:
Less than one year
Later than one year
Total operating sub-lease commitments
(c) Other contractual capital expenditure commitments
2016
$
51,649
-
51,649
2015
$
-
-
-
The Group has entered into several sub-lease arrangements with respect to the Group’s head office. Rentals paid to the Group under
these sub-lease arrangements are reflected as a reduction in rental expense in the profit or loss statement on a straight line basis over the
period of the sub-lease arrangements. Future minimum rentals receivable under the sub-lease arrangements as at 30 June are as follows:
Less than one year
Later than one year
Total capital expenditure commitments
23. Share based payments
(a) Employee Share Plan (ESP)
2015
$
-
-
-
2014
$
3,878
-
3,878
During the year ended 30 June 2016, the Company established a share based payment plan, the Employee Share Plan (ESP) to assist the
Company in retaining and attracting current and future employees by providing them with the opportunity to own shares in the Company.
39
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only NOTES TO THE FINANCIAL STATEMENTS
The key terms of the ESP are as follows:
•
•
•
the Board may invite a person who is employed or engaged by or holds an office with the Group (whether on a full or part-time basis)
and who is declared by the Board to be eligible to participate in the ESP from time to time (Eligible Employee) to apply for fully paid
ordinary shares under the plan from time to time (ESP Shares);
invitations to apply for ESP Shares are to be made on the basis of the market price per share defined as the volume weighted average
price at which the Company’s shares have traded during the 30 days immediately preceding the date of the invitation;
invitations to apply for ESP Shares under the ESP will be made on a basis determined by the Board (including as to the conditionality
on the achievement of any key performance indicators) and notified to Eligible Employees in the invitation, or if no such determination
is made by the Board, on the basis that ESP Shares will be subject to a 3 year vesting period, with:
- 33% of ESP Shares applied for vesting on the date that is the first anniversary of the issue date of the ESP Shares;
- 33% of ESP Shares applied for vesting on the date that is the second anniversary of the issue date of the ESP Shares; and
- 34% of ESP Shares applied for vesting on the date that is the third anniversary of the issue date of the ESP Shares.
• Eligible Employees who accept an invitation (ESP Participants) may be offered an interest free loan from the Company to finance the
whole of the purchase of the ESP Shares they are invited to apply for (ESP Loan). ESP Loans will have a term of 5 years and become
repayable in full on the earlier of:
-
-
the fifth anniversary of the issue date of the ESP Shares; and
if the ESP Participant ceases to be an Eligible Employee, either:
»
»
the fifth anniversary of the issue date of the ESP Shares, if the Eligible Employee is a good leaver (as defined in the ESP);
or
that date of cessation, if the Eligible Employee is a bad leaver (as defined in the ESP).
•
if the ESP Participant does not repay the outstanding ESP Loan, or it notifies the Company that it cannot, then such number of ESP
Shares that equal by value (using the price at which the ESP Shares were issued) the outstanding amount of the ESP Loan will become
the subject of a buy-back notice from the Company which the ESP Participant must accept. The buy-back of such number of ESP
Shares will be considered full and final satisfaction of the ESP Loan and the Company will not have any further recourse against the
ESP Participant;
• any dividends received by the ESP Participant whilst the whole or part of the ESP Loan remains outstanding must be applied to the
repayment of the ESP Loan;
•
•
the maximum number of ESP Shares for which invitations may be issued under the ESP together with the number of ESP Shares still
to be issued in respect of already accepted invitations and that have already been issued in response to invitations in the previous
5 years (but disregarding ESP Shares that are or were issued following invitations to non-residents, that did not require a disclosure
document under the Corporations Act, or that were issued under a disclosure document under the Corporations Act) must not
exceed 10% of the total number of ordinary shares on issue in the Company at the time the invitations are made;
in the event of a corporate reconstruction, the Board will adjust, subject to the Listing Rules (if applicable), any one or more of the
maximum number of shares that may be issued under the ESP (if applicable), the subscription price, the buy-back price and the
number of ESP Shares to be vested at any future vesting date (if applicable), as it deems appropriate so that the benefits conferred on
ESP Participants after a corporate reconstruction are the same as the benefits enjoyed by the ESP Participants before the corporate
reconstruction. On conferring the benefit of any corporate reconstruction, any fractional entitlements to shares will be rounded down
to the nearest whole share;
• ESP Participants will continue to have the right to participate in dividends paid by the Company despite some or all of their ESP Shares
not having vested yet or being subject to an ESP Loan. If an ESP Loan has been made to the ESP Participant, then any dividend due
must first be applied to reducing any outstanding ESP Loan amount applicable to the ESP Shares on which the dividend is paid;
• ESP Shares which have not vested and/or are subject to repayment of the ESP Loan will be restricted (escrowed) from trading;
•
the Company may buy-back at the issue price any ESP Shares which:
- have not vested, or are incapable of vesting at any time (including as a result of the ESP Participant failing to meet any key
performance indicators on which vesting of ESP Shares is conditional); or
-
remain in escrow and/or are the subject of an ESP Loan, on the occurrence of:
»
the ESP Participant ceasing to be an Eligible Employee (unless the Board, in its sole and absolute discretion determines
otherwise, subject to any conditions that it may apply, including the repayment of any outstanding ESP Loan); or
»
the expiration of the term of the ESP Loan.
• any bonus securities issued in relation to ESP Shares which remain unvested or are subject to an ESP Loan which becomes repayable
in full will be the subject of a buy-back by the Company at the issue price for no consideration;
• on the death or permanent disability of an ESP Participant, all ESP Shares held by the ESP Participant or their estate will immediately
vest subject to the repayment of any outstanding ESP Loan by the curator, executor or nominated beneficiary(ies) (as the case may be)
within 30 days of their appointment (or such longer period as the Company in its discretion may allow). Failing such repayment, the
Company will buy-back all ESP Shares in respect of which there is an outstanding ESP Loan;
40
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only NOTES TO THE FINANCIAL STATEMENTS
•
•
the rules of the ESP and any amendment to the rules of the ESP must be in accordance with the Listing Rules and the Corporations Act;
if, while the Company’s shares are traded on the ASX or any other stock exchange, there is any inconsistency between the terms of the
ESP and the Listing Rules, the Listing Rules will prevail; and
•
the ESP is governed by the laws of the State of New South Wales, Australia.
(b) ESP share grants
On 23 December 2015, 4,655,000 ESP shares were issued at an issue price of $0.148 and are subject to the following vesting conditions:
• 33% of the ESP shares vest on the first anniversary of their issue date, subject to the Company’s share price achieving $0.40 on 10
days in any 20 consecutive trading days prior to that date (Tranche 1);
• 33% of the ESP shares vest on the second anniversary of their issue date, subject to the Company’s share price achieving $0.60 on 10
days in any 20 consecutive trading days prior to that date (Tranche 2); and
• 34% of the ESP shares vest on the third anniversary of their issue date, subject to the Company’s share price achieving $0.80 on 10
days in any 20 consecutive trading days prior to that date (Tranche 3).
If the share price performance condition in the first tranche is not satisfied, then those ESP shares will roll forward to the second
tranche and be required to meet the higher share price performance condition for the second tranche. Subsequently, if the share price
performance condition applicable in the second tranche is not satisfied, then any unvested ESP shares will roll forward to the third tranche
and be required to meet the share price performance condition for the third tranche.
All Eligible Employees who accepted an offer of ESP shares were given an interest free loan from the Company to finance the whole of the
purchase of the ESP shares they were invited to apply for (ESP Loan).
The ESP Loans are provided to participants on a non-recourse basis and upon vesting must be repaid in order to remove trading
restrictions on vested ESP shares. The term of the ESP Loan is five years, however participants may forfeit their ESP shares if they do not
repay the ESP Loan or leave the Company under particular circumstances. As the ESP removes the risk to participants from decreases in
the share price by limiting the maximum loan amount repayable to the value of the ESP shares disposed and waiving the ESP Loan should
the participant forfeit their ESP shares, whilst still allowing participants the rewards of any increase in share price, the Company has
effectively granted the participants an option to the ESP shares due to the ESP Loans being non-recourse. As such, this arrangement is
accounted for under AASB 2.
The assessed weighted average fair value at grant date of the effective share options granted during the financial year is $0.0764 per
option. Options were priced using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk-free interest rate for the term of the option. The expected volatility of the Company’s shares is based on the historical volatility of
the Company’s shares and other ASX listed companies considered to be comparable to Skyfii Limited.
The model inputs for the share option grants outstanding during the year ended 30 June 2016 include:
• Weighted average exercise price: $0.148
• Weighted average life of the option: 5 years
• Expected share price volatility: 61%
• Risk-free interest rate: 2.24%.
(c) Other share based payments
Issue Date
Directors:
26-Feb-16
Total
Creditor
Purpose
Valuation
No. of shares
Value per share
G. Flowers
Director’s fees
Value of services
100,000
100,000
$0.200
$0.200
Total
$
20,000
20,000
24. Related parties
(a) Parent and ultimate controlling party
Skyfii Limited became the parent and ultimate controlling party of the Group on 20 November 2014. Prior to that date the parent and
ultimate controlling party of the Group was Skyfii Group Pty Ltd.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 27.
(c) Key management personnel compensation
Short-term employee benefits, including contractor fees
Share based employee benefits
Other long term benefits
Total benefits
41
2016
$
1,103,119
152,273
100,205
1,355,597
2015
$
818,660
103,418
74,216
996,294
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only NOTES TO THE FINANCIAL STATEMENTS
Short-term employee benefits
These amounts include fees and benefits paid to Directors as well as all salary, paid leave benefits and fringe benefits awarded to other KMP.
Share based employee benefits
These amounts represent the expense related to ordinary shares issued in lieu of payments for liabilities in cash as measured by the fair
value of the shares issued or liabilities extinguished.
Further information in relation to KMP remuneration can be found in the Remuneration Report.
(d) Payable transactions with directors and key management personnel
The aggregate value of payable transactions and outstanding balances relating to director and key management personnel and entities
over which they have control or significant influence were as follows:
KMP
Jason Martin Simple Machines Pty Ltd Outsourced software development services
Related party entity
Transaction
Transaction value
Balance outstanding
2016
$
397,244
2015
$
499,101
2016
$
-
2015
$
-
Other payable transactions with directors and key management personnel
At 30 June 2016 the payable balance outstanding with directors and key management personnel relating to expense reimbursements for
supplier payments and business expenses was $61,831 (2015: $14,220).
Conditional Subscription Agreement
On 25 February 2016, the Company and Chapmans Opportunities Limited (COL), of which Mr Anthony Dunlop is a director, entered into a
subscription agreement that, subject to certain conditions, would have resulted in the issue of 16,000,000 ordinary shares and 5,000,000
options over the same number of ordinary shares in the Company to COL (COL Transaction). Details of the agreement are disclosed in the
Company’s interim financial statements for the half-year ended 31 December 2015.
On 10 May 2016, the Company’s shareholders approved the COL Transaction at a general meeting of shareholders.
On 15 July 2016, the Company announced that the remaining conditions precedent had not been fulfilled and that the COL Transaction had
been terminated.
The terms and conditions of the transactions with these entities were no more favourable than those available, or which might reasonably
be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.
(e) Receivable transactions with directors and key management personnel
At 30 June 2016 the receivables balance outstanding with directors and key management personnel was $9,507 (2015: $8,150) relating to
employee debit and credit card advances utilised for the sole purpose of supplier payments and business expenses.
25. Parent entity information
Set out below is information about the legal parent entity, Skyfii Limited (previously known as RKS Consolidated Limited).
Statement of comprehensive income
Loss after tax
Total comprehensive income
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Contributed equity
Reserves
Accumulated losses
Total equity
Parent
2016
$
2015
$
(2,876,784)
(2,876,784)
(577,545)
(577,545)
10,363,934
10,363,934
176,041
176,041
10,187,893
47,773,689
294,492
(37,880,288)
10,187,894
6,171,271
6,171,271
63,026
63,026
6,108,245
40,877,749
234,000
(35,003,504)
6,108,245
Contingent liabilities
Other than the contingent earn-out obligation, as discussed in Note 21, the parent entity had no contingent liabilities at 30 June 2016 and
30 June 2015.
Capital commitments – plant and equipment
The parent entity had no capital commitments for plant and equipment as at 30 June 2016 and 30 June 2015.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 3.
42
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
26. Business combinations
In the prior financial year, on 20 November 2014, the Company (formerly RKS Consolidated Limited and referred to in this note as RKS)
acquired 100% of the issued capital of Skyfii Group Pty Ltd (SGPL), a retail focussed technology company that captures and utilises big data
to drive customer loyalty and sales for retailers. The acquisition was seen as an opportunity to use the existing listed company structure
of the Company and provide existing shareholders of RKS the opportunity to participate in the significant future opportunities of SGPL.
Details of the acquisition are disclosed in the 2015 Annual Report.
The acquisition resulted in goodwill of $2,092,841 which was written off in the year ended 30 June 2015. Goodwill represented the value to
SGPL of having an immediate ASX listed company status with all of the capital raising avenues available to this type of company. Acquisition
costs of $443,931 were expensed in the year ended 30 June 2015.
27. Interests in controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in Note 3:
Parent entity
Skyfii Limited
Subsidiaries:
Skyfii Group Pty Ltd
Skyfii International Pty Ltd
(incorporated 3 November 2014)
Skyfii Brasil Inteligência, Mídia e Tecnologia Mobile Ltda.
(incorporated 24 February 2015)
Skyfii South Africa (Pty) Ltd (incorporated 29 July 2015)
Skyfii UK Operations Limited (incorporated 19 April 2016)
Skyfii US Operations, LLC. (incorporated 28 April 2016)
28. Events occurring after the reporting date
Country of incorporation
Australia
Ownership interest
2015
2016
Australia
Australia
Brazil
Republic of South Africa
United Kingdom
United States of America
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
On 15 July 2016, the Company announced that certain conditions precedent to the share subscription agreement with Chapmans
Opportunities Limited had not been fulfilled and the COL Transaction had been terminated. Refer to Note 24(d) for further details on the
terms of the COL Transaction.
Other than the above matters there are no other matters or circumstances that have arisen since 30 June 2016 that have significantly
affected, or may significantly affect:
•
•
•
the consolidated entity’s operations in the future financial years, or
the results of those operations in future financial years, or
the consolidated entity’s state of affairs in the future financial affairs.
43
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only
29. Reconciliation of loss after tax to net cash from operating activities
NOTES TO THE FINANCIAL STATEMENTS
Loss for the year
Investment cash flows included in comprehensive loss:
Payments for acquisition costs
Non-cash items in operating loss:
Depreciation and amortisation
Issue of Earn Out Shares
Impairment of goodwill and domain names
Acquisition costs paid by RKS Consolidated Limited prior to acquisition
R&D tax incentive receivable
Share based payments
Changes in operating assets and liabilities:
Decrease / (increase) in trade and other receivables
Decrease / (increase) in inventories
Decrease / (increase) in prepayments
Decrease / (increase) in other assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in provisions and employee benefits
Increase / (decrease) in deferred revenue
Net cash used in operating activities
Non-cash financing activities
2015
$
(5,415,324)
2014
$
(4,789,482)
-
443,931
461,091
3,013,535
-
-
(851,219)
80,492
297,891
33,056
16,970
3,366
246,276
69,376
78,155
(1,966,335)
10,903
-
2,157,841
344,881
(791,729)
235,000
517,958
(43,500)
(94,153)
(2,000)
(58,871)
(11,812)
88,770
(1,992,262)
During the year ended 30 June 2016, 22,342,028 shares were issued pursuant to a number of Earn Out Variation Deeds for no
consideration. A fair value of $3,013,535 was applied to these shares.
30. Earnings per share (EPS)
(a) Basic earnings per share
Basic EPS attributable to ordinary equity holders of the Company
(b) Diluted earnings per share
Diluted EPS attributable to ordinary equity holders of the Company
(c) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used in calculating basic EPS
Weighted average number of ordinary shares used in calculating diluted EPS
2016
Cents per share
2015
Cents per share
(3.8)
(3.8)
(7.1)
(7.1)
Number
141,357,785
141,357,785
Number
67,579,606
67,579,606
(d) Reconciliation of earnings used in calculating earnings per share
Loss attributable to the ordinary equity holders of the Company used in calculating basic EPS
$
(5,415,324)
$
(4,789,482)
44
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only Directors’ Declaration
In the Directors’ opinion:
•
•
•
•
the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in Note 2 to the financial statements;
the attached financial statements and notes thereto give a true and fair view of the consolidated entity’s financial position as at 30
June 2016 and of its performance for the year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by section 259A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the Directors
James Scott
Chairman
31 August 2016
45
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Independent Auditor’s Report
SKYFII LIMITED
ACN 009 264 699
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SKYFII LIMITED AND CONTROLLED ENTITIES
Report on the Financial Report
We have audited the accompanying financial report of Skyfii Limited, which comprises the consolidated
statement of financial position as at 30 June 2016, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information and the directors’ declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility 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 is free from material misstatement, whether due to fraud or error. In Note 2(a), the directors
also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements that
the financial statements comply with International Financial Reporting Standards (IFRS).
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial report in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
46
www.skyfii.com | /skyfii | /company/skyfiiFor personal use only Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s Opinion
In our opinion:
(a)
the financial report of Skyfii Limited is in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2(a).
Emphasis of Matter
Without modifying our opinion, we draw attention to Note 2(e) in the financial report which indicates
that the Group has incurred a net loss after tax of $5,415,324 and net cash outflows from operating
activities of $1,966,335. These conditions, along with other matters as set forth in Note 2(e) indicate
the existence of a material uncertainty that may cast significant doubt about the Company’s ability
to continue as a going concern and therefore, the Company may be unable to realise its assets and
discharge its liabilities in the normal course of business and at the amounts stated in the financial
report.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 17 of the Directors’ Report for
the year ended 30 June 2016. The Directors of the Company are responsible for the preparation
and presentation of the Remuneration Report in accordance with s 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.
Auditor’s Opinion
In our opinion the Remuneration Report of Skyfii Limited for the year ended 30 June 2016 complies
with s 300A of the Corporations Act 2001.
HALL CHADWICK
Level 40, 2 Park Street
SYDNEY NSW 2000
GRAHAM WEBB
Partner
Dated: 31 August 2016
47
SKYFII LIMITED 2016 ANNUAL REPORTFor personal use only Additional ASX Information
Use of cash and cash equivalents
In accordance with ASX Listing Rule 4.10.19, the Board has determined that the Company has used the cash and equivalents that it had
at the time of its re-admission to the ASX in a way consistent with its business objectives during the financial year ended 30 June 2016.
Shareholder information
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report.
This additional information was applicable as at 26 August 2016.
Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act are:
Substantial shareholder
Birketu Pty Ltd
Jagafii Pty Ltd
Avenue C Pty Ltd
Karibu Pty Ltd
Bonduffmex Pty Ltd
Top 20 shareholders as at 26 August 2016
#
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
Jagafii Pty Ltd
Continue reading text version or see original annual report in PDF format above