annual report
2017
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For personal use only Skyfii Limited
aBn 20 009 264 699
Financial report for the year ended 30 June 2017
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For personal use only Table of Contents
Chairman’s letter
Ceo’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
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Skyfii Limited annuaL report 2017For personal use only Chairmans Letter
dear Shareholders,
On behalf of the Board of Skyfii Limited (ASX: SKF), I am pleased to open our Annual Report for the year ended 30 June 2017 (FY17).
A range of activities undertaken by your Board and management over the last 12 months has ensured Skyfii is well positioned to prosper
as a global provider of data analytics and marketing services.
Key achievements
• Substantial recurring revenue growth from IO platform subscription services up 82%
• Growth of international footprint and into new verticals
• Advanced stage future revenue pipeline grew to $91 million
• Important relationships solidified and formed with ecosystem partners
• Generation of rich consumer insights as result of the 840 million visitor journeys analysed across our global footprint of venues
since inception
We grew overall revenue substantially, up 32% to $3.2 million of which recurring revenues grew by 82%, and are now recognised across a
growing number of industry verticals for our capacity to use data to provide insights and drive specific business outcomes for our clients.
We successfully grew our international footprint, executing agreements with notable global brands, such as Woolworths of South Africa,
Wellington International Airport in New Zealand and a premier global food chain in the UK amongst others, in line with our stated
FY17 objectives.
Alongside our clients sit a growing number of important relationships within the industry ecosystem which support our business model.
We continued to grow and align ourselves with quality partners who are firmly engaged and are pivotal to our continued growth.
Two examples of core partner relationships which were either solidified or formed through the year were with Aruba Networks,
a Hewlett Packard Enterprise company, and key enabler of location-based services and with Cincinnati Bell, a US provider of integrated
communications solutions.
In addition to our partnerships, we further grew channel partner relationships in key geographies during the period who will play an
important role in growing the business.
Our capability to add value to our clients continues to grow exponentially. Tangible and quantifiable client use cases now span an increasing
number of verticals, for example the addition of education and culture centres, though we maintain a strong anchor in the retail sector with
the likes of our tier one clients, Scentre Group, The GPT Group, and more recent wins, One Five One Property and Mirvac.
Further demonstrating Skyfii’s value proposition, conversations are now being had with a broader array of internal stakeholders within
enterprises, well beyond the traditional Chief Information Officer / Chief Technical Officer engagement route that now include the Chief
Marketing Officer and Chief Financial Officer. This expanded stakeholder group is a reflection of Skyfii’s ability to solve problems using
complex data sets across a range of use cases.
The Skyfii data analytics and marketing platform IO, is able to ingest multiple forms of data, integrating with existing enterprise systems.
Above all, the platform provides a dashboard into clients’ operations and is also adding value in its ability to make sense of clients’ existing
operating data. Recognising the importance of these datasets, Data Consulting Services (DCS), a small but growing newly formed division
now sits alongside our existing Software as a Service (SaaS) subscription based IO platform that has become synonymous with the
Skyfii name.
The value of enterprise data continues to evolve as does the data analytics industry itself. Skyfii’s value lies in its position to generate
specific datasets to solve for clients’ specific problems, using both anonymised and targeted data since inception. The data analytics and
marketing platform IO, deployed with our clients, has analysed 840 million visitor journeys and 10 million registered users. Our data is a real
insights capability.
Skyfii’s value proposition extends across greenfield and brownfield settings. Whether using aggregate data driven insights to redesign
entire commercial fit-outs, using heat maps and flow data or drive the design of greenfield footprints such as new lifts and escalators,
we now have countless examples of having worked with clients to optimise both asset use and capital allocation.
In marketing, our ability to also capture named users allows our clients to directly engage and market to their customers and prospective
customers, such as in retail, university or municipality settings.
FY17 has been a year of strong validation for our business and in further projecting our value potential. The opportunity before us
is to capture growing demand in the sector while at the same time increasing our “share of wallet” from existing customers.
Our advanced stage revenue pipeline has continued to grow and now sits at a record all time high of $91 million. The challenge in
the coming year will be to deploy our resources in the most efficient and effective manner while at the same time allowing us to lead
the industry.
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Chairmans Letter
We have a globally recognised platform, a strong management team and an engaged workforce and partner community which will help
us capture and deliver on the opportunities in the increasing markets we operate in.
My fellow Board Director, Andrew Johnson and I would like to thank key executives within the business for their outstanding contribution
during the year. CEO and Executive Director, Wayne Arthur who is now based overseas, has shown a relentless drive to grow Skyfii’s
business internationally, culminating in the recent acquisition of Wicoms and a number of high profile international client wins.
John Rankin, MD of ANZ and global COO, joined us in early FY17, quickly cemented leadership over our Australian operations and has
successfully driven the provision of our Data Consulting Services division. This move has brought us closer to our clients who increasingly
see us as real problem solvers, backed by real data.
I look forward to what is shaping up to be an incredibly exciting year for Skyfii and its stakeholders as we stretch ourselves to deliver
strong revenue growth, expand our footprint in the UK, build a meaningful position in the US, and extend our existing relationships in the
ANZ market.
I thank shareholders for their support throughout the year and look forward to keeping you apprised as we hit our FY18 milestones.
Yours faithfully,
James Scott
Chairman and Non-Executive Director
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Skyfii Limited annuaL report 2017For personal use only CEO’s letter
Fellow Skyfii Shareholders,
It is a pleasure to write to you, looking back upon what has been a period of considerable achievement within the Skyfii business
in FY17.
Highlights
• Recurring revenues up 82% to $2.0 million and overall revenue up 37% at $3.2 million
• Large enterprise contract wins; Woolworths of South Africa and Durham University
• Sales and marketing capability strengthened, and resellers engaged in UK and US markets
• Skyfii’s data insights capability increasingly recognised by clients
• Emergence of bespoke Data Consulting Services (DCS) and Marketing Services (MS) offering positioned to solve clients’ unique
challenges
Skyfii achieved significant growth this year, with recurring revenues up at $2.0 million, a 82% improvement on FY16. Overall revenue
reached $3.2 million, up 37%. Our recurring revenues are locked in across long term contracts, and provide an extremely robust
base from which to strive for further growth in FY18.
In line with our stated goal, we invested heavily in growing our sales and marketing capability during the year. This effort led
to unlocking growth and considerable new business wins to provide data analytics and marketing services to clients across key
geographies and verticals (municipalities, hospitality, transit, education and culture centres), alongside our carefully selected channel
partner network.
During the year we signed 10 resellers in the UK and US markets, adopting a less is more approach. Beachhead offices were opened
in Dallas in the US and in London in the UK from which we will grow the business regionally. We created strong brand image and
shop front for our data analytics and marketing services offering and also promoted the business through attendance at numerous
industry events, including presence at Aruba’s global events during the year.
These successfully executed initiatives combined with my recent deployment overseas to cover both the UK and US markets, position
the business ideally to accelerate revenue growth in FY18 in line with our stated objectives.
The sales pipeline has grown substantially during FY17, up to $91 million from $53 million in FY16 which now includes a growing
number of verticals. Pilots are underway to enter the casino, sporting venue and small format retail stores verticals. Importantly, we
improved our ability to move opportunities through the sales pipeline funnel, and this work has contributed to our improved FY17
revenue result.
Our growth potential has also been positively impacted by our ability to know where clients see need and where Skyfii could be a
good fit. Our proximity to clients is now much closer – both geographically and as a result of new consulting services which enable us
to become further embedded within the client teams with which we work. We have witnessed very strong retention in our pipeline
and are confident of maintaining our continued position as a leader in the sector.
In recent years Skyfii has established a position of expertise in data and analytics in the retail sector. This position is testimony
to our depth of contracts across the retail sector, predominantly in Australia, however this expertise is also starting to become
recognised across the UK and continental Europe. The recent acquisition (post period) of Wicoms Wireless Ltd, a provider of
guest wifi services and user analytics to the retail sector, has enabled Skyfii to establish a profitable European foothold. As part of
the Wicoms acquisition, Skyfii acquired the contracts for a portfolio of large-format designer outlet chain stores, operating across
9 countries in North America and Europe.
Reinforcing our ambitions to drive growth through geographic expansion, we had a number of big international wins during
the year. A standout was the multi-year agreement we announced in April with international retail giant, Woolworths of South Africa.
Under the agreement, Skyfii will roll out its Software as a Service (SaaS), IO platform offering to around 500 stores across an initial
three year period. Not only is the agreement with Woolworths impressive on its own, perhaps more gratifying is the fact that this tier
one client has referred new leads into our sales pipeline.
Reviewing international operations, the UK had a slow start to the year but ended with a number of major contract wins including
with Durham University and a leading UK food chain. The UK now stands as our fastest growing revenue market heading into FY18.
The US market has been slower to grow and Skyfii is focused on reshaping the resource plan and building the right team to deliver
growth in this market. A number of live tier one pilots sit in our revenue pipeline that have the potential to significantly grow the
business. Brazil continues to grow its revenues and build its pipeline.
Assuming responsibility as MD for the ANZ market as well as global COO, John Rankin oversaw further growth during the year
culminating in a number of contract wins including Wellington International Airport and National Museum of Australia. John also led
domestic growth of the revenue pipeline together with Ian Robinson, Sales Director, ANZ. John’s successful appointment has allowed
me to relocate overseas and focus on driving international growth in the UK and US markets.
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Product innovation continues to be the leading edge of our business. We are focused on ensuring the IO platform remains competitive
and able to integrate and ingest data from other platforms and data sources. We can integrate with a broad range of data sources -
Google analytics, weather feeds, CCTV, Point of Sale data, Salesforce and MailChimp are but a few. Our long standing Chief Product
Officer, Jason Martin, has applied his critical foresight necessary to keep evolving the technology which underlies the IO platforms’
data analytics and marketing tools, thereby helping ensure we remain the partner of choice for existing and prospective clients.
Our IO platform is now well known across the market and during the year, we identified the strong need from clients for us to work
with them in a more bespoke manner giving rise to consulting services.
The emergence of bespoke data services consulting led to the creation of two new revenue areas within the business, Data Consulting
Services (DCS) and Marketing Services (MS).
These services position Skyfii to solve our clients’ unique challenges. The IO platform in this setting has demonstrated its ability to
serve as a dashboard into clients’ operations, including leveraging and making sense of existing often underutilised enterprise data
sitting within an organisation.
DCS involves direct client problem solving through the use of data science. MS remains in its infancy and offers huge upside potential,
involving assisting clients in running large marketing campaigns. These developments firmly position Skyfii as a data company,
correcting the misconception that we are a Wi-Fi provider and further cementing our business model.
I would like to thank our nimble yet fit-for-purpose Board consisting of Chairman, James Scott and Andrew Johnson who I sit
alongside. James has been instrumental in facilitating key deal flow discussions. He also provides a tremendous wealth of experience
to the organisation in enterprise sales and knowledge around the application and deployment of data backed technology solutions
to companies through his senior executive roles. Andrew has delivered wise counsel and governance, while also opening up his
network to support Skyfii’s growth.
Leading into FY18, the small but focused Skyfii team will further capitalise upon the differentiated positioning we have built in the
market as retail experts, while continuing to push for growth in new verticals. We are already seeing strong signs of pipeline activity
which position us well to accelerate growth in key geographies in the year ahead, particularly in the UK and the US.
I am excited by what I can see ahead for FY18 and look forward to reporting on our progress along the way.
Sincerely,
Wayne Arthur
CEO and Executive Director
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Skyfii Limited annuaL report 2017For personal use only Data Consulting Services (DCS)
The company has continued to build its data science capabilities,
now defining this revenue generating service as Data Consulting
services (DCS). The DCS service is a key differentiator for the
company and supports the sell-through of subscriptions to the IO
platform (Connect, Insight and Engage) software as a service. DCS
fees are charged on a per project basis or can be charged on a
subscription basis typically between 6-36 month periods. .
This business unit solves real business problems for customers
including:
1. Shopper research - consumer segmentation, venue
performance and shopper sentiment
2. Automation and enrichment - bespoke reporting , data
consolidation and CRM enrichment
3. Marketing spend optimisation - audience building, attribution
and measurement, testing and experimentation
4. Trade area analysis - real time measurement of venue visitation,
conversion and loyalty
The company’s data science capability provides a clear differentiator
from its competitors, supporting the sell-through of the company’s
core subscription products and services.
Transactions
In FY17, Skyfii invested in the research and development of data
sharing capabilities to integrate customer data with third party
platforms. Encrypted customer data can be shared with other third
party data platforms, used as an enrichment tool for data driven
marketing campaigns. The location based data can also be used to
deliver contextualised marketing to a consumer within a physical
venue. The application of this data benefits a multitude of data
platforms including loyalty and rewards applications, digital Out-of-
Home, media and programmatic platforms. In this exchange, Skyfii
has the potential to generate revenues from the transaction or
revenues generated from advertising revenues.
Several performance based revenue models remain in pilot with
existing customers and partners, and represents a significant
revenue opportunity in the future for Skyfii.
Review of Operations
Skyfii’s Business Model
During FY17, the company maintained its categorisation of revenue
channels defined as subscriptions; services and transactions.
Subscriptions
The company’s core recurring revenue base is derived from
subscriptions to its Software as a Service (SaaS) IO platform
including IO Connect (a data portal where data is collected
and unified - data in) , IO Insight (venue performance, customer
behaviour and, loyalty & engagement - insights out) and IO Engage
(targeted content delivery, automated marketing and monetization)
modules. Modules can be purchased packaged, combination or in
isolation, and are typically contracted on 1,3 or 5 year terms.
The company continued to expand in its initial core target vertical
within the retail sector (a mix of retailers, including department
stores and quick service food retail, and shopping centres). FY17
saw the company grow the business into a number of new key
verticals discussed later in this section.
During FY17, the company generated revenues from a new
marketing and content delivery product (IO Engage). The marketing
tools are sold as a subscription on a per account basis, ranging
from $500 - $5,000 per month, per account and typically on 12
month terms.
Social Dashboard
In 2H FY17, the company launched a new platform feature, the
Social Dashboard. The Social Dashboard is an extension of the
analytics tool (IO Insights), ingesting key data from Facebook. This
toolset enables venues to see a direct correlation between social
media engagement and its effect on venue footfall. For any retailer,
airport, stadium, municipality or smart city with an active digital
marketing strategy, the Social Dashboard provides a platform to
measure ongoing social engagement campaigns.
Services
The company’s services capabilities include network design, project
management, data consulting services (DCS) and marketing services
(MS), which is in its infancy, all of which support and underpin
revenue generation from the company’s IO platform subscription
modules (Connect, Insight and Engage).
Network Design & Project Management
The company provides network design and project management
services, supporting the deployment of wireless, 3D camera, people
counting technology on behalf of its customers. Both services
provide customers with access to industry best practice, to guide
investment decisions whilst also ensuring an optimal level of
accurate and insightful data collection for Skyfii’s core data analytics
and content delivery services. Fees generated from these services
are typically a once-off fee for service, on a per venue basis, and
form the base for the company’s implementation revenues.
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For personal use only Skyfii target verticals
The Company continued to pursue opportunities within the
retail vertical both locally and abroad, successfully delivering new
contracts within this key vertical during the financial year. Consistent
with the company’s stated strategy, Skyfii successfully entered
a number of new verticals during the FY17 year. Including the
successful deployment of our subscription platform services into
five new and highly lucrative verticals, namely: Transit, Education,
Municipalities, Quick Service Retail and Cultural Centres.
Retail
In FY17, the company announced wins within its core vertical of
retail, with the completion of a number of key contracts in Australia,
South Africa and Brazil. In January 2017, in Brazil, the company
completed a multi-year contract with Aliansce Shopping Centre
Group which will see the company’s subscription platform services
deployed to over 30 shopping centres, bringing the total number
of shopping malls under contract in the region to over 50+. The
Aliansce contract includes the agreement of network commercial
rights to Skyfii, allowing for further monetisation of the contract
through targeted advertising sponsorship campaigns
The Australian market successfully extended its contract with
Mirvac property group in December 2016, in addition to signing
new contracts with shopping centre management group One Five
One Property in April 2017. Also during April, 2017, Skyfii signed
a multi year agreement with Woolworths Group (South Africa),
deploying subscription platform services across their +500 medium
sized department stores located throughout Africa.
New verticals
In January 2017, the company successfully entered the education
vertical, announcing the completion of a multi-year deal with
Durham University in the United Kingdom. In April 2017, the
company also announced the completion of a contract with a
premium UK food chain (QSR) to roll out its subscription platform
services to +300 stores. The following month in May 2017, the
company announced its first contract in the transit vertical with a
12 month initial agreement signed with Wellington airport in New
Zealand, a contract which includes both subscription platform
services and Data consulting services (DCS). In June of 2017, the
company announced its first contract within the Cultural centres
vertical, signing a contract with the National Museum of Australia.
In 1H FY17, the company made two announcements within the
‘smart city’ or municipality vertical, completing agreements with
Waverley Council to deploy subscription platform services across
Bondi Beach, surrounding beaches and public spaces. The second
announcement made in the smart city vertical was the successful
completion of a multi-year agreement in the United States, with
integrated communications company Cincinnati Bell Inc. (NYSE:
CBB). The company’s subscription services will support Cincinnati
Bell’s ongoing campaign to “Light up the city of Cincinnati”
connecting residents, visitors and businesses through the use of
technology.
These contract wins demonstrate the versatility of the
IO
platform and the company’s ability to unlock significant value
in key geographies, importantly within new verticals locally and
internationally.
The company is currently engaged in a number of live pilots across
additional verticals including, casinos, sporting venues and small
format retail stores, and looks forward to updating the market on
new contract wins early in FY18.
Domestic and international sales strategy
As stated in the FY17 strategy, the company continued to expand
its operations in key growth markets of North America, United
Kingdom and Europe. The first year of operations in these strategic
markets, resulted in significant growth within the company’s sales
pipeline, showing strong demand for the IO platform’s subscription
service.
The sales strategy underpinning Skyfii’s international expansion
is to sell IO platform, data analytics and marketing services via
carefully selected channel partners. This strategy provides access
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Skyfii Limited annuaL report 2017For personal use only Review of Operations continued
to a large network of existing customers and qualified prospects,
whilst reducing the requirement to establish a large dedicated sales
team.
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•
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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 with a managed WiFi
solution (using a third party WiFi provider). MSPs can provide
critical go-to-market capabilities such as technical assistance
centre (TAC) support, managed network operations centres
(NOC), proof of concept support and enterprise customer
deployment capabilities.
Value added resellers (VARs): VARs provide a route to
market for 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.
The channel partner strategy has proven to be successful for all
markets with a particular emphasis on deals announced in 2H FY17
coming via channel partners in North America United Kingdom and
Europe markets.
In FY16, the company announced the appointment of John Rankin,
Chief Operating Officer (COO) for global operations and Managing
Director for the ANZ geography. The appoint of an inaugural COO
has allowed the company to refocus Wayne Arthur, Chief Executive
Officer (CEO), to lead the international expansion in North America,
United Kingdom and Europe. In 2H FY17 Wayne Arthur relocated
overseas, allocating his time across sales efforts in North America,
United Kingdom and Europe.
Headquartered in Sydney, the company’s Australian operations
delivered strong revenue performance in the FY17. This was due
to a noticeable increase in subscriptions for the IO platform and
service fees generated from existing customers, in addition to a
steady undercurrent of smaller but profitable contract wins. Service
fees generated from Data Consulting Services (DCS) materialised
in 2H FY17, with strong adoption in the retail vertical, specifically
shopping centres. The company has built a strong reputation as the
data analytics and marketing services provider of choice in Australia
across the retail, transit, education and municipality verticals.
Key performance highlights
The company commenced FY17 with several strategic objectives
including continued expansion within its core retail vertical,
penetration into new, lucrative verticals, expansion into new key
geographies, accelerate revenue growth and develop new product
and service offerings to grow existing customer revenues.
At year end the company delivered the following key highlights:
•
Signed 3 new retail contracts totalling 539 new retail venues
under contract (Woolworths of South Africa, One Five One
Property, Aliansce Malls)
• New contracts signed within 5 new verticals
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•
•
•
New contracts and significant pipeline growth within new
geographies of USA, UK and Europe
Accelerated revenue growth - 37% YOY growth in topline
revenues, recurring revenue growth of 87% YOY
Launch of Data Consulting Services business unit and first
revenue contracts secured
Significant growth in key operating metrics in FY17
line with the Company’s continued growth
in contract
In
deployments, all key operating metrics continue to experience
significant growth, lending strong user validation of Skyfii’s services:
•
Total User Registrations (Millions)
Significant growth in total registered user base of +151%
year on year from 3.9 million to 9.9 million unique users
(as of 30th June)
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• Significant growth in customer venue visits of +96% year on year
Total User Registrations (Millions)
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Quarterly Customer Visits (Millions)
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Quarterly Customer Visits (Millions)
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Operating metric definitions
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total user registrations: The total number of people who have
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registered to use guest WiFi in venues where Skyfii is deployed.
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Quarterly Customer Visits: The total number of physical people
visits to venues where Skyfii is deployed.
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Key operating highlights
New contract wins in FY17:
McGavren Guild Malls
McGarven Guild Malls are the first major commercial agreement
in the North American market, providing the company with
direct, large-scale exposure to the North American retail mall
sector. Headquartered in New York, McGarven Malls are a media
representation company focused on providing a wide range of
media to 3,000 shopping malls throughout North America.
Waverley Council
Following a successful trial and tender, Skyfii secured a contract
with Waverley Council, highlighting the adaptability of Skyfii’s IO
platform across multiple industries and applications. Drawing 2.2
million annual visitors, this deployment provides Waverley Council
visitors and residents with Guest WiFi, whilst offering a critical data
analytics reporting tool for the council, supporting their ‘Smart
Cities’ initiative
Cincinnati Bell Inc.
Supporting Cincinnati Bell’s ‘Light Up Cincinnati’ campaign, Skyfii’s IO
platform was deployed across the Cincinnati metro area. Integrating
with Cincinnati Bell’s Fioptics WiFi services, the IO platform will
provide a reliable data analytics, marketing and communication
tool for local events and businesses to promote and advertise their
goods and services.
Durham University
Representing Skyfii’s first education client, Durham University
(United Kingdom) was another successful execution of Skyfii’s
strategy to expand within existing and new verticals. With
approximately 2,800 Access Points across 235 buildings, leveraging
Aruba’s Analytics and Location Engine (ALE), Durham University is
one the largest single deployments for Aruba’s ALE infrastructure,
with Skyfii recording an average of 350,000 visits per week.
Aliansce Malls
Managing the second largest portfolio of shopping centres in
Brazil, Aliansce Malls are a market leader in Retail Property. The
deployment of Skyfii’s services across Aliansce’s 33 Shopping
Centres, results in a total deployment of 50 shopping centres in the
Brazilian market. Representing Skyfii’s core vertical, deployments
within Retail Property are expected to continue as the company
expands internationally.
Premium UK Food Chain
Deploying across 320 stores within the United Kingdom, Skyfii will
be rolling out its services to a premium UK Food Chain. The fast-food
chain is a leading retail food group, with 390 stores in 6 countries
including North America. This partnership is in conjunction with
channel partner Jade Solutions, whose experience in the retail
sector is proving a successful match for Skyfii.
Woolworths Group
A leading international retail group, a Master Services Agreement
(MSA) was signed with Woolworths Group (South Africa). The
deployment/across 500 stores, evidence of another retail group’s
adoption of the IO platform. Operating in 14 countries with a
total of 1,300 large format stores, the current deployment has an
opportunity to be expanded significantly.
Wellington Airport
Demonstrating Skyfii’s continued
international and vertical
expansion, Wellington International Airport in New Zealand is
Skyfii’s first contract in the airport vertical. In addition, to deploying
the IO platform, Wellington Airport engaged Skyfii’s Data Consulting
Services (DCS) for the paid provision of services. With over 5.2
million passengers each year, the IO platform will be a critical tool,
reporting on the performance of the venue and the behaviour of
its passengers.
National Museum of Australia
A prominent Australian cultural centre, the National Museum of
Australia (NMA) is housed on 6,600 square meters of exhibition
space. With more than 1.2 million visitors between the 2015/2016
financial year, the IO platform will provide insights to support NMA
in planning its exhibits to suit the preference of visitors. As a new
contract in the culture centre vertical, the NMA is a proving point
for the platform’s suitability in an industry of more than 2,000
museums and galleries Australia wide.
Existing customer growth
Mirvac Shopping Centres
In partnership with Optus Business, Skyfii expanded its IO platform
subscription across Mirvac Shopping Centres. With an initial
deployment in two of Mirvac’s retail assets, the partnership with
Optus Business will see Skyfii provide a further five Mirvac sites with
matching services, resulting in a total of seven deployments across
Mirvac’s retail property assets.
One Five One Property
Following an earlier agreement for the provision of the IO Platform
across One Five One Property’s managed retail centres, Skyfii
secured a further nine shopping centres across New South Wales,
Victoria, Queensland and South Australia.
Scentre Group (contract delivered through Optus Business)
Skyfii’s services were deployed to an additional 6 shopping centres
bringing the total number of live shopping centres to 35. This
concludes the deployment phase of Skyfi’s platform services across
Scentre’s Australian portfolio of shopping centres.
The GPT Group
Contracting with Skyfii for the delivery of platform subscriptions
services in June 2015, the GPT Group have continued to leverage
Skyfii’s expertise and services, undertaking the paid provision of
Data Consultancy Services. The DCS team, who are working closely
with GPT along their retail portfolio, have been critical in delivering
addressable research outcomes to support operations through to
marketing teams..
11
Skyfii Limited annuaL report 2017For personal use only Review of Operations continued
Continued pipeline growth
The company’s advanced stage pipeline continued to grow
significantly year on year up 42% YOY to $91m globally. Key drivers
of this growth were the expansion into the US and UK/EMEA
markets where we are seeing significant demand across our suite
of services. Particular focus on our channel partner selection has
also assisted this growth in the advanced stage pipeline, through a
more refined focus on existing Wifi deployments which has reduced
the sale cycle significantly.
The company has also successfully broadened its target vertical
focus and entered new verticals such as municipalities, quick service
restaurants, transit, education and lifestyle centre all of which are
contributing to an acceleration in advanced pipeline opportunities.
Finally, the successful launch of the company’s Data consulting
services has seen strong support from the market and is also
beginning to contribute strongly to the pipeline, particularly in the
retail vertical.
Qualified sales pipeline snapshot
5 year qualified advanced
stage pipleine of $91m1
• Equivalent to $18m in
annual revenues
• Existing and new verticals
• Qualified prospects
Presentation &
Demonstration
Pilot Phase
(8 weeks +)
Contract
Negotiation
Roll out
Subscription revenues -
SaaS platform
• IO Connect (guest wifi)
• IO Insight (analytics)
• IO Engage (marketing)
3-5 year contracts
1 assuming full roll out 3 to 5 year contract terms excluding additional revenues from advertising and data services, defined as proposals
presented, pilots underway and submissions rendered.
12
For personal use only Expansion of products/services offering
The company successfully launched its Data Consulting Services
(DCS) offering during the fourth quarter of FY17, following a string
of successful pilot projects delivered during the third quarter.
DCS works with retailers to inform decisions and solve complex
problems through the analysis of data. Analysing over 530m visitor
experiences for FY17 for some of the world’s leading retail brands,
the team are experts in visitor behaviour and retail analytics,
delivering a wealth of unique IP and expertise to every project.
International highlights
The company successfully launched its product and services offering
into the UK and US markets early in the FY17 financial year and
has reported a full year of operation within both of these markets.
In addition to an accelerated sales effort within the US and UK
markets, the company continued to focus efforts within its existing
international markets of South Africa, Brazil and New Zealand with
new contracts being converted in all markets during the period.
In addition to the new contract wins which are noted in the key
operating highlights section of this report, here are some additional
notable highlights delivered internationally during the period:
•
•
•
•
5 new channel partnerships initiated within the US market,
including with Cincinnati Bell Telecom
New partnerships initiated within the UK and Italy with Jade
Solutions and Telcomms Multimedia Solutions respectively
New partnerships within the South African and Brazilian markets
Skyfii CEO relocation overseas to drive new partnerships across
the US and UK specifically
• Significant revenue growth within South Africa and the UK
•
•
Significant advanced stage pipeline growth within the US market
with several large contracts at final stages
Successful penetration into new verticals opening up further
growth opportunity globally
13
• IO Connect (guest wifi)
• IO Insight (analytics)
• IO Engage (marketing)
3-5 year contracts
Skyfii Limited annuaL report 2017For personal use only Review of Operations continued
New case studies
14
Wi-Fi & Digital Signage CampaignShopper Sentiment ResearchResults●Completion rate 2.5 times higher than surveys sent via bulk eDM●Survey now rolled out group wide across 9 assetsChallengeA Shopping Centre client wanted to accelerate their tactical research initiatives and leverage technology to improve the way they survey visitors and capture shopper sentiment data:●Contact qualified customers with recent shopping experiences●Improve the quality of research data●Minimise the impact to shoppers. Solution ●Creation of exit survey delivered to customers 60 min after their visit●Correlate research data with behavioural data for improved insights and audience selection.Wi-Fi & Digital Signage CampaignCreating Smart Campuses with SkyfiiBackgroundA leading UK university sought to provision a software platform capable of leveraging the campuses new wireless network, as a critical reporting tool for student behaviour and campus performance. SolutionSeamlessly integrating with Aruba’s Wireless Infrastructure, Skyfii’s data analytics and marketing platform was chosen to incorporate with the networks 2,800 access points, including ALE (Aruba Location Engine). ResultsThe platform provided the university with a critical reporting tool for student behaviour and campus performance, helping support a number of key challenges:Timetable Optimisation – Observing course attendance rates to map and optimise lecture hall timetables.Event Planning - Understanding student traffic flow and behaviour to optimise for future planning.Facilities Utilisation - Visualisation of cross-campus traffic and congestion levels in facilities, informing on-going changes to amenities.For personal use only 3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
-
0.5
-
0.0
0.0
Successful capital raisings in FY17
On the 15th December 2016, the Company announced a successful
capital raise of $4.1m raised to fund accelerated growth into the
UK and US markets particularly and continue the strong recurring
revenue momentum of the business.
The capital raise consisted of:
An unconditional placement of 40.8 million ordinary, fully paid
shares issued at 0.063c to raise approximately $2.6million before
costs and a conditional placement of $1.5million issued at the same
price which received shareholder approval.
The successful capital raise was over subscribed and strongly
supported by existing shareholders including Jan Cameron and The
White Family and in addition brought new, sophisticated investors
onto the register including former Seven Group CEO, Peter Gammell
and former Foxtel CEO, Richard Freudenstein.
On the 14th February 2017, the Company raised a further $0.5
million through the subscription of 7.8 million ordinary paid shares
(SPP Shares).
Combining the oversubscribed capital raise in December 2016 with
the SPP Shares raise in February 2017, the total capital raised in
FY17 was $4.7 million.
Outlook for FY18 and beyond
Skyfii continues to see strong interest in data analytics and marketing
services across the verticals in which it operates, particularly large
enterprise clients. The company will remain focused on delivering
revenue growth in its key geographical markets, particularly in the
US, UK and mainland Europe where several large deals are well
progressed.
The advanced stage pipeline continues to build in the US, UK,
mainland Europe, Brazil, South Africa and Asia Pacific region, with
a large component of this pipeline sourced through key channel
partners. We will remain particularly focussed on continuing to
build our strong retail footprint throughout shopping centres,
major retail chains and quick service retail and will also continue to
build momentum into our newly penetrated verticals of education,
transit, museums and municipalities.
Revenues attributed from new sources including Data Consulting
Services (DCS) built strong momentum in the final quarter of
FY2017, and we expect these revenues to drive further growth in
FY2018.
Overview of financial performance
The Company achieved operating revenues of $3.2 million in FY17,
representing 37% growth on the previous corresponding period
(FY16: $2.3 million).
Underlying the growth in operating revenues in FY17 was an
increase in recurring revenues of 82% to $2.0 million. As at Q4
FY17, the Company’s annualised recurring revenue run rate
was $2.5 million, up 79% on the previous corresponding period
(Q4 FY16: $1.4 million)
Consistent growth in recurring revenues
Total Operating Revenues ($m)
Total Operating Revenues ($m)
FY14
FY14
FY15
FY15
Recurring
Recurring
FY17
FY17
FY16
FY16
Non-recurring
Non-recurring
Annualised Recurring Revenues ($m)
Annualised Recurring Revenues ($m)
Q 3 FY15
Q 3 FY15
Q 4 FY15
Q 4 FY15
Q 1 FY16
Q 1 FY16
Q 2 FY16
Q 2 FY16
Q 3 FY16
Q 3 FY16
Q 4 FY16
Q 4 FY16
Q 1 FY17
Q 1 FY17
Q 2 FY17
Q 2 FY17
Q 3 FY17
Q 3 FY17
Q 4 FY17
Q 4 FY17
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 $4.894 million
(FY16: $5.407 million loss) and operating loss before interest, tax,
depreciation and amortisation of $4.912 million (FY16 Operating
EBITDA: $5.415 million loss).
Net operating cash outflows of $2.3 million in FY17 remained in
line with the previous financial year (FY16: $2.0 million outflow),
including the receipt of an R&D tax incentive rebate of $0.82 million
(FY16: $0.80m).
During the year, the Company also spent and capitalised $1.6 million
on software development activities relating to its SaaS platform
(FY16: $1.8 million), with the reduction reflecting an increased focus
and expenditure on sales and marketing activities internationally.
As at 30 June 2017, the Company held cash and equivalents of
$2.28 million. In addition, the Company expects to receive an R&D
tax incentive rebate of $0.82 million in FY18 relating to research
and development expenditures undertaken in FY17.
15
Skyfii Limited annuaL report 2017For personal use only Directors’ Report
Your Directors submit the financial report of Skyfii Limited (Skyfii or the Company) for the year ended 30 June 2017. 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
Experience, interests in shares,
special responsibilities and other directorships
James Scott
Independent Non-Executive
Chairman from 21 April 2016.
Independent Non-Executive
Director until 20 April 2016
(appointed 20 November
2014)
• Mr Scott has 21 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
BEng. (Hons)
FIEAust.
CPEng.
Andrew Johnson
Independent Non-Executive
Director (appointed 27
November 2014)
BComm., M Sc.
Remuneration Committee.
• Holds a relevant interest in 2,020,879 shares and 3,250,000 options over an equivalent number of
unissued 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 2,274,157 shares and 1,750,000 options over an equivalent number of
unissued shares.
• No other listed company directorships.
Wayne Arthur
• Mr Arthur, a co-founder of Skyfii, built a long standing career in the outdoor media sector in senior
Chief Executive Officer/
Executive Director (appointed
20 November 2014)
BComm.
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 and 1,775,000 ESP shares.
• No other listed company directorships.
16
For personal use only
Company Secretary
Mr Heath Roberts held the position of Company Secretary during and at the end of the financial year (resigned on the 4th August 2017).
Ms Koreen White was appointed to the position of Company Secretary after the end of financial year (appointed on 4th August 2017).
Name, independence
status and qualifications
Experience, interests in shares,
special responsibilities and other directorships
Heath Roberts
• Mr Roberts is a commercial solicitor with 19 years’ ASX listed company experience. He has particular
Company Secretary until 4th
August 2017 (appointed 20
November 2014)
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.
Dip Law (SAB),
Grad. Dip. Legal Practice
• Holds a relevant interest in nil shares.
• No other listed company directorships.
Koreen White
• Ms White has 20 years’ experience in listed and unlisted, Australian and US-based corporate entities
having worked across the technology, media and telecommunications (TMT) sector.
• Holds a relevant interest in nil shares.
• No other listed company directorships.
Company Secretary
(appointed 4 August 2017)
CPA Australia
BBus(Acc)
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’
Meetings
Audit and Risk
Committee Meetings
Nomination and Remuneration
Committee Meetings
Eligible to attend Attended
Eligible to attend Attended
Eligible to attend Attended
James Scott
Andrew Johnson
Wayne Arthur
12
12
12
12
12
11
2
2
-
2
2
-
2
2
-
2
2
-
17
Skyfii Limited annuaL report 2017For personal use only
Directors’ Report continued
Principal activities
Subsequent events
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 $4,911,715
(2016 loss: $5,415,324). Refer to the commentary in the Review of
Operations.
Dividends paid or recommended
On 26 July 2017, the Company announced the acquisition of
key assets from Wicoms Wireless for an all scrip transaction of
3,800,000 new ordinary shares issued at $0.065 per share valued
at $247,000.
Other than the above matter there are no other matters or
circumstances that have arisen since 30 June 2017 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.
In respect of the financial year ended 30 June 2017, there have
been no dividends paid or provided for (2016: nil).
Future developments
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.
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.
The Company has previously 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.
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 15 July 2016, the Company announced that certain
conditions precedent to the share subscription agreement with
Chapmans Opportunities Limited (COL) had not been fulfilled
and the COL transaction had been terminated.
On 21 September 2016, the Company issued 1,825,000 at
$0.077 per share in accordance with the Company’s Employment
Share Plan (ESP). The Company also issued 1,685,065 fully paid
ordinary shares at $0.077 per share to various employees in
accordance with their employment contracts. These shares
were issued outside of the Company’s ESP.
On 15 December 2016, the Company announced a two tranche
equity placement to new and existing sophisticated investors
and an intention to offer a share purchase plan to eligible
shareholders.
On 21 December 2016, the Company issued 40,043,922 fully
paid ordinary shares at $0.063 per share to new and existing
sophisticated investors to raise gross proceeds of $2.5 million.
On 21 December 2016, the Company issued 1,587,301 fully
paid ordinary shares at $0.063 per share to the Directors in lieu
of cash.
On 21 December 2016, the Company issued 5,000,000 options
over an equivalent number of unissued ordinary shares to
Messrs Scott and Johnson, which had been approved at the
AGM on the 30th November 2016.
On 10 February 2017, the Company issued 26,379,052 fully
paid ordinary shares at $0.063 per share to new and existing
sophisticated investors to raise additional gross proceeds
of $1.7 million, which had been approved and ratified at an
Extraordinary General Meeting on 6 February 2017.
On 10 February 2017, the Company issued 13,000,000 at $0.065 per
share in accordance with the Company’s Employment Share Plan.
On 14 February 2017, the Company issued 7,793,643 fully
paid ordinary shares at $0.063 per share pursuant to a share
purchase plan offered to eligible shareholders.
•
•
•
•
•
•
•
•
•
18
For personal use only Non-audit services
Amounts paid or payable to the auditor for non-audit services
provided during the year by the auditor amounted to $18,506.
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 19 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 57
of this report and forms part of the Directors’ Report for the year
ended 30 June 2017.
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.
19
Skyfii Limited annuaL report 2017For 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 and Executive Director
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
Jason Martin – Chief Technology Officer
•
• Brone Roze – Chief Financial Officer (ceased 22 June 2017)
•
Koreen White – Finance Director (commenced 22 May 2017)
and Company Secretary (effective from 4 August 2017)
• Michael Walker – Chief Information Officer
•
Ian Robinson – Sales Director
20
1. 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.
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.
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.
For personal use only
2. 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
Post employment benefits
Share based payments
Directors’ fees
Salary and fees Other
Super-annuation
Shares
Options
Total
$
$
$
$
$
$
$
FY17
Directors:
J. Scott
A. Johnson
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
B. Roze (1)
M. Walker
K. White (2)
Total
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
205,000
184,500
195,443
191,250
171,436
203,750
20,538
19,475
17,528
18,567
18,169
14,852
19,356
1,951
50,000
50,000
21,263
67,384
55,247
18,719
16,197
18,719
39,408
21,219
89,408
71,219
245,738
269,412
269,257
228,138
202,485
241,825
22,490
-
1,171,918
-
109,897
297,529
60,627 1,639,971
50,000
41,670
16,667
6,667
12,500
12,500
209,778
182,260
29,545
177,197
161,824
202,511
19,929
4,750
3,958
17,315
2,807
16,834
15,373
19,239
50,000
50,000
7,553
20,000
6,180
6,180
6,180
6,180
50,000
50,000
237,260
81,417
58,128
29,167
205,755
32,352
200,211
183,377
227,930
Total
108,337
963,115
31,667
100,205
152,273
- 1,355,597
The remuneration of key management personnel in the years ended 30 June 2017 and 30 June 2016 were 100% fixed, and there is no link
between remuneration and the market price of the Company’s shares.
Notes:
(1) Represents the remuneration up until 22 June 2017, being the date upon which the individual ceased to be a KMP.
(2) Represents the remuneration commencing on the 22 May 2017, being the date upon which the individual commenced to be a KMP.
21
Skyfii Limited annuaL report 2017For personal use only
Remuneration report continued
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
Received as part
of remuneration
Purchase
of shares
Transfer/Sale
of shares
Balance at
end of year
FY17
Directors:
J. Scott
A. Johnson
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
B. Roze (1)
M. Walker
K. White (2)
Total
Notes:
785,403
579,717
11,626,211
-
-
10,514,198
1,159,200
3,887,043
-
793,651
793,650
-
649,350
500,000
-
-
-
-
45,000
709,899
-
-
317,460
793,650
-
666,667
-
28,551,772
2,736,651
2,532,676
-
-
-
-
-
-
-
-
-
-
1,624,054
2,083,266
11,626,211
649,350
817,460
11,307,848
1,159,200
4,553,710
-
33,821,099
(1) Represents the ordinary share movements up until 22 June 2017, being the date upon which the individual ceased to be a KMP.
(2) Represents the ordinary share movements commencing on the 22 May 2017, being the date upon which the individual commenced to
be a KMP.
22
For personal use only
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 Granted / Released from Forfeited /
cancelled
restrictions
start of year
issued
FY17
Directors:
W. Arthur
Other KMP:
J. Martin
J. Rankin
550,000
1,225,000
450,000
1,000,000
-
2,025,000
I. Robinson
450,000
1,225,000
B. Roze (1)
M. Walker
K. White (2)
450,000
800,000
450,000
1,225,000
-
-
Total
2,350,000
7,500,000
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
Balance of
Balance of
end of year vested ESP shares unvested ESP shares
1,775,000
181,500
1,593,500
1,450,000
2,025,000
1,675,000
1,250,000
1,675,000
-
9,850,000
550,000
450,000
-
450,000
450,000
450,000
2,350,000
148,500
-
148,500
148,500
148,500
-
775,500
-
-
-
-
-
-
1,301,500
2,025,000
1,526,500
1,101,500
1,526,500
-
9,074,500
550,000
450,000
-
450,000
450,000
450,000
2,350,000
Options
Details of options over unissued ordinary shares in the Company held directly, indirectly or beneficially, by KMP including their related
parties, is as follows:
Balance at
start of year
Received as part
of remuneration
Purchase
of options
Sale
of options
Balance at
end of year
FY17
Directors:
J. Scott
A. Johnson
Total
-
-
-
3,250,000
1,750,000
5,000,000
-
-
-
-
-
-
3,250,000
1,750,000
5,000,000
23
Skyfii Limited annuaL report 2017For personal use only
Remuneration Report continued
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
22 to the financial statements.
Directors:
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
B. Roze (1)
M. Walker
K. White (2)
Total
2017 $
2016 $
161,025
81,400
131,600
141,225
146,225
118,600
146,225
-
66,600
-
66,600
66,600
66,600
-
844,900
347,800
Other transactions with KMP and/or their related parties
During the full year ended 30 June 2017, the Company incurred $118,934 (FY16: $397,244) of expenses relating to outsourced software
development services provided by Simple Machines Pty Ltd, a company associated with Jason Martin (CTO).
During the full year ended 30 June 2017, the Company recognised revenue $23,400 (FY16: $0) for services rendered for DSI Engineering &
Management Services, a company associated with Andrew Johnson (Director).
These services were provided under normal commercial terms and conditions. Further information in relation to related parties can be
found in Note 23 to the financial statements.
Executive service agreements
The employment terms and conditions of KMP and Group executives are formalised in service agreements.
Position
Key terms of service agreements
Chief Executive Officer
• Base salary: $210,000 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.
• Restraint of trade period: up to 6 months.
Other Executives
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
• restraint and confidentiality provisions.
This concludes the Remuneration Report, which has been audited.
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 2017
24
For personal use only
Auditor’s Independence Declaration
25
Skyfii Limited annuaL report 2017For 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.
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 2017 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) setting the long-term strategy and annual business plan
including objectives and milestones to be achieved;
(b) 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;
(c) 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;
(d) appointing, removing and determining the terms of engagement
of t he Directors, Chief Executive Officer and Company Secretary;
(e) overseeing the delegation of authority for the day to day
management of the Company;
(f) 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;
(g) approving the capital structure and major funding requirements
of the Company;
(h) approving the Company’s half year and full year reports to the
shareholders, ASX and ASIC; and
26
(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. The Board requires this Committee to undertake
appropriate checks on potential Board candidates. 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 2017 financial year. The Board will consider conducting a formal
performance evaluation during the 2018 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) coordinating the timely completion and dispatch of Board and
committee papers;
(b) ensuring the business at Board and committee meetings is
accurately captured in the minutes;
(c) monitoring and ensuring the Board and committee policy and
procedures are followed; and
(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.
For personal use only Given the size and nature of the Company, the Board determined
not to establish measurable objectives for achieving diversity for
the 2017 financial year. Establishing measurable objectives for
achieving diversity will be reconsidered on an annual basis.
As at 30 June 2017, the proportion of women employed by the
Group was as follows:
• Board of Directors: 0%
• Senior Executive positions: 17%
• Total Group workforce: 14%
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.
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.
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 Finance Director
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:
27
Skyfii Limited annuaL report 2017For personal use only Corporate Governance Statement continued
(a) complying with the continuous disclosure obligations imposed
by law;
(b) ensuring that company announcements are presented in a
factual, clear and balanced way;
(c) ensuring that all shareholders have equal and timely access to
material information concerning the Company; and
(d) communicating effectively with shareholders and making it easy
for shareholders to participate in general meetings.
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
28
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 as part of the Company’s
interim and end the financial year reporting periods.
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.
Principle 8 – Remunerate fairly and responsibly
The Company’s Nomination and Remuneration Committee
is responsible for developing, reviewing and making recommendations
on:
(a) the remuneration framework for Directors,
including the
process by which any pool of Directors fees approved by
security holders is allocated to Directors;
(b) the remuneration packages to be awarded to senior executives;
(c) equity based remuneration plans for senior executives and
other employees; and
(d) 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.
For personal use only Consolidated statement of profit or loss
and other comprehensive income For the financial year ended 30 June 2017
Revenue and other income
Revenue
Other income
Total revenue
Expenses
Direct costs of services
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
Share option expense
Share based payments expense
Depreciation and amortisation expenses
Finance costs
Loss before tax
Income tax expense
Loss for the period
Note
2017
$
2016
$
5
5
6
3,211,007
2,339,570
868,360
1,040,309
4,079,367
3,379,879
(825,358)
(786,738)
(4,033,752)
(2,428,258)
(111,339)
(69,089)
(304,140)
(227,517)
(511,158)
(316,041)
(444,872)
(257,694)
(1,085,772)
(870,363)
(100,000)
(295,003)
- (3,013,535)
(60,627)
-
(355,064)
(60,492)
6
6
(1,139,780)
(461,091)
(1,845)
(925)
(4,894,338)
(5,406,868)
(17,377)
(8,456)
(4,911,715)
(5,415,324)
Other comprehensive income
Items that will be reclassified to profit or loss when specific conditions are met:
Exchange differences on translation of foreign operations
12,296
3,588
Total comprehensive loss for the period
(4,899,419)
(5,411,737)
Earnings per share
Cents
Cents
Basic earnings per share
28
(2.3)
(3.8)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
29
Skyfii Limited annuaL report 2017For personal use only
Consolidated statement of financial position
As at 30 June 2017
Revenue and other income
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
2017
$
2016
$
8
9
10
11
12
13
2,280,860 2,612,422
2,239,156
1,515,106
1,901
10,444
142,605
93,930
4,664,522
4,231,902
177,634
164,374
3,289,065
2,803,857
3,466,699
2,968,231
8,131,221
7,200,133
14
15
824,509
674,768
181,246
136,841
771,262
166,926
1,777,018
978,534
1,777,018
978,534
6,354,203
6,221,599
16
17
22,774,553
17,987,101
320,948
64,080
(16,741,297)
(11,829,582)
6,354,203
6,221,599
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
30
For personal use only
Consolidated statement of changes in equity
For the financial year ended 30 June 2017
Note
Contributed
equity
$
Share
based
payments
reserve
$
-
-
-
-
-
-
Balance at 1 July 2015
11,091,161
Loss for the period
Exchange differences on
translation of foreign operations
Total comprehensive
loss for the period
Transactions with owners
in their capacity as owners:
Issue of ordinary shares
Capitalised equity raising costs
(net of tax)
Share based payments
16
16
17
-
-
-
7,138,535
(242,595)
-
60,492
Balance at 30 June 2016
17,987,101
60,492
Note
Contributed
equity
$
Share
based
payments
reserve
$
Balance at 1 July 2016
17,987,101
60,492
Loss for the period
Exchange differences on
translation of foreign operations
Total comprehensive
loss for the period
Transactions with owners
in their capacity as owners:
Issue of ordinary shares
Equity raising costs (net of tax)
Share based payments
Issue of options
-
-
-
16
16
17
17
4,946,766
(159,315)
-
-
-
-
-
-
-
183,945
Share
option
reserve
$
-
-
-
-
-
-
-
Share
option
reserve
$
-
-
-
-
-
-
-
Foreign
currency
translation
reserve
$
Accumulated
losses
Total
equity
$
$
-
(6,414,258)
4,676,903
-
(5,415,324)
(5,415,324)
3,588
-
3,588
3,588
(5,415,324) (5,411,737)
-
-
-
7,138,535
-
(242,595)
60,492
3,588
(11,829,582)
6,221,599
Foreign
currency
translation
reserve
$
Accumulated
losses
Total
equity
$
$
3,588
(11,829,582)
6,221,599
-
(4,911,715)
(4,911,715)
12,296
-
12,296
12,296
(4,911,715) (4,899,419)
-
-
-
-
-
-
-
-
4,946,766
(159,315)
183,945
60,627
-
60,627
Balance at 30 June 2017
22,774,553
244,437
60,627
15,884
(16,741,297)
6,354,203
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
31
Skyfii Limited annuaL report 2017For personal use only
Consolidated statement of cash flows
For the financial year ended 30 June 2017
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
Note
2017
$
2016
$
3,859,900
1,845,191
(7,127,655)
(4,791,419)
27,990
851,069
17,291
(1,845)
145,796
791,729
43,294
(925)
Net cash (outflow) from operating activities
27
(2,373,250)
(1,966,335)
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Payments for other assets
Payment for security deposits
Receipts from security deposits
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Capital raising costs
Net cash inflow from financing activities
(57,164)
(165,282)
(1,581,084)
(1,819,316)
(54,477)
(10,450)
(757)
-
-
17,159
(1,703,175)
(1,968,196)
3,904,177
4,105,000
(159,315)
(242,595)
3,744,862
3,862,405
Net (decrease) in cash
(331,562)
(72,126)
Cash at the beginning of the year
Cash at the end of the year
2,612,422
2,684,548
8
2,280,860
2,612,422
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
32
For personal use only
Notes to the financial statements
For the financial year ended 30 June 2017
Contents of the notes to the consolidated financial statements
Note Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
Reporting entity ................................................................................................................34
Basis of preparation ........................................................................................................34
Significant accounting policies ......................................................................................34
Operating segments ........................................................................................................40
Revenue ..............................................................................................................................41
Expenses ............................................................................................................................41
Income tax .........................................................................................................................42
Cash and cash equivalents ............................................................................................43
Trade and other receivables .........................................................................................43
Inventories .........................................................................................................................43
Other assets ......................................................................................................................43
Plant and equipment .......................................................................................................44
Intangible assets ...............................................................................................................44
Trade and other payables ..............................................................................................45
Provisions ...........................................................................................................................45
Contributed equity ...........................................................................................................46
Equity – reserves ..............................................................................................................47
Financial risk management ............................................................................................48
Remuneration of auditors ..............................................................................................49
Contingent liabilities ........................................................................................................49
Commitments for expenditure .....................................................................................50
Share based payments ...................................................................................................50
Related parties ..................................................................................................................53
Parent entity information ...............................................................................................54
Interests in controlled entities ......................................................................................54
Events occurring after the reporting date .................................................................54
Reconciliation of loss after tax to net cash from operating activities .................55
Earnings per share (EPS) ................................................................................................55
33
Skyfii Limited annuaL report 2017For personal use only Notes to the financial statements
For the year ended 30 June 2017
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 2017 comprise the Company and its
subsidiaries (together referred to as the Group and individually as
Group entities). The Group is a for-profit entity for financial reporting
purposes under Australian Accounting Standards. 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 31st August 2017 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 2017 the Group incurred a loss after tax of
34
$4,911,715 and incurred cash outflows from operating activities of
$2,373,250. At 30 June 2017, the Group had a surplus in net current
assets of $2,887,505 and a surplus in net assets of $6,354,203.
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 $2.8 million in
May 2015, $4.1 million in November 2015, $2.5 million in December
2016, $1.7 million in February 2017 and a share purchase plan of
$0.5 million in February 2017.
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
assumes that the Directors will be able to raise between $1 to $2
million dollars 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 25.
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.
initially recognises non-controlling
Equity interests in a subsidiary not attributable, directly or indirectly,
to the Group are presented as “non-controlling interests”. The
Group
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
For personal use only 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).
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.
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.
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.
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.
35
Skyfii Limited annuaL report 2017For personal use only Notes to the financial statements continued
For the year ended 30 June 2017
(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 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%.
(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
36
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.
For personal use only (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 and rendering of services 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 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:
•
•
•
Assets and liabilities are translated at year end exchange rates
prevailing at that reporting date.
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.
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.
37
Skyfii Limited annuaL report 2017For personal use only Notes to the financial statements continued
For the year ended 30 June 2017
(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.
Financial liabilities
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.
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
38
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
intangible assets with indefinite lives.
is performed annually for goodwill and
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,
For personal use only 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.
•
AASB 9: Financial
Instruments and associated Amending
Standards (applicable to annual reporting periods beginning on
or after 1 January 2018).
(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.
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 are performed
in assessing recoverable amounts which incorporate a number of
key estimates.
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 2017 of $3,289,065.
R&D tax incentive
The Group has established a precedent for entitlement to the
R&D tax incentive in prior periods. This experience supports the
assumption that eligibility for the tax incentive will continue on
the same basis, and accordingly, it is appropriate 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.
(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:
–
–
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);
• determine the transaction price;
•
•
allocate the transaction price to the performance
obligations in the contract(s); and
recognise revenue when
obligations are satisfied.
(or as) the performance
–
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,
39
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements
For the year ended 30 June 2017
4. Operating segments
in one
industry and
The Group operates predominantly
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.
–
–
Changes in Accounting Estimates and Errors (subject to
certain practical expedients in AASB 15); or recognise the
cumulative effect of retrospective application to incomplete
contracts on the date of initial application. There are also
enhanced disclosure requirements regarding revenue.
The Directors have conducted an initial assessment of the
impact of adopting AASB15 and have assessed that the
impact will not be significant.
•
AASB 16: Leases (applicable to annual reporting periods
beginning on or after 1 January 2019).
When effective, this Standard will replace the current
accounting requirements applicable to leases in AASB 117:
Leases and related Interpretations. AASB 16 introduces
a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or
finance leases.
– 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 given the Company’s current lease agreement
expires prior to the adoption of AASB 16.
40
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5. Revenue
Revenue from operations
Other income
Government R&D tax incentive
Other government grants
Interest income
Total other income
Note
2017
$
2016
$
3,211,007
2,339,570
823,229
27,840
17,291
851,219
145,796
43,294
868,360
1,040,309
Total revenue
4,079,367
3,379,879
6. Expenses
Employee
Note
2017
$
2016
$
Salaries and related expenses (including superannuation)
Other employment costs
Total employee benefits expense
3,810,253
2,235,746
223,499
192,512
4,033,752
2,428,258
Depreciation and amortisation
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
Net foreign exchange losses
Finance costs
Interest expense
12
13
43,903
25,648
1,095,876
435,443
1,139,780
461,091
298,088
(101,652)
152,547
(64,842)
196,436
87,705
20,093
27,423
1,845
925
41
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements continued
For the year ended 30 June 2017
7. Income tax
(a) Income tax
Current tax
Income tax (benefit)
Note
2017
$
2016
$
17,377
8,456
17,377
8,456
(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 27.5% (2016:30%)
(3,390,876)
(5,406,868)
(932,491)
(1,622,060)
Tax effect amounts which are not deductible / (taxable) in calculating taxable income:
R&D tax incentive
Difference in overseas tax rates
Acquisition costs not allowable
Accounting for R&D expenditure
Deferred tax assets not recognised
Other non-allowable items
Income tax expense
(c) Income tax receivable
R&D tax incentive receivable
Franking credits
-
963
(2,530)
-
904,061
294,089
331,682
556,348
373,787
101,961
20,024
17,377
8,456
(823,229)
(851,219)
Franking credits available at the reporting date based on a tax rate of 27.5%
-
-
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:
•
•
•
temporary differences: $2,019,310 (2016: ($1,342,314)
tax losses: operating losses $10,392,961 (2016: $7,533,567)
tax losses: capital losses $16,911 (2016: $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).
42
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8. Cash and cash equivalents
Current
Cash at bank and on hand
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
Total trade receivables net of provision for impairment
2017
$
2016
$
2,280,860
2,612,422
2,280,860
2,612,422
30-Jun-17
$
30-Jun-16
$
638,318
765,983
834,855
682,874
823,325
8,907
2,239,156
1,515,106
568,626
538,282
23,766
40,361
5,565
84,672
23,516
36,403
638,318
682,874
There was no impairment of trade receivables. Amounts past due but not impaired $45,926 (2016: $59,919).
10. Inventories
Current
Equipment – at cost
Total inventories
2017
$
2016
$
1,901
1,901
10,444
10,444
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
30-Jun-17
$
30-Jun-16
$
129,680
87,629
4,057
8,868
4,057
2,244
142,605
93,930
43
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements continued
For the year ended 30 June 2017
12. Plant and equipment
Non-current
Office and computer equipment – at cost
Accumulated depreciation
Carrying value of office and computer equipment
2017
$
2016
$
258,826
(81,192)
201,773
(37,399)
177,634
164,374
Total carrying value of plant and equipment
177,634
164,374
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 at 1 July 2015
Additions
Depreciation
Balance at 30 June 2016
Balance at 1 July 2016
Additions
Depreciation
Balance at 30 June 2017
13. Intangible assets
Non-current
Software development – at cost
Accumulated amortisation
Carrying value of software development
Office and
Computer
equipment
$
24,740
165,282
(25,648)
164,374
164,374
57,054
(43,794)
177,634
2017
$
2016
$
4,820,384
3,239,300
(1,531,319)
(435,443)
3,289,065
2,803,857
Total carrying value of intangible assets
3,289,065
2,803,857
44
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Reconciliations
Reconciliations of the carrying amount of intangible assets at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2015
Additions
Amortisation
Balance at 30 June 2016
Balance at 1 July 2016
Additions
Amortisation
Balance at 30 June 2017
14. Trade and other payables
Current
Trade payables
Sundry payables
Total trade and other payables
15. Provisions
Current
Employee benefits
Total provisions
Software Development $
1,419,984
1,819,316
(435,443)
2,803,857
2,803,857
1,581,084
(1,095,876)
3,289,065
2017
$
2016
$
802,012
633,289
22,498
41,478
824,509
674,768
2017
$
2016
$
181,246
136,841
181,246
136,841
45
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements continued
For the year ended 30 June 2017
16. Contributed equity
(a) Share capital
Ordinary shares
261,118,194
168,265,551
22,774,553
17,987,101
30-Jun-17
Number
30-Jun-16
Number
30-Jun-17
$
30-Jun-16
$
Reconciliation to 30 June 2016:
Balance at 1 July 2015
Equity raising costs (net of tax)
Movements in ordinary shares:
Share placement
Issue of ESP shares
Issue of Earn Out Shares
Issued in settlement of a liability
Balance at 30 June 2016
Reconciliation to 30 June 2017:
Balance at 1 July 2016
Equity raising costs (net of tax)
Movements in ordinary shares:
Issue of ESP shares
Issued in settlement of various liabilities
Issued in settlement of various liabilities
Share placement
Share placement
Issue of ESP shares
Share purchase plan
Issued in settlement of various liabilities
Date
Number
Unit price
$
113,768,522
11,091,161
(242,595)
9-Nov-15
27,366,667
$0.1500
4,105,000
23-Dec-15
4,655,000
$0.1480
-
26-Feb-16
22,342,028
$0.1349
3,013,535
26-Feb-16
133,334
$0.1500
20,000
168,265,551
17,987,101
168,265,551
17,987,101
(159,315)
21-Sep-16
1,825,000
21-Sep-16
1,685,065
20-Dec-16
1,587,301
$0.077
$0.077
$0.063
-
129,750
100,000
20-Dec-16
40,043,922
$0.063
2,522,767
10-Feb-17
26,379,052
$0.063
1,661,880
10-Feb-17
13,000,000
14-Feb-17
7,793,643
16-May-17
538,660
$0.065
$0.063
$0.077
-
491,000
41,369
-
Balance at 30 June 2017
261,118,194
22,774,553
(b) 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.
(c) Employee Share Plan (ESP)
Information relating to the Employee Share Plan, including details of shares issued under the plan, is set out in Note 22.
(d) Earn Out Shares
Information relating to the Earn Out Shares issued in the year ended 30 June 2016 can be found in the Company’s annual report for the
year ended 30 June 2016.
46
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(e) Options over unissued ordinary shares
The Company granted the following options to Directors, convertible into the same number of ordinary shares in the Company, on the basis
of shareholder approval granted on 30 November 2016:
Number of options
Option consideration
Expiry date
Exercise price per option
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
$0.00
$0.00
$0.00
$0.00
$0.00
30 November 2019
30 November 2019
30 November 2019
30 November 2019
30 November 2019
$0.100
$0.125
$0.150
$0.200
$0.300
The fair value of the options over the shares is recognised as an employee benefit expense with a corresponding increase in equity. The fair
value is measured and recognised at grant date, being 30 November 2016.
The fair value at grant date is determined using the Black-Scholes option pricing model that takes into account the exercise price, the term
of the options, the impact of dilution, the non-tradeable nature of the options, the share price at grant date and expected price volatility of
the underlying shares, the expected dividend yield and the risk-free interest rate for the term of the options.
17. Equity – reserves
(a) Movements
Share based payment reserve movements
Balance at the beginning of the period
Share based payment expense
Balance at the end of the period
Share option reserve movements
Balance at the beginning of the period
Share option 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
2017
$
2016
$
60,492
183,945
-
60,492
244,437
60,492
-
60,627
60,627
-
-
-
3,588
12,296
15,884
-
3,588
3,588
320,948
64,080
Share based payments reserve
The share based payments reserve represents the value of the ESP share grants to employees under the Company’s Employee Share Plan.
Share option reserve
The share option reserve represents the fair value of options granted over unissued ordinary shares in the Company.
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.
47
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements continued
For the year ended 30 June 2017
18. 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.
The Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade and other payables
Total financial liabilities
Note
8
9
2017
$
2016
$
2,280,860
2,612,422
2,239,156
1,515,106
4,520,016
4,127,528
14
824,509
674,768
824,509
674,768
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 at this early stage of international growth however to minimise the
risk the Group’s policy is, when available to hold a natural hedge on any foreign currency, being that any receipts paid to the Group will held
in the same foreign currency and then later used to settle any expenditure in those foreign entities.
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 (2016: nil).
48
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(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.
2017
Non-derivatives
Trade and other payables
2016
Non-derivatives
Trade and other payables
1 year or less
$
1 to 2 years
$
2 to 5 years Over 5 years
$
$
824,509
674,768
-
-
-
-
-
-
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.
(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.
19. 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
Tax compliance services
Total
20. Contingent liabilities
There are no other contingent liabilities as at 30 June 2017:
2017
$
2016
$
55,500
18,506
50,650
34,486
74,006
85,136
49
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements continued
For the year ended 30 June 2017
21. 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
2017 are as follows:
(a) Non-cancellable operating leases
Not later than one year
Later than one year
Total operating lease commitments
(b) Sub-lease arrangements
2017
$
2016
$
79,762
246,223
46,363
69,470
126,125
315,694
The Group has entered into sub-lease arrangements with respect to the Group’s head office. Rentals paid to the Group under 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 sub-lease arrangements as at 30 June 2017 are as follows:
(b) Sub-lease arrangements
Not later than one year
Total sub-lease commitments
22. Share based payments
(a) Employee Share Plan (ESP)
2017
$
1,100
1,100
2016
$
51,649
51,649
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.
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;
•
•
•
•
•
•
50
For personal use only
•
•
•
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;
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
Set out below are summaries of ESP shares granted and issued under the plan:
Issue
price
Balance at
start of year
Granted/
issued
Released
from
restrictions
Forfeited /
cancelled
Balance at
end of year
Balance of
vested ESP
shares
Balance of
unvested
ESP
shares
Grant date
FY17
23-Dec-15
$0.148
4,405,000
-
21-Sep-16
$0.077
10-Feb-17
$0.065
-
-
1,825,000
13,000,000
Total
FY16
4,405,000
14,825,000
23-Dec-15
$0.148
Total
-
-
4,655,000
4,655,000
-
-
-
-
-
-
(225,000)
4,180,000
1,379,400
2,786,667
(300,000)
1,525,000
(900,000)
12,100,000
-
-
1,525,000
12,100,000
(1,425,000)
17,805,000
1,379,400
16,411,667
(250,000)
4,405,000
(250,000)
4,405,000
-
-
4,405,000
4,405,000
51
Skyfii Limited annuaL report 2017For personal use only
Notes to the financial statements continued
For the year ended 30 June 2017
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. 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 $0.069 per option
(2016: $0.0764). 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 2017 include:
• Weighted average exercise price: $0.065
• Weighted average life of the option: 5 years
• Expected share price volatility: 61%
• Risk-free interest rate: 1.90%
(c) Other share based payments
Issue Date Creditor
Purpose
Valuation
No. of shares
Value per
share
Total
$
J. Scott
Director’s fees
Value of services
A. Johnson
Director’s fees
Value of services
793,651
793,650
1,587,301
$0.063
$0.063
$0.063
50,000
50,000
100,000
G. Flowers
Director’s fees
Value of services
133,334
133,334
$0.15
$0.15
20,000
20,000
2017
Directors:
21-Dec-16
21-Dec-16
Total
2016
Directors:
26-Feb-16
Total
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23. 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 25.
(c) Key management personnel compensation
Short-term employee benefits, including contractor fees
Share based employee benefits
Other long term benefits
Total benefits
2017
$
2016
$
1,171,918
1,103,119
358,156
109,897
152,273
100,205
1,639,971
1,355,597
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 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
Related party entity
Transaction
Jason Martin Simple Machines Pty Ltd
Outsourced sofware
development services
Transaction value
2016
$
2017
$
Balance outstanding
2016
$
2017
$
118,934
397,244
-
-
Other payable transactions with directors and key management personnel
At 30 June 2017 the payable balance outstanding with directors and key management personnel relating to expense reimbursements for
supplier payments and business expenses was $8,100 (2016: $61,831).
(e) Receivable transactions with directors and key management personnel
KMP
Related party entity
Transaction
Andrew Johnson DSI Engineering &
Management Services
Data Science
Consultancy
Transaction value
2016
$
2017
$
Balance outstanding
2016
$
2017
$
23,400
-
23,400
-
Other receivable transactions with directors and key management personnel
At 30 June 2017, the receivable balance outstanding with directors and key management personnel relating to employee debit and credit
card advances utilised for the sole purpose of supplier payments and business expenses was $42,242 (2016: $9,507).
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.
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Notes to the financial statements continued
For the year ended 30 June 2017
24. Parent entity information
Set out below is information about the legal parent entity, Skyfii Limited
Statement of comprehensive income
Loss after tax
Total comprehensive income
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Contributed equity
Reserves
Accumulated losses
Total equity
2017
$
2016
$
(104,275) (2,876,784)
(104,275) (2,876,784)
15,326,356
10,363,934
14,000,000
14,000,000
29,326,356
24,363,934
210,715
176,041
210,715
176,041
29,115,642 24,187,893
66,561,141
61,773,689
539,064
294,492
(37,984,563) (37,880,288)
29,115,642
24,187,893
Contingent liabilities
Other than the contingent earn-out obligation, as discussed in Note 20, the parent entity had no contingent liabilities at 30 June 2017 and
30 June 2016.
Capital commitments – plant and equipment
The parent entity had no capital commitments for plant and equipment as at 30 June 2017 and 30 June 2016.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 3.
25. 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
Skyfii Brasil Inteligência, Mídia e Tecnologia Mobile Ltda.
Skyfii South Africa (Pty) Ltd
Skyfii UK Operations Limited
Skyfii US Operations, LLC.
26. Events occurring after the reporting date
Country of
incorporation
Australia
Australia
Australia
Brazil
Republic of South Africa
United Kingdom
United States of America
Ownership interest
2016
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
On 26 July 2017, the Company announced the acquisition of key assets from Wicoms Wireless for an all scrip transaction of 3,800,000 new
ordinary shares issued at $0.065 per share valued at $247,000.
Other than the above matters there are no other matters or circumstances that have arisen since 30 June 2017 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.
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27. Reconciliation of loss after tax to net cash from operating activities
Loss for the year
Non-cash items in operating loss:
Depreciation and amortisation
Issue of Earn Out Shares
R&D tax incentive receivable
Share based payments
Share option expense
Changes in operating assets and liabilities:
Decrease / (increase) in trade and other receivables
Decrease / (increase) in inventories
Decrease / (increase) in prepayments and other assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in provisions and employee benefits
Increase / (decrease) in deferred revenue
Increase / (decrease) in other liabilities
Net cash used in operating activities
28. Earnings per share (EPS)
(a) Basic earnings per share
2017
$
2016
$
(4,911,715)
(5,415,324)
1,139,780
461,091
- 3,013,535
-
(851,219)
455,064
80,492
60,627
-
72,546
297,891
8,543
33,056
(48,676)
20,335
206,055
246,276
35,874
604,337
4,315
69,376
78,155
-
(2,373,250)
(1,966,335)
2016
Cents per share Cents per share
2017
Basic EPS attributable to ordinary equity holders of the Company
(2.3)
(3.8)
(b) Diluted earnings per share
Diluted EPS attributable to ordinary equity holders of the Company
(2.3)
(3.8)
(c) Weighted average number of shares used as the denominator
Number
Number
Weighted average number of ordinary shares used in calculating basic EPS 210,951,238
141,357,785
Weighted average number of dilutive options outstanding
2,904,110
-
Weighted average number of ordinary shares used in calculating diluted EPS
213,855,347
141,357,785
(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 (4,911,715)
(5,415,324)
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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 2017
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 2017
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For personal use only Additional ASX information
Use of cash & 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 2017.
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 15 August 2017.
Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act are:
Substantial shareholder
Jagafii Pty Ltd
Avenue C Pty Ltd
The Elsie Cameron Foundation Pty Ltd
Birketu Pty Ltd
Karibu Pty Ltd
Top 20 shareholders as at 15 August 2017
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
JAGAFII PTY LTD
AVENUE C PTY LTD
THE ELSIE CAMERON FOUNDATION PTY LTD
BIRKETU PTY LTD
KARIBU PTY LTD
BONDUFFMEX PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
SHANDERLAY INVESTMENTS PTY LTD
INVICTUS SUPER NOMINEES PTY LTD
MONTELLA INVESTMENTS PTY LTD
PAYNEHAM INVESTMENTS PTY LTD
ALTERAC PTY LTD
DEVERO HOLDINGS PTY LTD
THE CHIMES PRIVATE FOUNDATION
YELLOW MONKEY HOLDINGS PTY LTD
AUSTER CAPITAL PARTNERS LLC
MR MARCO BETTELLI
MR ANDREW JOHNSON
MR JAMES SCOTT
MR MARTIN ERIC ROBINSON
Total Securities of Top 20 Holdings
Total Remaining Holders
Total of Securities
Date of
Notice
Number of
shares
10-Feb-17
41,865,060
14-Feb-17
17,189,642
14-Feb-17
17,009,380
10-Feb-17
15,392,436
14-Feb-17
13,401,211
Number of ordinary % of ordinary
shares held
shares held
41,865,060
17,189,642
17,009,380
15,392,436
11,626,211
10,911,023
9,239,577
8,602,639
7,936,508
7,581,715
5,819,689
4,620,465
4,553,710
4,548,450
4,174,327
3,800,000
2,620,465
2,274,157
2,020,879
2,008,055
183,794,388
61,643,806
245,438,194
17.06%
7.00%
6.93%
6.27%
4.74%
4.45%
3.76%
3.51%
3.23%
3.09%
2.37%
1.88%
1.86%
1.85%
1.70%
1.55%
1.07%
0.93%
0.82%
0.82%
74.88%
25.12%
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Additional ASX information continued
Distribution of ordinary shareholders as at 15 August 2017
Name
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
Shareholders
Number of
shares
629
57
57
8,574
195,996
475,148
189
7,990,481
169
236,767,995
1,101
245,438,194
At the closing market price of 0.07 per share on 15 August 2017, there were 624 shareholders with less than a marketable parcel
of shares ($500).
Option holders as at 15 August 2017
Rank Name
1
2
Mr James Scott
Mr Andrew Johnson
Total
Restricted securities as at 15 August 2017
Number of
% of
options held options held
3,250,000
1,750,000
5,000,000
65.00%
35.00%
There are no restricted securities on issue for the purpose of the ASX Listing Rules. There are ordinary shares on issue that are subject to
escrow in accordance with voluntary escrow arrangements, as set out in the table below:
Class of restricted securities
Nature of restriction
Unquoted ESP shares
Various dates ending no later than 22-Dec-19
Total shares subject to escrow
Number of shares
19,480,000
19,480,000
31. Voting Rights
The voting rights attaching to ordinary shares, set out in the Company’s Constitution are:
(a) at meetings of members, each member is entitled to vote in person or by proxy, attorney or representative; and
(b) on a show of hands, every person present who is a member has one vote, and on a poll every member present has a vote for each fully
paid share owned.
There are no voting rights attached to unlisted ordinary shares or unlisted options, voting rights will be attached to unlisted ordinary shares
once issued and to options upon exercise.
32. On-market Buy Back
There is no current on-market buy back.
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Corporate directory
Chairman, Non-Executive Director
Executive Director
Non-Executive Director
Company Directors
Mr James Scott
Mr Wayne Arthur
Mr Andrew Johnson
Company Secretary
Ms Koreen White
Registered Office
Level 1
34-36 Oxford Street
Darlinghurst NSW 2010
Telephone: +61 2 8188 1188
Share Registry
Boardroom Limited
Level 7
207 Kent Street
Sydney NSW 2000
Auditors
Hall Chadwick
Level 40
2 Park Street
Sydney NSW 2000
Securities exchange listing
Skyfii Limited shares are listed on the Australian Securities Exchange (Listing code: SKF)
Website
www.skyfii.io
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