annual
report
For personal use only Skyfii Limited
ABN 20 009 264 699
Financial report for the year ended 30 June 2019
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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For personal use only Chairman’s Letter
Dear Shareholders,
It gives me great pleasure to write my first Chairman’s letter to you. Whilst I have been on the board of Skyfii since it first listed in 2014,
I have only taken on the Chairman’s role in January of this year after the retirement of James Scott. I would like to thank James for his tireless
efforts over the past three years as Chairman of the company. What we have today very much reflects his commitment and leadership.
As the world’s first omnidata intelligence company, Skyfii collects and analyses billions of data points each month from a range of venue
types across five continents. Our SaaS, cloud-based solutions help venues visualise, measure, predict, and influence customer behaviour,
creating better experiences for their visitors and customers.
Our listing on the ASX provides strong roots into the Australian market and reflects our heritage. At the same time, we are a truly global
organisation with 54 staff in 8 countries delivering solutions to a portfolio of 8,500+ venues, under contract in over 30 countries.
2019 – A year of delivery
The 2019 financial year represented another period of exceptional underlying growth for the company, with the key metrics being:
•
Full year FY2019 total operating revenues of $9.4m, representing a 52% growth compared to FY2018
• Delivered our second consecutive year of positive operating EBITDA i of $0.88m, compared to $0.35m in FY2018.
Positive operating EBITDA was a goal that the company set for FY19 and our ability to deliver on our forecasts should provide comfort to
investors that we can maintain the balance between growth and profitability.
Successfully executing on internal growth and acquisitions
Post FY19, Skyfii formally completed the acquisition of Beonic Technologies, a leading Australian consumer insights provider specialising
in camera and people counting technology. The transaction was highly complementary to our existing product offering and provides new
channels for our business to engage with customers. Furthermore, acquiring Beonic demonstrates Skyfii’s commitment to diversifying its
product and service offering to position itself as a true omnidata intelligence company.
Skyfii received an overwhelmingly positive and supportive response from Beonic’s key customers, consisting of blue-chip customers in the
Australian retail sector including AMP, Lend Lease, QIC, ISPT and The GPT Group that extends Skyfii’s already market leading position in
the retail property segment in Australia.
Additional new customers including New Balance, Melbourne City Council, L’Oreal, David Jones and National Museum of Australia, provides
Skyfii a further diversified customer base across the lucrative retail, municipality, cultural centres and education verticals.
Furthermore, the acquisition provides a significant opportunity to upsell Skyfii’s full suite of SaaS services to Beonic’s existing portfolio of
customers and reflects our ability to identify, execute and complete value-adding acquisitions to complement our existing operations.
Our internal development activities delivered a steadily increasing level of customer engagement globally. Our focus on growth in the
American and European markets has seen a very sound level of new contract wins from those geographies, both in traditional verticals as
well as new areas such as museums, stadiums and municipalities. We will continue to invest in on the ground people and channel partners
which we are confident will continue to open up further growth opportunities in global markets.
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For personal use only Our people
As a technology and services company, our ability to create world leading software-based solutions and take them effectively to a global
market is fundamental to our success. The board is committed to maintaining the strongest team of data scientists, analysts and engineers
to allow Skyfii to continue to be a global leader in omnidata intelligence.
Furthermore, we have developed a very strong international sales and delivery team who are tasked with growing our global contracts and
transitioning Skyfii to be a truly international company. With our CEO and CPO based in the USA, our commitment to our global presence
is demonstrable, remaining strong and in sound hands.
Well positioned for FY20
In FY19, Skyfii took the deliberate decision to achieve sound ongoing growth through acquisition and a direct investment into our
distribution channels and in-house programming technology. We believe that this investment positions Skyfii very well for continued
customer engagement and revenue growth. We continue to set positive operating EBITDA as a fundamental target for our business, but
we remain committed to investing in driving growth. As we move in to FY20 I see the key areas of focus for the company as:
• Deliver strong top line and recurring revenue growth across all regions
• Close out large deals in our short and medium-term pipeline, particularly in the USA
• Maintain focus on cash management and maintaining a positive operating EBITDA position
Our growing global presence will offer new opportunities for the business in FY20. We are also growing our presence in verticals outside
our traditional exposure to retail. New markets will continue to allow Skyfii to deliver on its historic growth rates.
I believe the company is well-positioned for a period of exciting growth as our investment in people, technology and global strategy
establish Skyfii in a world leading position in omnidata intelligence.
I am pleased to have the opportunity to represent you as the Chairman of Skyfii and I am confident that the Skyfii team can continue to
deliver for you, the shareholder.
Yours faithfully,
Andrew Johnson
Chairman and Non-Executive Director
i Operating EBITDA is defined as earnings before interest tax, depreciation, and amortization, and adjusted to be inclusive of any R&D tax
incentive grants accrued or received, and exclusive of share, option-based payments and acquisition expenses.
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SKYFII LIMITED annual report For personal use only
CEO’s Letter
Dear Shareholders,
I am very pleased to report another year of strong growth at all levels for the company. We began the financial year with a number of key
objectives, including: further consolidation of our dominant position in the ANZ retail vertical, a continued focus on recruiting and enabling
new channel partners globally, delivering growth in our international markets, managing cash and maintaining a positive operating EBITDA
position and also continuing to investigate accretive acquisition opportunities to complement our strong organic growth rate.
FY19’s results have shown successful delivery against all of these stated objectives. Firstly, our key financial and operating highlights
included significant growth in both topline and recurring revenues, we maintained a positive operating EBITDA position for the full year,
substantially grew topline and organic revenues, doubled our portfolio of venues under contract, with many new contract wins in the ANZ
retail vertical and continued revenue growth across all international markets. Post the end of the year we also successfully concluded
the acquisition of Beonic technologies, which will help to further accelerate our revenue growth and diversification into FY20 and beyond.
From an operations perspective, the company outpaced its internal forecasts, growing its venue portfolio to over 8,500+ venues under
contract, up from 4,500 in FY18. In addition, we successfully penetrated new verticals outside of retail including: Cultural centres (museums,
art galleries and libraries), Hospitals, Retail banking branches, Sporting stadiums, Smart Cities, Smart Commercial Buildings, Universities,
Grocery stores and Quick Service Retail (QSR) venues. Finally, we have successfully grown our operations within our international markets,
posting a number of new contract wins across the North America, EMEA and Brazil markets.
This year’s successes would not have been possible without a supportive board and the continued commitment from the Skyfii team.
I would like to personally thank all of the Skyfii staff for your tireless efforts and I look forward to working alongside the team as we work
towards our goal of becoming the leading omnidata intelligence provider globally.
As we enter FY20, I firmly believe that the company will reach a significant inflection point and I am excited to share this next stage of the
journey with our team and shareholders.
Strong recurring revenue growth and improving operating earnings
Total operating revenue for the company in FY19 was up 52% YoY to $9.4m and our recurring revenues grew at a similar rate, up 50%
YoY, at $5.2m. This is a very pleasing result and is testament to the momentum the company is delivering across all operating regions.
The company was pleased to deliver a positive operating EBITDA of $0.88m for the full year, which was a key milestone set and announced
by the business 12 months ago. We are very pleased that this milestone has been met and should provide our investors with confidence
as we continue to invest in our operating model.
Financial strength and flexibility
During FY19, the company continued to manage its cash position to reflect its growth aspirations, ending the year with cash at bank of
$1.33m. In May 2019, the company announced it had secured a $2m loan facility, which was a response to the increasing need for working
capital as a result of the acquisition of Beonic. This will also allow Skyfii to better manage operating capital to support our growth rate as we
look to scale further within the international markets. The company remains focused on managing its cost base, while continuing to invest
in growth and the drawdown facility will provide access to further growth capital as needed.
Investing in our product and distribution
The company continued to invest into its proprietary and market leading technology platform. Major milestones include the release of our
omnidata intelligence functionality and integration with a variety of people counting solutions, the launch of our custom reporting suite
through IO Labs and various new reporting features including student attendance reporting for the higher education vertical.
The company has maintained a strategy of scaling international operations through distribution via channel partners and we welcomed
new global Managed Service Provider (MSPs) to our list of supported partners during FY19.
Positioning ourselves as an industry pioneer through omnidata intelligence
2019 has been a breakthrough year for us in more ways than one.
We have now developed a global positioning strategy that will help us stand out from the crowded “WiFi analytics” and “WiFi marketing”
spaces. As shareholders may recall, our technology platform initially relied solely on WiFi data to understand visitor behavior. However,
we’ve long recognised that our customers would need more than a single data source to paint a complete picture of what’s happening
in their venues. To that end, we’ve invested heavily in integrating other data sources in our platform, such as people counters. We’ve also
enhanced these data sources by building our our data services team, who have provided our customers with much needed expertise with
data science, research, and other services.
However, while our technology and services offerings have advanced tremendously, our messaging had not kept pace. At the same time,
the market continued to perceive us as a “WiFi” company, which hindered our ability to build awareness around our more sophisticated
solutions. To address this, Skyfii has crafted a new narrative around a concept we’re calling ‘omnidata intelligence’. This methodology
provides customers with the right data, intelligent technology, and experienced people to gain insights about their venues. Instead of
having to take on expensive and risky ‘big data’ projects, our customers can benefit from this new approach to get value from their data
reliably and quickly.
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For personal use only We have already begun incorporating messaging around omnidata intelligence in our marketing and communications strategy, and you
can expect us to continue evangelizing for this new and exciting approach.
New contract wins
During FY19 the business continued to deliver new contract wins. Importantly we are seeing an increasing level of customer engagement
in new verticals such as stadium, municipalities and museums which highlight the ability of our technology to add value outside of our
historic focus on retail. We are also seeing an uplift in the contracts signed outside of Australia reflecting the truly global potential for our
business.
A selection of our key contract wins during 2019 are;
• Increased our presence in Stadium verticals through deals with the iconic Sydney Cricket Ground and Somerset County Cricket Club UK
• Consolidated our presence in our core retail vertical with contracts with Fortius Funds Management, expanded contract with Nando’s in
South Africa, US Retail Group Cafaro, Tanger Outlets and Home Consortium
• Expanded our presence in Latin America through contracts with Habibs Restaurants, Dasa Group Medical Centers and white goods
retailer, Frigelar
• Entered into new verticals through contracts with the National Library of Australia, Dayton Arena in Ohio and the San Francisco Museum
of Modern Art
Our global focus
Skyfii’s suite of SaaS products are truly global in their ability to capture and analyse customer behavior data. Australia has been our
traditional region of focus as we developed our technologies and software with our large base of local customers and relationships.
As our offerings have enhanced and products refined, we are in a position where we are now successfully able to leverage our offerings
into the global marketplace. We are further increasing our on the ground presence in the USA, Europe & Asia and working with local
channel partners to broaden our distribution network. Our global strategy is gaining momentum with recent contract wins in Brazil and
the USA and a very strong and large pipeline of enterprise customer opportunities.
Positive outlook for FY20 and beyond
As we enter FY20, with contracted recurring revenues of $6.0m (pre-Beonic acquisition) to be recognised over the new financial year,
Skyfii is well positioned to deliver another very strong financial and operating performance.
In addition to continued expected growth at both the topline and recurring revenue lines, the company will continue to focus on maintaining
a positive operating EBITDA result for the full year. The company expects to see a significant contribution from the North America and
EMEA regions and is at this stage continuing to invest into its operating model to support this expected growth.
We have successfully diversified our product and services offering to now include analytics reporting from new data sources, including
People Counting technology, 2D and 3D cameras, Point of Sale terminals, Mobile Applications, Live Weather and Social Media. The inclusion
of new data sources provides a clear competitive advantage and increases the opportunity to sell through additional products and services
to our current and prospective customer base.
Skyfii is well positioned to become the preferred omnidata intelligence partner for physical venues globally.
Key areas of focus for Skyfii in FY20:
• Conversion of key contracts within our international markets
• Deliver strong topline and recurring revenue growth across all regions
• Maintain focus on cash management and maintaining a positive operating EBITDA position
•
•
•
Integrate the Beonic (people counting) business and expand offering into the UK, USA and Brazil
Further increase the number of datasets represented in the IO platform
Further build out our channel partnerships with global ecosystem partners
On behalf of the Skyfii team I would like to thank the board, our talented and committed team and our shareholders for another great year
and we look forward to delivering another successful year in FY20.
Yours faithfully,
Wayne Arthur
CEO and Executive Director
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SKYFII LIMITED annual report For personal use only Review of Operations
Skyfii business overview
Skyfii is a global omnidata intelligence company which is
transforming the way organisations collect, analyse and
extract value from data and we exist to help physical venues
use data to better understand visitor behaviour and improve
experiences.
Physical venues need access to data and insights if they are
going to operate successfully. However, many businesses
don’t have the resources or in-house capability to make use
of this data. Skyfii’s omnidata intelligence approach helps
provide actionable insights reliably, and securely.
1. RIGHT DATA
Skyfii IO supports data collection from a growing number
of data sources, many of which are already present within
physical spaces today. This consolidation of data provides
venues the ability to build a holistic view of the visitor
experience and the factors that influence it. The scope, scale
and integrity of our data allows our customers to maximize
their client engagement and satisfaction.
The practice of omnidata intelligence means combining
3 key elements;
1.The right data
2. Intelligent technology
3. Experienced people
Beacons
Survey
Responses
Advertising
Networks
ERP
CRM &
Marketing
Web
Infrared
Cameras
Weather
Mobile
POS
People
Counters
Social
Wi-Fi
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For personal use only 2. INTELLIGENT TECHNOLOGY
Our SaaS cloud-based solution, the IO Platform, helps
venues , gather and visualise data, in order to measure,
predict, and influence customer behaviour, thereby creating
better experiences for their visitors and customers.
•
•
•
•
IO Connect automates the collection, storage and
processing of data from a wide variety of sources
including; WiFi, Camera, CRM, Survey, BLE / Mobile Apps,
Weather, POS / Sales, ERP / Accounting and Finance.
IO Insights automates the reporting of data collected
in real time providing tangible insights such as visitor
counts, dwell time, traffic flow and venue conversion.
IO Engage provides marketing tools to deliver & automate
content across a number of channels including; Email,
SMS, Mobile Push, WiFi Captive Portal and OOH Digital
Screens.
IO Labs is a research and innovation environment where
Skyfii’s data science & strategy teams build the products
of tomorrow and support more custom client needs.
SALE
IO Insights
BI Dashboard &
Automated Reporting
IO Connect
Data Ingest &
Centralisation
IO Engage
Multichannel
Marketing
Automation
IO Labs
Research & Innovation
Environment
Our SaaS product offering is modular, thereby allowing our customers the flexibility to ‘start small’ and grow with us. During the FY19 year we
successfully launched our IO Labs as well as camera and people counting technology, with more product and service offerings set to be launched
in FY20.
3. EXPERIENCED PEOPLE
Our business offers more than just data. Skyfii’s expert data scientists, strategists, and marketers develop customized solutions designed around
your venue’s unique needs. We service our customers in the following areas:
• Data Science
• Market Research
• Data Visualisation
• Marketing optimization
• Campaign Support
• Data Sourcing
Our people and technology ensure that our solutions are customised to allow physical venues to optimise the experience of the venue for their
customers.
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SKYFII LIMITED annual report For personal use only Review of Operations continued
Go-to-market strategy
Product Development
Our go to market strategy utilises a combination of our own
direct sales efforts, predominantly in the ANZ region and revenue
generation through key channel partnerships, which is our preferred
sales approach in our international markets.
With a total employee base of 54, we have set up small, nimble sales
and support teams in each of our international markets to support
and enable sales through a global channel partner ecosystem which
includes bluechip enterprise companies such as:
• Optus
• Dimension Data
The product underwent significant product research and development
within FY19. Development has focused on the following key areas:
Data Quality and Enhanced Multi-Datasource Capabilities
The Skyfii Connect module continues to be enhanced to support
the growing categories of data for streamlined integration and
provisioning, the goal of which is to improve overall data quality.
The Skyfii IO Insights module was enhanced to provide advanced
reporting capabilities regarding the correlation and influence of
related data types.
• Hewlett Packard Enterprises (HPe)
Intelligent Campaign Tools
• Cisco
• AT&T
Channel partners are typically paid a percentage of revenue (10%-
30%) and fall into the following categories:
Technology partners: Technology partners enable delivery of Skyfii’s
solutions or increase our capabilities using a ‘better together’ go-to-
market approach. Examples of these partnerships include Hewlett
Packard & Cisco Meraki.
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. Examples of these partnerships
include Optus & Dimension Data.
Value added resellers (VARs): VARs typically provide a route to
market for large 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.
Examples of these partnerships includes Telcomms & Jade Solutions.
The Skyfii IO Engage module was enhanced to deliver targeted
campaigns based on machine learning and predictive models.
Vendor Support
Skyfii continued its support of data category and vendor agnostic
sources with the introduction of new Wi-Fi, 2D/3D Camera, CRM and
SMS providers.
Data Privacy
Skyfii treats data production, privacy and security very seriously. How
data is collected, stored and used is of the utmost importance to
our business, including supporting our customers’ compliance with
General Data Protection Regulation (GDPR).
As part of this continued commitment to data privacy, Skyfii ensured
its compliance with GDPR, which came into effect on 25 May 2018.
Skyfii also takes a number of steps to ensure our data remains secure
at every stage. This includes storing data securely in ISO 27001, SOC
III, PCI DSS certified data centres. Data is kept within jurisdictional
boundaries. Data is transmitted and stored using multiple levels of
encryption that enforce the industry’s most secure algorithms, such
as 256 bit AES.
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For personal use only Key Verticals and New Customer Contracts
The company continued to successfully diversify its addressable
market during FY19 - accelerating growth in new target verticals whilst
extending its penetration in established verticals. This diversification
resulted in an extensive number of new contract wins, in new and
exciting verticals, announced throughout the financial year. The
number of venues under contract include Healthcare venues, Cultural
centres (museums), Hospitals, Retail banking branches, Sporting
stadiums, Smart Cities, Smart Buildings, Universities, Grocery stores,
Quick Service Retail (QSR), and Department store retailers.
The company continued to extend its dominance in the retail property
sector in Australia and made significant headway in this lucrative
vertical in the United States, Brazil, United Kingdom and Europe.
A list of announced contracts during FY19 can be found below,
however, this list is non-exhaustive and does not reflect the entirety
of contracts secured during FY19.
Skyfii signs five year contract with Sydney Cricket Ground
(12 June 2019)
Sydney Cricket Ground, an iconic Australian sporting stadium,
signed a five year contract to deploy Skyfii’s ‘IO Connect’ (data
collection) and ‘IO Insight’ (data analytics) across the stadium.
Skyfii signs three year contract with Fortius Funds
Management (4 April 2019)
Fortius Funds Management signed a three year contract to deploy
Skyfii’s ‘IO Connect’ (data collection) and ‘IO Insight’ (data analytics)
across two Australian shopping centres, including Mid-City Centre
in Sydney and Albany Creek Village in the greater Brisbane region.
Skyfii secures three-year contract with National Library of
Australia (19 March 2019)
The National Library of Australia, based in Canberra, signed a
three year contract with Skyfii to deploy Skyfii’s ‘IO Connect’ (data
collection) and ‘IO Insight’ (data analytics) across the library.
Skyfii extends Nando’s agreement to South Africa extending
international partnership (7 March 2019)
After the initial signed MSA with Nando’s Australia and expansion
to Nando’s in the U.K., Skyfii extended its deployment to include
an additional 260 restaurants in South Africa. This expansion
takes Skyfii’s total deployment to 780 Nando’s restaurants globally,
including the UK and Australia restaurants.
Skyfii signs master services agreement with North American
retail property group Cafaro (5 March 2019)
Cafaro Company, a North American retail property group, signed
a three year Master Services Agreement (MSA) to deploy Skyfii’s
full suite of ‘IO Platform’ services into Eastwood Mall in Ohio. This
agreement has since extended to include 3 additional mall venues.
Skyfii signs contract with San Francisco Museum of Modern
Art (26 February 2019)
Representing Skyfii’s first client in the cultural centre vertical in the
United States, the San Francisco Museum of Modern Art signed
an initial one year contract to deploy Skyfii’s ‘IO Connect’ (data
collection) and ‘IO Insight’ (data analytics) services. This contract
has recently expanded to include delivery of People counters and
People counting analytics.
Skyfii signs contract with leading large format retail landlord -
Home Consortium (13 February 2019)
Home Consortium, a leading Australian large format retail landlord,
signed a three year contract to deploy Skyfii’s ‘IO Connect’ (data
collection) and ‘IO Insight’ (data analytics) across 23 centres with a
further 18 centres planned for future deployment.
Skyfii signs three year contract with Somerset County Cricket
Club in U.K. (5 February 2019)
Representing Skyfii’s first stadia client in the United Kingdom,
Somerset County Cricket Club signed a three year contract to
deploy Skyfii’s full suite of ‘IO Platform’ services across the stadium.
Skyfii partners with Cincinnati Bell to deploy a Smart City and
University in North America (30 January 2019)
An initial five year contract delivered by North American Skyfii
reseller, Cincinnati Bell, to deploy Skyfii’s full suite of ‘IO Platform’
services across the City of Fairborn and University of Dayton in
Ohio.
Skyfii signs contract with leading Australian property group
ISPT (5 November 2018)
Major Australian property group, ISPT, signed a one year contract
for the deployment of Skyfii’s ‘IO Insight’ (data analytics) across 32
shopping centres and commercial office towers located in Australia.
Skyfii signs multi year contract with Habib’s restaurant chain
in Brazil (16 October 2018)
Further solidifying Skyfii’s position in the Quick Service Restaurant
(QSR) vertical, Skyfii signed a three year contract with Habib’s,
a restaurant chain in Brazil. The contract included the total
deployment of Skyfii’s ‘IO Connect’ (data collection) and ‘IO Insight’
(data analytics) across 360 Habib’s venues.
Skyfii Signs Three Year Contract with Brazilian Retailer
Frigelar (4 September 2018)
Frigelar, a national white goods retailer in Brazil, signed a three
year contract for the deployment of Skyfii’s full suite of ‘IO Platform’
services across 31 retail venues. The agreement includes access
to ‘IO Connect (data collection), ‘IO Insight’ (data analytics) and ‘IO
Engage’ (marketing tools).
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SKYFII LIMITED annual report For personal use only Review of Operations continued
Skyfii Signs Multi Year Contract with French Retailer Kooples
(28 August 2018)
Representing Skyfii’s first retailer signed in France, the three
year signed contract with fashion retailer Kooples, included the
deployment of ‘IO Connect’ (data collection) with a basic level of
analytics across 100 Kooples retail venues.
Skyfii Renews Contract with Waverley Council
(14 August 2018)
After a successful two year relationship with Waverley Council,
Skyfii renewed the contract with the council for a further one year
term. The renewal includes the recent inclusions of WiFi services to
Bondi Junction, which provides Waverley Council with key insights
into public transport utilisation between the beaches and the Bondi
Junction transport hub.
A snapshot of our current enterprise customer base
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For personal use only Key operating highlights
Founded in 2012, Skyfii has grown to provide services to 8,500+ venues, culminating in the collection of 29.9+ million unique registered users
across by our our customers base.
Total registered user base increased by 10.7% QoQ
from 27 million to 29.9 million
Q4 FY19 customer visits increased by 12.89% QoQ from
253 million to 286 million.
Overview of financial performance
In FY19, the company delivered total operating revenues of
$9.4m, representing a 52% growth when compared with FY18 and
recurring revenues of $5.2m, representing a 50% growth when
compared with FY18. This places the Company in a very strong
financial position for FY20.
The growth in revenue is a result of the company’s focus on delivering
high margin, multi-year, recurring revenue contracts and growth in
our services offering to our customer base, both domestically and
internationally across a growing number of industry verticals.
The company delivered a positive operating EBITDA of $0.88m for
the full year. Maintaining a positive operating EBITDA for the full
year FY19 was a key milestone set and announced by the business
12 months ago. We are very pleased that this milestone has
been met and should provide our investors with confidence as
we continue to invest in our operating model in our international
operations.
The increase in net loss is a result of non-cash accounting
adjustments made up of share based payments valued using the
black scholes method, the amortisation of the Causely aquisition
(completed February 2018) and Beonic acquisition costs (completed
July 2019) when compared with the prior year.
AUD $12m
AUD $10m
AUD $8m
AUD $6m
AUD $4m
AUD $2m
0
AUD -$2m
FY19 Revenue & EBITDA results
52%
GROWTH
$6.2m
$3.4m
$9.4m
$5.2m
$0.4m
$0.9m
$3.2 m
$2.0 m
$2.3m
$1.12m
-$3.8 m
-$2.0m
AUD -$4m
-$4.9m
AUD -$6m
-$5.4m
FY16
-$4.9m
FY17
-$4.0m
FY18
FY1 9
Operating EBITDA
Total Operating Revenue
Recurring Revenue
Net Loss
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SKYFII LIMITED annual report For personal use only Review of Operations continued
Revenue Channel Categories
The categorisations of revenue channels, defined as recurring,
non-recurring and services revenues.
Recurring Revenues
The company’s core revenue base is derived from subscriptions
to its Software as a Service (SaaS) IO platform, comprised of IO
Connect (data collection) , IO Insight (data analytics) and IO Engage
(marketing tools) modules. Modules can be purchased packaged,
as a combination or in isolation, and are typically contracted on 1,3
or 5 year terms.
Non-recurring Revenues
Non-recurring revenues are generated from the deployment of
hardware and infrastructure, implementations and upfront setup
fees, which underpin recurring revenues.
Services Revenues
Providing additional paid services to clients, services revenues are
generated from the payment of projects undertaken by both the
Data Consultancy and Marketing Services team, including revenues
generated from customers of the Causely (US) business. Revenues
generated from services are received as either recurring or fixed
fee projects.
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For personal use only Furthermore, the acquisition provides a significant opportunity to
upsell Skyfii’s full suite of SaaS services to Beonic’s existing portfolio of
customers and reflects our ability to identify, execute and complete
value adding acquisitions to complement our existing operations.
Outlook for FY20 and beyond
As we enter FY20, with contracted recurring revenues of $6.0m
(pre-Beonic acquisition) to be recognised over the new financial
year, Skyfii is well positioned to deliver another very strong financial
and operating performance.
In addition to continued growth at both the topline and recurring
revenue lines, the company will continue to focus on maintaining
a positive operating EBITDA result for the full year. The company
expects to see a significant contribution from the North America
and EMEA regions and is at this stage continuing to invest into its
operating model to support this growth.
The company has successfully diversified its product and service
offering to now include analytics reporting from new data sources,
including People Counting technology, 2D and 3D cameras, Point of
Sale terminals, Mobile Applications, Live Weather and Social Media.
The inclusion of new data sources provides a clear competitive
advantage and increases the opportunity to sell through additional
products and services to our current and prospective customer
base. Skyfii is well positioned to become the preferred omnidata
intelligence partner for physical venues globally.
Key areas of focus for Skyfii in FY20:
• Conversion of key contracts within our International markets
• Deliver strong topline and recurring revenue growth across all
regions
• Maintain focus on cash management and maintaining a positive
operating EBITDA position
• Integrate the Beonic (people counting) business and expand
offering into the UK, USA and Brazil
• Increase the number of datasets represented in the IO platform
• Further build out our partnership with global ecosystem partners
Cash position
As at 30 June 2019, the company maintained a cash position of
$1.33m, down from $1.46m at the end of the previous year (ending
30 June 2018), as a result of over $175k in costs related to the
acquisition of Beonic (completed 9 July 2019), upfront costs of
delivering multiple infrastructure deployments in the Australian
market and timing of customer payments to be received in FY20.
On 14 May 2019, the company announced it obtained unsecured
loan facilities of $2 million in aggregate from sophisticated investors,
Thorney Technologies Ltd (ASX:TEK), Jagafii Pty Ltd a company
associated with Skyfii director, Jon Adgemis and BMR Securities Pty
Ltd. The initial term of the loan facility is for 2 years and matures
on 31 May 2021, with a conditional option to extend for a further
12 months.
The company expects to maintain its cash balance in the coming
year, while at the same time continuing to invest in growing
revenues.
Post Financial Year End
Acquisition and Global Development
As we have stated previously, we are building an omnidata intelligence
practice for our customers and our ability to secure value-added and
accretive acquisitions is a key part of this strategy. We were extremely
pleased to complete the acquisition of Beonic Technologies, a leading
Australian customer insights provider specialising in camera and
people counting technology. The transaction is highly complementary
to our existing product offering and allows Skyfii to add more revenue
opportunities to new and existing customers.
People counters provide physical venues with an effective way to
capture high-fidelity, granular analytics on visitor movement throughout
their venues. Additionally, the ability to correlate their data with other
sources in the Skyfii ‘IO Platform’ – such as WiFi, POS, and weather – can
help venues improve the depth of intelligence they can gather. While
the ‘IO Platform’ already supports the ingestion and visualisation of
people counter data, the acquisition of Beonic allows us to augment
those capabilities, and integrate with an even wider range of devices
and customer opportunities.
Skyfii received an overwhelmingly positive and supportive response
from Beonic’s top customers, consisting of blue chip customers in the
Australian retail sector including AMP, Lend Lease, QIC, ISPT and The
GPT Group that extends Skyfii’s already market leading position in the
retail property segment in Australia.
Additional new customers including New Balance, Melbourne City
Council, L’Oreal, David Jones and National Museum of Australia,
provides Skyfii a further diversified customer base across the lucrative
retail, municipality, cultural centres and education verticals.
We estimate that Beonic will deliver a pro-forma 30% increase in Skyfii’s
annualised Recurring Revenue base and the acquisition is anticipated
to be operating EBITDA accretive in the first full year post completion.
15
SKYFII LIMITED annual report For personal use only Directors’ Report
Your Directors submit the financial report of Skyfii Limited (Skyfii or the Company) for the year ended 30 June 2019. 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
Andrew Johnson
Independent Non-Executive
Chairman from 31 January
2019
Independent Non-Executive
Director until 30 January 2019
(appointed November 2014)
• Mr Johnson, a highly experienced and successful telecommunications industry executive, previously
Chairman of Kumul Telikom Holdings Ltd, a telecommunications company in the South Pacific region
and 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.
BComm., M Sc.
FAICD
• Member (Chairman) of the Audit and Risk Committee.
• Holds a relevant interest in 5,183,861 shares and 910,000 options over an equivalent number of
unissued shares.
• No other listed company directorships.
Lincoln Brown
Independent Non-Executive
Director
(appointed 27 April 2018)
• Mr Brown, was the founder and chairman of Causley and a sophisticated technology entrepreneur who
sold his mobile technology business to Zynga in a very successful exit. He brings expertise in mobile
tech, data science and machine learning and a wealth of US based contacts to the Skyfii board and will
assist in Skyfii’s North America expansion.
• Member of the Remuneration and Nomination Committee.
• Holds a relevant interest in 374,150 shares.
• No other listed company directorships.
Susan O’Malley
• Ms O’Malley, is a former Westfield/Scentre Group executive having held various senior managerial roles.
Independent Non-Executive
Director (appointed 24
September 2018)
BBus
GAICD
Sue will support Skyfii’s push into the retail property sector both domestically and internationally.
• Member (Chairperson) of the Remuneration and Nomination Committee and a member of the Audit
and Risk Committee.
• Holds a relevant interest of 170,068 shares.
• No other listed company directorships.
16
For personal use only
Name, independence
status and qualifications
Experience, interests in shares,
special responsibilities and other directorships
Jon Adgemis
• Mr Adgemis, is a former Managing Director of Mergers & Acquisitions at KPMG. Jon will assist Skyfii as it
Independent Non-Executive
Director (appointed 24
September 2018)
grows and expands its operations globally and builds on its strong top line sales growth trajectory.
• Member of the Remuneration and Nomination Committee and a member of the Auditor and Risk
Committee.
• Holds a relevant interest of 33,260,006 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)
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, 3,075,000 ESP shares and 3,739,463 EOP Options.
BComm.
• No other listed company directorships.
James Scott
Independent Non-Executive
Chairman
(resigned 31 January 2019)
Shaun Bonett
Independent Non-Executive
Director
(resigned 29 November 2018)
Roger Hatem
Independent Non-Executive
Alternate Director
(resigned 29 November 2018)
Company Secretary
Koreen White
• Ms White has 21 years’ experience in listed and unlisted, Australian and US-based corporate entities
Company Secretary
(appointed 4 August 2017)
CPA Australia
BBus(Acc)
having worked across the technology, media and telecommunications (TMT) sector.
• Holds a relevant interest in 428,788 shares, 1,400,000 ESP shares and 1,792,283 EOP Options.
• No other listed company directorships.
17
SKYFII LIMITED annual report For personal use only
Directors’ Report continued
Meetings of Directors
During the financial year, 7 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 attendance 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
Andrew Johnson
Lincoln Brown
Susan O’Malley
Jon Adgemis
Wayne Arthur
James Scott
Shaun Bonett / Roger Hatem (1)
7
7
5
5
7
4
3
7
7
5
5
7
4
2
2
-
1
-
-
1
-
2
-
1
-
-
1
-
Note:
(1) Roger Hatem attended 1 board meeting on behalf of Shaun Bonett
4
4
1
1
-
3
3
4
4
1
1
-
3
3
with up to $1.167m in deferred scrip consideration based on
successful contract renewals in the first year post completion.
Other than the above matter there are no other matters or
circumstances that have arisen since 30 June 2019 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.
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.
Principal activities
The principal activity of the Group during the financial year was the
provision of data analytics services.
Review of operations
The consolidated entity’s loss attributable to equity holders of the
Company, after providing for income tax, amounted to $4,035,527
(2018 loss: $2,009,719). Refer to the commentary in the Review of
Operations.
Dividends paid or recommended
In respect of the financial year ended 30 June 2019, there have
been no dividends paid or provided for (2018: nil).
Significant changes in state of affairs
There are no significant changes in the state of affairs of the parent
entity occurred during the financial year:
Subsequent events
On 9 July 2019, the Company announced the acquisition of the
Beonic business from Beonic Technologies (Beonic). Beonic is a
leading Australian customer insights provider specialising in camera
and people counting technology.
This transaction possesses an attractive valuation multiple of
~1.05x annual Recurring Revenue contract value. The consideration
comprises of $0.1 cash and $0.4m in Skyfii scrip upon completion,
18
For personal use only
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 26
of this report and forms part of the Directors’ Report for the year
ended 30 June 2019.
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.
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.
Non-audit services
Amounts paid or payable to the auditor for non-audit services
provided during the year by the auditor amounted to $6,000 (FY18:
$7,663).
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.
19
SKYFII LIMITED annual report For 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:
• Andrew Johnson – Non-Executive Chairman
• Lincoln Brown – Non-Executive Director
• Susan O’Malley - Non-Executive Director
(effective from 24 September 2018)
• Jon Adgemis – Non-Executive Director
(effective from 24 September 2018)
• Wayne Arthur – Chief Executive Officer
• James Scott – Non-Executive Chairman
(resigned 31 january 2019)
• Shaun Bonett – Non-Executive Director
(resigned 29 November 2018)
• Roger Hatem – Non-Executive Alternate Director
(resigned 29 November 2018)
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 Product Officer
• Koreen White – Finance Director and Company Secretary
• Michael Walker – Chief Information Officer
• Ian Robinson – Sales Director
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 $300,000 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.
20
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
Directors’ fees
$
Salary and fees Other
$
$
Post employment benefits
Superannuation
$
Share based payments
Options
$
Shares
$
Total
$
30,000
30,000
30,000
30,000
5,000
25,000
FY 2019
Directors:
A. Johnson
L. Brown
S. O’Malley (1)
J. Adgemis (2)
J.Scott (3)
S. Bonett (4)
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
M. Walker
K. White
30,000
30,000
25,000
20,000
30,000
29,655
89,655
60,000
55,000
50,000
55,074
90,074
25,000
232,500
22,088
36,982
211,544
503,114
211,958
16,667
227,500
213,750
218,125
197,500
20,136
21,612
20,306
20,430
18,763
29,423
40,225
31,988
31,988
15,178
178,777
456,961
163,640
452,977
112,851
378,895
-
270,543
108,310
339,751
Total
150,000
1,301,333
16,667
123,335
320,784
859,851 2,771,970
25,000
25,000
29,167
FY 2018
Directors:
J. Scott
A. Johnson
S. Bonett (5)
L. Brown (6)
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
M. Walker
K. White
210,000
189,000
210,000
207,500
207,500
186,128
6,667
32,000
19,950
17,955
19,950
19,713
19,713
17,682
50,000
50,000
25,000
36,976
29,785
86,061
32,350
32,350
9,784
75,000
75,000
29,167
25,000
266,926
243,407
348,011
259,563
259,563
213,594
Total
79,167
1,210,128
38,667
114,963
352,306
1,795,231
The remuneration of key management personnel in the years ended 30 June 2019 was 100% fixed with the exception of Mr Arthur and Mr
Rankin issued options. 40% of options issued to Mr Arthur and Mr Rankin are based on share price hurdles. For the year ended 30 June 2018
remuneration was 100% fixed. There is no link between remuneration and the market price of the Company’s shares.
Represents the remuneration commencing on the 24 September 2018, being the date upon which the individual commenced to be a KMP
Represents the remuneration commencing on the 24 September 2018, being the date upon which the individual commenced to be a KMP.
Notes:
(1)
(2)
(3) Represents the remuneration up until 31 January 2019, being the date upon which the individual ceased to be a KMP.
(4) Represents the remuneration up until 29 November 2018, being the date upon which the individual ceased to be a KMP.
(5)
(6)
Represents the remuneration commencing on the 22 November 2017, being the date upon which the individual commenced to be a KMP
Represents the remuneration commencing on the 12 February 2018, being the date upon which the individual commenced to be a KMP.
21
SKYFII LIMITED annual report For 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
FY 2019
Directors:
A. Johnson
L. Brown
S. O’Malley (1)
J. Adgemis (2)
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
M. Walker
K. White
Total
FY 2018
Directors:
J. Scott
A. Johnson
S. Bonett (3)
L. Brown (4)
W. Arthur
R. Hatem (5)
Other KMP:
J. Martin
J. Rankin
I. Robinson
M. Walker
K. White
Total
3,357,869
-
-
18,589,512
11,626,211
649,350
1,307,315
10,911,023
4,553,710
50,000
51,044,990
1,624,054
2,083,266
-
-
11,626,211
649,350
817,460
11,307,848
4,553,710
-
32,661,899
374,150
374,150
170,068
136,054
1,451,842
-
-
-
-
-
27,034,440
(12,500,000)
-
-
-
-
-
-
-
378,788
-
-
378,788
-
-
-
-
5,183,861
374,150
170,068
33,260,006
11,626,211
649,350
1,686,103
10,911,023
4,553,710
428,788
1,054,422
29,243,858
(12,500,000)
68,843,270
669,306
560,317
22,015,874
-
396,825
714,286
714,286
489,855
(396,825)
50,000
3,007,646
3,357,869
22,015,874
-
11,626,211
396,825
649,350
1,307,315
10,911,023
4,553,710
50,000
1,918,427
23,692,322
(396,825)
57,875,823
Notes:
(1)
(2)
(3)
(4)
(5)
Represents the ordinary share movements commencing on the 24 September 2018, being the date upon which the individual commenced to be a KMP
Represents the ordinary share movements commencing on the 24 September 2018, being the date upon which the individual commenced to be a KMP
Represents the ordinary share movements commencing on the 22 November 2017, being the date upon which the individual commenced to be a KMP
Represents the ordinary share movements commencing on the 12 February 2018, being the date upon which the individual commenced to be a KMP
Represents the ordinary share movements commencing on the 22 November 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
FY 2019
Directors:
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
M. Walker
K. White
3,075,000
2,450,000
3,125,000
2,675,000
2,675,000
1,400,000
Total
15,400,000
-
-
-
-
-
-
-
FY 2018
Directors:
W. Arthur
Other KMP:
J. Martin
J. Rankin
1,775,000
1,300,000
1,450,000
1,000,000
2,025,000
1,100,000
I. Robinson
1,675,000
1,000,000
M. Walker
1,675,000
1,000,000
K. White
Total
-
1,400,000
8,600,000
6,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
Balance of
Balance of
end of year vested ESP shares unvested ESP shares
3,075,000
1,787,500
1,287,500
2,450,000
3,125,000
2,675,000
2,675,000
1,400,000
1,440,000
2,116,000
1,588,500
1,588,500
462,000
15,400,000
8,982,500
1,010,000
1,009,000
1,086,500
1,086,500
938,000
6,417,500
3,075,000
585,750
2,489,250
2,450,000
3,125,000
2,675,000
2,675,000
1,400,000
478,500
668,250
552,750
552,750
-
1,971,500
2,456,750
2,122,250
2,122,250
1,400,000
15,400,000
2,838,000
12,562,000
23
SKYFII LIMITED annual report For personal use only
Remuneration Report continued
Executive option plan (EOP) & Other 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
Exercise
of options
Sale
of options
Balance at
end of year
FY 2019
Directors:
A.Johnson
W.Arthur
Other KMP:
J. Martin
J. Rankin
I.Robinson
K. White
Total
FY 2018
Directors:
J. Scott
A. Johnson
Total
1,750,000
525,000
(1,365,000)
-
-
-
-
-
3,739,463
3,334,564
3,234,564
1,822,282
1,792,282
-
-
-
-
-
1,750,000
14,448,154
(1,365,000)
3,250,000
1,750,000
5,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
910,000
3,739,463
3,334,564
3,234,564
1,822,282
1,792,282
14,833,154
3,250,000
1,750,000
5,000,000
Loans to Directors and KMP
The following loan balances are outstanding at the reporting date in relation to remuneration arrangements with Executive Directors and
KMP in respect of shares issued under the Employee Share Plan (ESP) and the Executive Option Plan (EOP).
As the ESP and EOP are considered in substance to be an option, the ESP and EOP 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 and EOP is set out in Note 22 to the financial statements.
Directors:
W. Arthur
Other KMP:
J. Martin
J. Rankin
I. Robinson
M. Walker
K. White
Total
24
2019 $
2018 $
243,183
198,001
197,308
220,811
215,363
210,563
29,462
161,385
175,086
178,575
178,575
9,784
1,116,690
901,406
For personal use only
Other transactions with KMP and/or their related parties
During the full year ended 30 June 2019, the Company incurred $172,131 (FY18: $6,719) of expenses relating to outsourced software
development services provided by Simple Machines Pty Ltd, a company associated with Jason Martin (CPO).
During the full year ended 30 June 2019, the Company recognised revenue $nil (FY18: $4,500) 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: $232,500 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
Andrew Johnson
Chairman
30 August 2019
25
SKYFII LIMITED annual report For personal use only
Auditor’s Independence Declaration
26
For 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 4th 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 2019 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 the 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
(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 three independent Directors, Ms O’Malley, Mr Brown
and Mr Adgemis. 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 2019 financial year. The Board will consider conducting a formal
performance evaluation during the 2020 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) 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.
27
SKYFII LIMITED annual report For personal use only Corporate Governance Statement continued
Given the size and nature of the Company, the Board determined
not to establish measurable objectives for achieving diversity for
the 2019 financial year. Establishing measurable objectives for
achieving diversity will be reconsidered on an annual basis.
As at 30 June 2019, the proportion of women employed by the
Group was as follows:
• Board of Directors: 20%
• Senior Executive positions: 20%
• Total Group workforce: 15%
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 three independent Directors,
Ms O’Malley, Mr Brown and Mr Adgemis. Ms O’Malley acts as
chairperson. 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,
Mr Johnson, Mr Brown, Ms O’Malley and Mr Adgemis) 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 - Instil a culture of acting lawfully, ethically
and responsibly
The Board has adopted a Code of Conduct which sets out the
values, commitments, ethical standards of conduct expected of the
Company’s business and people, taking into account the Company’s
legal and other obligations to its stakeholders. This Code of Conduct
is the foundation and basis for which the Company culture is built
upon. Furthermore, 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 three independent Directors,
Directors, Mr Johnson, Ms O’Malley and Mr Adgemis. Mr Johnson
acts as Chairperson.
implemented a process to receive written
The Board has
assurances from its Chief Operations 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:
(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.
28
For personal use only Principle 6 – Respect the rights of security holders
Principle 8 – Remunerate fairly and responsibly
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 is comprised of three
independent Directors, Mr Johnson, Ms O’Malley and Mr Adgemis.
Mr Johnson acts as Chairperson.
The Company has adopted an Audit and Risk Committee Charter
which is available on the Company’s website, www.skyfii.io.
Under the Board Charter, the Board ensures that the Company
has in place an appropriate risk management framework. A risk
management framework was developed during the 2015 financial
year by the Audit and Risk Committee, and approved by the
Board. The Board will review, at least annually, the Company’s risk
management framework in order to satisfy itself that it continues to
be sound. A risk review was undertaken 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.
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.
29
SKYFII LIMITED annual report For personal use only Consolidated statement of profit or loss
and other comprehensive income for the financial year ended 30 June 2019
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
Share option expense
Share based payments expense
Depreciation and amortisation expenses
Finance costs
Loss before tax
Income tax benefit
Loss for the year
Note
2019
$
2018
$
5
5
6
6
6
7
9,360,252
6,171,120
89,677
130,113
9,449,930
6,301,233
(1,989,683)
(1,357,890)
(3,785,448)
(3,007,968)
(370,685)
(601,584)
(711,103)
(404,397)
(75,340)
(235,247)
(514,224)
(361,354)
(1,636,231)
(1,022,657)
(369,730)
(204,167)
(359,034)
-
(1,381,607)
(282,523)
(2,755,329)
(2,026,486)
(10,673)
(1,023)
(4,925,574)
(2,787,646)
890,047
777,927
(4,035,527)
(2,009,719)
Other comprehensive income
Items that will be reclassified to profit or loss when specific conditions are met:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Earnings per share
Basic earnings per share
Diluted earnings per share
28
28
(107,239)
(115,220)
(4,142,766)
(2,124,939)
Cents
Cents
(1.32)
(1.30)
(0.72)
(0.71)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
30
For personal use only
Consolidated statement of financial position
As at 30 June 2019
Note
2019
$
2018
$
Revenue and other income
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
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
Borrowings
Provisions
Current tax liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Provisions
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
8
9
10
11
12
13
14
15
7
15
16
17
1,329,881
1,464,907
2,789,475
2,050,016
411,190
377,449
4,530,546
3,892,372
88,849
137,824
6,240,523
6,677,768
6,329,372
6,815,592
10,859,918
10,707,964
1,124,138
822,417
509,552
-
371,875
223,199
144,852
1,485,038
-
977,955
3,635,455
2,023,571
65,745
-
380,519
286,300
446,264
286,300
4,081,719
2,309,870
6,778,199
8,398,094
27,624,521
26,739,453
1,940,219
409,656
(22,786,541)
(18,751,015)
6,778,199
8,398,094
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
31
SKYFII LIMITED annual report For personal use only
Consolidated statement of changes in equity
For the financial year ended 30 June 2019
Note
Contributed
equity
$
Share
based
payments
reserve
$
Share
option
reserve
$
Foreign
currency
translation
reserve
$
Accumulated
losses
Total
equity
$
$
Balance at 1 July 2017
22,774,553
244,437
60,627
15,884
(16,741,297)
6,354,204
Loss for the year
Exchange differences on
translation of foreign operations
Total comprehensive
loss for the year
Transactions with owners
in their capacity as owners:
-
-
-
-
-
-
(2,009,719)
(2,009,719)
-
(115,220)
-
(115,220)
22,774,553
244,437
60,627
(99,336)
(18,751,016)
4,229,265
Issue of ordinary shares
Share based payments
16
17
3,964,900
-
-
203,928
-
-
-
-
-
-
3,964,900
203,928
Balance at 30 June 2018
26,739,453
448,365
60,627
(99,336)
(18,751,016)
8,398,094
Note
Contributed
equity
$
Share
based
payments
reserve
$
Share
option
reserve
$
Foreign
currency
translation
reserve
$
Accumulated
losses
Total
equity
$
$
Balance at 1 July 2018
26,739,453
448,365
60,627
(99,336)
(18,751,016)
8,398,094
Loss for the year
Exchange differences on
translation of foreign operations
Total comprehensive
loss for the year
Transactions with owners
in their capacity as owners:
-
-
-
-
-
-
-
(4,035,527)
(4,035,527)
(107,239)
-
(107,239)
26,739,453
448,365
60,627
(206,575)
(22,786,543)
4,255,328
Issue of ordinary shares
16
776,937
Issue of ordinary shares
on exercise of options
Share based payments reserve
Issue of options
17
17
-
-
-
(108,131)
108,131
-
-
1,302,170
-
-
443,763
-
-
-
-
-
-
-
-
776,937
-
1,302,170
443,763
Balance at 30 June 2019
27,624,521
1,750,535
396,259
(206,575)
(22,786,543)
6,788,198
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
32
For personal use only
Consolidated statement of cash flows
For the financial year ended 30 June 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Receipts from government R&D tax incentive & government grants
Interest received
Interest paid
Note
2019
$
2018
$
9,430,914
6,081,006
(9,212,459)
(6,970,373)
918,742
942,824
5,954
(10,673)
10,158
(1,023)
Net cash inflow from operating activities
27
1,132,478
62,592
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Payment for security deposits
Proceeds from disposal of plant and equipment
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Net cash inflow from financing activities
(75,867)
(6,626)
(2,193,242)
(1,621,752)
(6,312)
16,667
4,057
-
(2,258,754) (1,624,321)
487,500
503,750
745,775
-
991,250
745,775
Net (decrease) in cash
(135,026)
(815,954)
Cash at the beginning of the year
Cash at the end of the year
1,464,907
2,280,861
1,329,881
1,464,907
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
33
SKYFII LIMITED annual report For personal use only
Notes to the financial statements
For the financial year ended 30 June 2019
Contents of the notes to the consolidated financial statements
Note Contents
Reporting entity ................................................................................................................35
Basis of preparation ........................................................................................................35
Significant accounting policies ......................................................................................35
Operating segments ........................................................................................................44
Revenue ..............................................................................................................................45
Expenses ............................................................................................................................45
Income tax .........................................................................................................................46
Cash and cash equivalents ............................................................................................47
Trade and other receivables .........................................................................................47
Other assets ......................................................................................................................47
Plant and equipment .......................................................................................................48
Intangible assets ...............................................................................................................49
Trade and other payables ..............................................................................................50
Borrowings .........................................................................................................................50
Provisions ...........................................................................................................................50
Contributed equity ...........................................................................................................51
Equity – reserves ..............................................................................................................53
Financial risk management ............................................................................................54
Remuneration of auditors ..............................................................................................55
Contingent liabilities ........................................................................................................56
Commitments for expenditure .....................................................................................56
Share based payments ...................................................................................................56
Related parties ..................................................................................................................61
Parent entity information ...............................................................................................62
Interests in controlled entities ......................................................................................63
Events occurring after the reporting date .................................................................63
Reconciliation of loss after tax to net cash from operating activities .................64
Earnings per share (EPS) ................................................................................................64
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.
34
For personal use only Notes to the financial statements
For the year ended 30 June 2019
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 2, 100 William Street, Wooloomooloo NSW 2011.
The consolidated financial statements of the Company as at and
for the year ended 30 June 2019 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 30 August 2019 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(v).
(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 continues to be in the research, development and
commercialisation stage of its data analytics technology and
services. During the year ended 30 June 2019 the Group incurred
a loss after tax of $4,035,527. At 30 June 2019, the Group had a
surplus in net current assets of $895,091 and a surplus in net
assets of $6,788,199.
On 14 May 2019, the Company announced it obtained unsecured
loan facilities of $2 million in aggregate from sophisticated investors,
including Thorney Technologies LTD (ASX:TEK), Jagafii Pty Ltd a
company associated with Skyfii director, Jon Adgemis and BMR
Securities Pty Ltd. The initial term of the loan facility is for 2 years
and matures on 31 May 2021, with a conditional option to extend
for a further 12 months. Interest on the loan facility is payable
quarterly, with a total annual interest rate of 8% on funds drawn
plus an annual line fee of 2%. The loan facility provides for greater
funding capacity to invest for organic growth across international
markers and to support the integration of the recently announced
acquisition of Beonic Technologies, a complementary customer
insights business.
Management have prepared cash flow projections that support
the Group’s ability to continue as a going concern. This forecast
acknowledges that the Group will not require to raise additional
capital funding for its daily operations.
The Directors of the Company consider that the cash flow
projections and assumptions will be achieved, and in the longer
term, significant revenues will continue to 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 statement.
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.
Equity interests in a subsidiary not attributable, directly or indirectly,
to the Group are presented as “non-controlling interests”. The
Group initially recognises non-controlling interests that are present
ownership interests in subsidiaries and are entitled to a proportionate
share of the subsidiary’s net assets on liquidation at either fair value or
35
SKYFII LIMITED annual report For personal use only Notes to the financial statements continued
For the year ended 30 June 2019
at the non-controlling interests’ proportionate share of the subsidiary’s
net assets. Subsequent to initial recognition, non-controlling interests
are attributed their share of profit or loss and each component of
other comprehensive income. Non-controlling interests are shown
separately within the equity section of the statement of financial
position and statement of comprehensive income.
The consolidated financial statements have been prepared using
reverse acquisition accounting. In reverse acquisition accounting, the
cost of the business combination is deemed to have been incurred by
the legal subsidiary Skyfii Group Pty Ltd (the acquirer for accounting
purposes) in the form of equity instruments issued to the owners of
the legal parent, Skyfii Limited (the acquiree for accounting purposes).
(b) Business combinations
Business combinations occur where an acquirer obtains control
over one or more businesses.
A business combination is accounted for by applying the acquisition
method, unless it is a combination involving entities or businesses
under common control. The business combination will be
accounted for from the date that control is attained, whereby the
fair value of the identifiable assets acquired and liabilities (including
contingent liabilities) assumed is recognised (subject to certain
limited exceptions).
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
36
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
For personal use only basis. Net realisable value represents the estimated selling price
for inventories less all estimated costs of completion and costs
necessary to make the sale.
(e) Plant and equipment
Plant and equipment is stated at historical cost less depreciation,
amortisation and
includes
expenditure that is directly attributable to the acquisition of the items.
losses. Historical cost
impairment
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%.
Customer contracts
Customer contracts acquired are carried at their fair value at date
of acquisition, less accumulated amortisation. They are amortised
on a straight-line basis over the period of their expected benefit,
being their finite useful life between two and six years.
Brand Names
Brand Names acquired are carried at their fair value at date of
acquisition, less accumulated amortisation. They are amortised on
a straight-line basis over the period of their expected benefit, being
their finite useful life of five years.
Software
Software acquired are carried at their fair value at date of
acquisition, less accumulated amortisation. They are amortised on
a straight-line basis over the period of their expected benefit, being
their finite useful life of four years.
(g) Employee benefits
Short-term obligations
Employee benefits that are expected to be settled within 12 months
have been measured at the amounts expected to be paid when the
liabilities are settled, plus related on-costs.
The liability for annual leave is recognised in the provision
for employee benefits. All other short-term employee benefit
obligations are presented as payables.
Short term incentive plans
The Group recognises a liability and an expense for bonuses
payable under short term incentive plans. Short term incentive
plans are based on the achievement of targeted performance
levels that may be set at the beginning of each financial year. The
Group recognises a liability to pay out short term incentives when
contractually obliged based on the achievement of the stated
performance levels, or where there is a past practice that has
created a constructive obligation.
Other long–term employee benefit obligations
Employee benefits payable later than 12 months have been
measured at the present value of the estimated future cash
outflows to be made for those benefits. In determining the liability,
consideration is given to employee wages increases and the
probability that the employee may satisfy any vesting requirements.
Those cash flows are discounted using market yields on national
government bonds with terms to maturity that match the expected
timing of cash flows attributable to employee benefits.
(h) Borrowing costs
All borrowing costs are recognised in profit and loss in the period in
which they are incurred.
(i) Provisions
Provisions are recognised when the Group has a legal or
constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that
outflow can be reliably measured. Provisions recognised represent
the best estimate of the amounts required to settle the obligation
at reporting date.
(j) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with banks, other short-term highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts.
37
SKYFII LIMITED annual report For personal use only Notes to the financial statements continued
For the year ended 30 June 2019
(k) 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.
(l) Revenue recognition
The Group has applied AASB 15: Revenue from Contracts with
Customers using the cumulative effective method. The prior
period comparatives were reviewed and the impact of AASB 15 on
revenue and deferred revenue was considered to be immaterial
and therefore comparative balances have not been restated.
On adoption of AASB 15 the company’s revenue streams and their
impact on adoption of AASB 15 is as follows:
•
•
•
Installation (non-recurring) revenues under AASB 15 where
the performance obligation is satisfied and deemed to be
recognisable at the initial stage of the contract continue to
be recognised in accordance with the previous accounting
policy however revenues related to configuration as part of
the installation (non-recurring) revenues are unbundled and
amortised over the contract period.
Recurring revenues recognised over the contract period
continue to be recognised in accordance with the previous
accounting policy; and
Services revenue recognised in the period of when the
performance obligation is satisfied and is deemed to be
recognised in accordance with the previous accounting policy.
In the comparative period
Revenue was 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
was deferred, it was treated as the provision of financing and
was 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 was
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 the particular project.
Government grants are recognised at fair value where there is
reasonable assurance that the grant will be received and all grant
conditions will be met.
All revenue is stated exclusive of the amount of goods and services
tax (GST).
(m) 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.
(n) 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
into functional
Foreign currency transactions are translated
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.
38
For personal use only
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.
(o) 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.
(p) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions to the
instrument. For financial assets, this is the date that the Group
commits itself to either the purchase or sale of the asset (ie trade
date accounting is adopted).
Financial instruments (except for trade receivables) 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.
Where available, quoted prices in an active market are used to
determine fair value. In other circumstances, valuation techniques
are adopted.
Trade receivables are initially measured at the transaction price
if the trade receivables do not contain a significant financing
component or if the practical expedient was applied as specified
in AASB 15.63.
Classification and subsequent measurement
Financial liabilities
Financial instruments are subsequently measured at:
•
•
amortised cost; or
fair value through profit or loss.
A financial liability is measured at fair value through profit and loss
if the financial liability is:
•
a contingent consideration of an acquirer in a business
combination to which AASB 3:Business Combinations applies;
• held for trading; or
• initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised
cost using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
expense in profit or loss over the relevant period. The effective
interest rate is the internal rate of return of the financial asset or
liability. That is, it is the rate that exactly discounts the estimated
future cash flows through the expected life of the instrument to the
net carrying amount at initial recognition.
A financial liability is held for trading if:
•
it is incurred for the purpose of repurchasing or repaying in the
near term;
part of a portfolio where there is an actual pattern of short-term
profit taking; or
a derivative financial instrument (except for a derivative that
is in a financial guarantee contract or a derivative that is in an
effective hedging relationships).
Any gains or losses arising on changes in fair value are recognised
in profit or loss to the extent that they are not part of a designated
hedging relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to
changes in the issuer’s credit risk is taken to other comprehensive
income and are not subsequently reclassified to profit or
loss. Instead, they are transferred to retained earnings upon
derecognition of the financial liability. If taking the change in
credit risk in other comprehensive income enlarges or creates an
accounting mismatch, then these gains or losses should be taken to
profit or loss rather than other comprehensive income.
A financial liability cannot be reclassified.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer
to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payment when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts are initially measured at fair values
(and if not designated as at fair value through profit or loss and
do not arise from a transfer of a financial asset) and subsequently
measured at the higher of:
•
the amount of loss allowance determined in accordance with
AASB 9.3.25.3; and
the amount initially recognised less the accumulative amount of
income recognised in accordance with the revenue recognition
policies.
•
39
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
Financial assets
Financial assets are subsequently measured at:
• amortised cost;
•
•
fair value through other comprehensive income; or
fair value through profit or loss. Measurement is on the basis of
two primary criteria:
the contractual cash flow characteristics of the financial asset;
and
the business model for managing the financial assets.
•
•
A financial asset that meets the following conditions is subsequently
measured at amortised cost: – the financial asset is managed solely
to collect contractual cash flows; and
•
the contractual terms within the financial asset give rise to cash
flows that are solely payments of principal and interest on the
principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently
measured at fair value through other comprehensive income:
•
the contractual terms within the financial asset give rise to cash
flows that are solely payments of principal and interest on the
principal amount outstanding on specified dates;
the business model for managing the financial assets comprises
both contractual cash flows collection and the selling of the
financial asset.
•
By default, all other financial assets that do not meet the
measurement conditions of amortised cost and fair value through
other comprehensive income are subsequently measured at fair
value through profit or loss.
The Group initially designates a financial instrument as measured
at fair value through profit or loss if:
•
it eliminates or significantly reduces a measurement or
recognition inconsistency (often referred to as “accounting
mismatch”) that would otherwise arise from measuring assets
or liabilities or recognising the gains and losses on them on
different bases;
it is in accordance with the documented risk management or
investment strategy, and information about the groupings was
documented appropriately, so that the performance of the
financial liability that was part of a group of financial liabilities or
financial assets can be managed and evaluated consistently on
a fair value basis;
it is a hybrid contract that contains an embedded derivative that
significantly modifies the cash flows otherwise required by the
contract.
•
•
The initial designation of the financial instruments to measure
at fair value through profit or loss is a one-time option on
initial classification and is irrevocable until the financial asset is
derecognised.
Equity instruments
At initial recognition, as long as the equity instrument is not held
for trading and not a contingent consideration recognised by an
acquirer in a business combination to which AASB 3: Business
Combinations applies, the Group made an irrevocable election
to measure any subsequent changes in fair value of the equity
instruments in other comprehensive income, while the dividend
40
revenue received on underlying equity instruments investment will
still be recognised in profit or loss.
Regular way purchases and sales of financial assets are recognised
and derecognised at settlement date in accordance with the
Group’s accounting policy.
Derecognition
Derecognition refers to the removal of a previously recognised
financial asset or financial liability from the statement of financial
position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (ie when the
obligation in the contract is discharged, cancelled or expires).
An exchange of an existing financial liability for a new one with
substantially modified terms, or a substantial modification to the
terms of a financial liability is treated as an extinguishment of the
existing liability and recognition of a new financial liability.
The difference between the carrying amount of the financial liability
derecognised and the consideration paid and payable, including any
non-cash assets transferred or liabilities assumed, is recognised in
profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder’s contractual
rights to its cash flows expires, or
the asset is transferred in such a way that all the risks and rewards
of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of
financial asset:
•
the right to receive cash flows from the asset has expired or
been transferred;
all risk and rewards of ownership of the asset have been
substantially transferred; and
the Group no longer controls the asset (ie the Group has no
practical ability to make a unilateral decision to sell the asset to
a third party).
•
•
On derecognition of a financial asset measured at amortised cost,
the difference between the asset’s carrying amount and the sum
of the consideration received and receivable is recognised in profit
or loss.
On derecognition of a debt instrument classified as at fair value
through other comprehensive income, the cumulative gain or loss
previously accumulated in the investment revaluation reserve is
reclassified to profit or loss.
On derecognition of an investment in equity which was elected
to be classified under fair value through other comprehensive
income, the cumulative gain or loss previously accumulated in the
investment revaluation reserve is not reclassified to profit or loss,
but is transferred to retained earnings.
For personal use only
•
•
Impairment
The Group recognises a loss allowance for expected credit losses on:
•
financial assets that are measured at amortised cost or fair
value through other comprehensive income;
lease receivables;
contract assets (eg amounts due from customers under
construction contracts);
loan commitments that are not measured at fair value through
profit or loss; and
financial guarantee contracts that are not measured at fair value
through profit or loss. Loss allowance is not recognised for:
• financial assets measured at fair value through profit or loss; or
equity instruments measured at fair value through other
•
comprehensive income.
•
•
Expected credit losses are the probability-weighted estimate of
credit losses over the expected life of a financial instrument. A
credit loss is the difference between all contractual cash flows that
are due and all cash flows expected to be received, all discounted at
the original effective interest rate of the financial instrument.
•
•
Purchased or originated credit-impaired approach
For a financial asset that is considered credit-impaired (not on
acquisition or origination), the Group measures any change in its
lifetime expected credit loss as the difference between the asset’s
gross carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective
interest rate. Any adjustment is recognised in profit or loss as an
impairment gain or loss.
Evidence of credit impairment includes:
• significant financial difficulty of the issuer or borrower;
• a breach of contract (eg default or past due event);
•
a lender granting to the borrower a concession, due to the
borrower’s financial difficulty, that the
lender would not
otherwise consider;
high probability that the borrower will enter bankruptcy or other
financial reorganisation; and
the disappearance of an active market for the financial asset
because of financial difficulties. Low credit risk operational
simplification approach
The Group uses the following approaches to impairment, as
applicable under AASB 9: Financial Instruments:
•
•
•
•
the general approach
the simplified approach
the purchased or originated credit impaired approach; and
low credit risk operational simplification.
General approach
Under the general approach, at each reporting period, the Group
assesses whether the financial instruments are credit-impaired,
and if:
•
the credit risk of the financial instrument has increased
significantly since initial recognition, the Group measures the
loss allowance of the financial instruments at an amount equal
to the lifetime expected credit losses; or
there is no significant increase in credit risk since initial
recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12-month expected
credit losses.
•
Simplified approach
The simplified approach does not require tracking of changes
in credit risk at every reporting period, but instead requires
the recognition of lifetime expected credit loss at all times. This
approach is applicable to:
•
trade receivables or contract assets that result from transactions
within the scope of AASB 15: Revenue from Contracts with
Customers and which do not contain a significant financing
component; and
lease receivables.
•
In measuring the expected credit loss, a provision matrix for trade
receivables was used taking into consideration various data to get to
an expected credit loss (ie diversity of customer base, appropriate
groupings of historical loss experience, etc).
If a financial asset is determined to have low credit risk at the initial
reporting date, the Group assumes that the credit risk has not
increased significantly since initial recognition and accordingly it
can continue to recognise a loss allowance of 12-month expected
credit loss.
In order to make such a determination that the financial asset has
low credit risk, the Group applies its internal credit risk ratings or
other methodologies using a globally comparable definition of low
credit risk.
A financial asset is considered to have low credit risk if:
•
•
there is a low risk of default by the borrower;
the borrower has strong capacity to meet its contractual cash
flow obligations in the near term;
• adverse changes in economic and business conditions in the
longer term may, but not necessarily will, reduce the ability of the
borrower to fulfil its contractual cash flow obligations.
A financial asset is not considered to carry low credit risk merely
due to existence of collateral, or because a borrower has a risk of
default lower than the risk inherent in the financial assets, or lower
than the credit risk of the jurisdiction in which it operates.
Recognition of expected credit losses in financial statements
At each reporting date, the Group recognises the movement in the
loss allowance as an impairment gain or loss in the statement of
profit or loss and other comprehensive income.
The carrying amount of financial assets measured at amortised
cost includes the loss allowance relating to that asset.
Assets measured at fair value through other comprehensive income
are recognised at fair value, with changes in fair value recognised
in other comprehensive income. Amounts in relation to change in
credit risk are transferred from other comprehensive income to
profit or loss at every reporting period.
For financial assets that are unrecognised (eg loan commitments
yet to be drawn, financial guarantees), a provision for loss allowance
is created in the statement of financial position to recognise the
loss allowance.
41
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
(q) 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.
(r) 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.
(s) Comparative figures
When required by Accounting Standards, comparative figures
have been adjusted to conform to changes in presentation for the
current financial year.
Where the Group has retrospectively applied an accounting policy,
made a retrospective restatement or reclassified items in its
financial statements, an additional statement of financial position
as at the beginning of the earliest comparative period will be
disclosed.
(t) 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.
(u) 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.
(v) 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 2019 of $6,240,523.
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.
(w) New Accounting Standards for Application in Future Periods
The AASB has issued a number of new and amended Accounting
Standards that have mandatory application dates for future
reporting periods, some of which are relevant to the Group.
The directors have decided not to early-adopt any of the new
and amended pronouncements. The following sets out their
assessment of the pronouncements that are relevant to the Group
but applicable in future reporting periods.
– AASB 16: Leases (applicable to annual reporting periods
beginning on or after 1 January 2019).
The Group has chosen not to early-adopt AASB 16. However, the
Group has conducted a preliminary assessment of the impact of
this new Standard, as follows.
A core change resulting from applying AASB 16 is that most leases
will be recognised on the balance sheet by lessees as the standard
no longer differentiates between operating and finance leases. An
asset and a financial liability are recognised in accordance to this
new Standard.
42
For personal use only
Basis of preparation
The accounting for the Group’s operating leases will be primarily
affected by this new Standard.
AASB 16 will be applied by the Group from its mandatory adoption
date of 1 July 2019. The comparative amounts for the year prior to
first adoption will not be restated, as the Group has chosen to apply
AASB 16 retrospectively with cumulative effect. While the right-of-
use assets for property leases will be measured on transition as if
the new rules had always been applied, all other right-of-use assets
will be measured at the amount of the lease liability on adoption
(after adjustments for any prepaid or accrued lease expenses).
The Group’s non-cancellable operating lease commitments amount
to $77,500 as at the reporting date.
The Group has performed a preliminary impact assessment
and subject to extending its current lease has estimated that on
1 July 2019, the Group may recognise right-of-use assets and
lease liabilities of approximately $77,500. The current operating
lease term ends in December 2019. The company is currently in
discussions regarding extending its current lease however at the
date of this report this item remains open.
Given that the Group’s activities as a lessor will not be materially
impacted by this new Standard, the Group does not expect
any significant impact on its financial statement from a lessor
perspective. Nonetheless, starting from 2020, additional disclosures
will be required.
43
SKYFII LIMITED annual report For personal use only Notes to the financial statements continued
For the year ended 30 June 2019
4. Operating segments
The Group operates predominantly in two geographical segments, being the development and commercialisation of data analytics,
marketing and advertising services to its customers in Australia and Internationally. 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.
FY19
Revenue
Other income
Total revenue
Australia
International
Total
4,906,588
89,677
4,453,664
9,360,252
-
89,677
4,996,266
4,453,664
9,499,930
Segment net profit
3,537,861
3,211,283
6,749,144
Employee benefits expense
Depreciation and amortisation expenses
Other Expenses
Finance Costs
Loss before tax
Income tax benefit
Loss for the year
FY18
Revenue
Other income
Total revenue
(3,785,448)
(2,755,329)
(5,123,268)
(10,673)
(4,925,574)
890,047
(4,035,527)
Australia
International
Total
3,783,922
2,387,235
6,171,156
128,621
1,492
130,113
3,912,506
2,388,727
6,301,233
Segment net profit
3,400,304
1,857,084
5,257,387
Employee benefits expense
Depreciation and amortisation expenses
Other Expenses
Finance Costs
Loss before tax
Income tax benefit
Loss for the year
44
(3,007,968)
(2,026,486)
(2,181,288)
(1,023)
(2,787,646)
777,927
(2,009,719)
For personal use only
5. Revenue and other income
Revenue from contracts with customers
Export market development grant
Other government grants
Gain on sale of plant and equipment
Interest income
Total other income
Total revenue
6. Expenses
Employee
Note
2019
$
2018
$
9,360,252
6,171,120
67,057
-
16,667
5,954
89,677
110,955
9,000
-
10,158
130,113
9,449,930
6,301,233
Note
2019
$
2018
$
Salaries and related expenses (including superannuation)
Other employment costs
Total employee benefits expense
2,797,522
2,369,222
987,926
638,746
3,785,448
3,007,968
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
11
12
124,842
46,437
2,630,487
1,980,049
2,755,329
2,026,486
307,264
237,741
(23,109)
(131,517)
284,155
106,224
83,966
142,778
10,673
1,023
45
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
7. Income tax
(a) Income tax
Current tax
Over provision in respect of prior years
Income tax (benefit)
Note
2019
$
2018
$
(947,583)
(777,927)
57,534
-
(890,047)
(777,927)
(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%
(4,925,574)
(2,787,646)
(1,354,533)
(756,621)
Tax effect amounts which are not deductible / (taxable) in calculating taxable income:
R&D tax incentive
Over provision in respect of prior years
Difference in tax rates
Accounting for R&D expenditure
Benefit of tax losses/ timing difference not recognised
Other non-allowable items
Income tax (benefit)
(c) Current tax liabilities
Income tax payable in overseas jurisdictions
Franking credits
(1,117,750)
(828,232)
57,534
17,941
655,835
286,173
584,752
-
(18,067)
537,786
176,824
120,384
(890,047)
(777,927)
144,852
-
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: $3,113,282 (2018: $2,486,491)
tax losses: operating losses $12,092,623 (2018: $10,513,376)
tax losses: capital losses $16,911 (2018: $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).
46
For personal use only
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) Expected credit losses
2019
$
2018
$
1,329,881
1,464,907
1,329,881
1,464,907
2019
$
2018
$
1,600,684
1,146,853
1,037,412
151,379
828,593
74,570
2,789,475
2,050,016
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the
lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the days past due. The loss allowance provision as at 30 June 2019 has been determined as follows;
the expected credit losses also incorporates forward looking information.
2019
Expected loss rate
Gross carrying amount
Loss allowing provision
Current
>30 days
>60 days
>90 days
0%
0%
1,211,976
243,144
$0
$0
0%
48,665
$0
0%
Total
0%
96,898
1,600,684
$0
$0
Trade receivables balance includes some customers with extended payment terms of over 90 days as well as a few customers with a history
of paying late. In both cases the company expects to receive all payments in full.
10. Other assets
Current
Prepayments
Other
Total current other assets
2019
$
2018
$
392,448
18,742
328,575
48,874
411,190
377,449
47
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
11. Plant and equipment
Non-current
Office and computer equipment – at cost
Accumulated depreciation
Carrying value of office and computer equipment
2019
$
2018
$
341,542
265,250
(252,693)
(127,427)
88,849
137,824
Total carrying value of plant and equipment
88,849
137,824
Reconciliations
Reconciliations of the carrying amount of plant and equipment at the beginning and end of the current financial year are set out below:
Office and
Computer
equipment
$
177,634
6,627
Total $
177,634
6,627
(46,437) (46,437)
137,824
137,824
137,824
75,867
(124,842)
137,824
75,775
(124,750)
88,849
88,849
Balance at 1 July 2017
Additions
Depreciation
Balance at 30 June 2018
Balance at 1 July 2018
Additions
Depreciation
Balance at 30 June 2019
48
For personal use only
12. Intangible assets
Non-current
Software development – at cost
Accumulated amortisation
Carrying value of software development
Customer Contracts
Accumulated amortisation
Carrying value of customer contracts
Brand Names
Accumulated amortisation
Carrying value of brand names
Software
Accumulated amortisation
Carrying value of software
2019
$
2018
$
8,635,378
6,442,136
(4,708,620)
(3,075,299)
3,926,758
3,366,837
853,000
853,000
(422,302)
(138,736)
430,698
714,264
198,000
(56,100)
198,000
(16,500)
141,900
181,500
2,696,000
2,696,000
(954,833)
(280,833)
1,741,167
2,415,167
Total carrying value of intangible assets
6,240,523
6,677,768
Balance at 1 July 2017
Additions
Amortisation
Software
Development
Customer
Contracts
Brand
Names
Software
$
Total
$
3,289,065
1,621,752
-
-
-
3,289,065
853,000
198,000
2,696,000
5,368,752
(1,543,980)
(138,736)
(16,500)
(280,833)
(1,980,049)
Balance at 30 June 2018
3,366,837
714,264
181,500
2,415,167
6,677,768
Balance at 1 July 2018
Additions
Amortisation
3,366,837
2,193,242
714,264
181,500
2,415,167
-
-
-
6,677,768
2,193,242
(1,633,321)
(283,566)
(39,600)
(674,000)
(2,630,487)
Balance at 30 June 2019
3,926,758
430,698
141,900
1,741,167
6,240,523
49
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
13. Trade and other payables
Current
Trade payables
Sundry payables
Total trade and other payables
14. Borrowings
Current
Loans
Total borrowings
2019
$
2018
$
1,062,653
61,485
740,588
81,829
1,124,138
822,417
2019
$
2018
$
509,552
509,552
-
-
On 14 May 2019, the Company announced it obtained unsecured loan facilities of $2 million in aggregate from sophisticated investors,
Thorney Technologies LTD (ASX:TEK), Jagafii Pty Ltd a company associated with Skyfii director, Jon Adgemis and BMR Securities Pty Ltd. The
initial term of the loan facility is for 2 years and matures on 31 May 2021, with a conditional option to extend for a further 12 months. Interest
on the loan facility is payable quarterly, with a total annual interest rate of 8% on funds drawn plus an annual line fee of 2%. Amounts drawn
down at balance date amount to $503,750 with line fee and interest accrued of $5,820.
2019
$
2018
$
371,875
223,199
65,745
-
437,620
223,199
15. Provisions
Current
Employee benefits
Non-current
Employee benefits
Total provisions
50
For personal use only
16. Contributed equity
(a) Share capital
Ordinary shares
Total share capital
Reconciliation to 30 June 2018:
Balance at 1 July 2017
Equity raising costs (net of tax)
Movements in ordinary shares:
30-Jun-19
Number
30-Jun-18
Number
30-Jun-19
$
30-Jun-18
$
314,463,017
300,924,789
27,624,521
26,739,453
Date
Number
Unit price
$
261,118,194
22,774,553
Issued for purchase of Wicomms Acquisition
1-Aug-17
3,800,000
Issued in settlement of various liabilities
Issue of ESP shares
Issued in settlement of various liabilities
Issue of ESP shares
25-Aug-17
12-Oct-17
24-Nov-17
11-Dec-17
289,855
800,000
1,428,572
6,000,000
Issued for purchase of Causely Acquisition
7-Feb-18
25,000,000
Issued in settlement of various liabilities
Conversion of ESP to FPO
Conversion of ESP to FPO
Issue of ESP shares
Issue of ESP shares
Conversion of ESP to FPO
Conversion of ESP to FPO
Conversion of ESP to FPO
Conversion of ESP to FPO
Balance at 30 June 2018
Reconciliation to 30 June 2019:
Balance at 1 July 2018
Equity raising costs (net of tax)
Movements in ordinary shares:
Issued in settlement of various liabilities
Issue of ESP shares
Issued in settlement of various liabilities
Issued in settlement of various liabilities
Issue of ESP shares
Issued in settlement of Directors Fees
Exercise of Directors Options
Exercise of Directors Options
Balance at 30 June 2019
$0.065
$0.069
$0.058
$0.070
$0.073
$0.140
$0.161
$0.065
-
$0.156
$0.147
$0.065
-
$0.065
-
247,000
20,000
-
100,000
-
3,500,000
78,595
7,508
-
-
-
4,290
-
7,508
-
8-Feb-18
22-Mar-18
22-Mar-18
6-Apr-18
8-Jun-18
29-Jun-18
29-Jun-18
29-Jun-18
29-Jun-18
488,168
115,500
(115,500)
1,000,000
1,000,000
66,000
(66,000)
115,500
(115,500)
300,924,789
26,739,454
300,924,789
26,739,454
25-Jul-18
5-Sep-18
12-Sep-18
10-Oct-18
28-Dec-18
28-Dec-18
3-Apr-19
18-Apr-19
335,730
200,000
98,926
75,000
7,500,000
1,428,572
1,365,000
2,535,000
$0.133
$0.194
$0.200
$0.200
$0.149
$0.147
$0.153
$0.153
44,652
-
19,785
15,000
-
210,000
208,470
387,160
314,463,017
27,624,521
51
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
(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) 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 and 29 November 2018 of which a portion has been exercised:
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
300,000
300,000
300,000
300,000
300,000
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Fully Exercised
Fully Exercised
Fully Exercised
30 November 2019
30 November 2019
Fully Exercised
Fully Exercised
Fully Exercised
29 November 2021
30 November 2021
$0.100
$0.125
$0.150
$0.200
$0.300
$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 and 29 November 2018.
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.
In April 2019, all options with an exercise price of $0.10, $0.125 and $0.15 were fully exercised as fully paid ordinary shares contributing a
total of $487,500 as cashflows from financing activities.
52
For personal use only 17. Equity – reserves
(a) Movements
Share based payment reserve movements
Balance at the beginning of the year
Share based payment expense
Balance at the end of the year
Share option reserve movements
Balance at the beginning of the year
Share option expense
Balance at the end of the year
Foreign currency translation reserve movements
Balance at the beginning of the year
Currency translation differences arising during the year
Balance at the end of the year
Total reserves
(b) Nature and purpose of reserves
2019
$
2018
$
448,365
1,302,170
244,437
203,928
1,750,535
448,365
60,627
335,632
60,627
-
396,259
60,627
(99,336)
15,884
(107,239)
(115,220)
(206,575)
(99,336)
1,940,219
409,656
Share based payments reserve
The share based payments reserve represents the value of the ESP & EOP share grants to employees under the Company’s Share Plans.
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.
53
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
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
Borrowings
Total financial liabilities
Note
8
9
13
14
2019
$
2018
$
1,329,881
1,464,907
2,789,475
2,050,016
4,119,356
3,514,923
1,124,138
822,417
509,552
-
1,633,690
822,417
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. Foreign currency is translated using the average exchange rates at the dates of transactions each month and at the end of each month
the balance sheet is restated using the end of month spot rate. To minimise 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 (2018: nil).
54
For personal use only
(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
On 14 May 2019, the Company announced it obtained unsecured loan facilities of $2 million in aggregate from sophisticated investors,
Thorney Technologies LTD (ASX:TEK), Jagafii Pty Ltd a company associated with Skyfii director, Jon Adgemis and BMR Securities Pty Ltd.
The initial term of the loan facility is for 2 years and matures on 31 May 2021, with a conditional option to extend for a further 12 months.
Interest on the loan facility is payable quarterly, with a total annual interest rate of 8% on funds drawn plus an annual line fee of 2%. Amount
drawn down at balance date amount to $503,750 with line fee and interest accrued of $5,802
Maturities of financial liabilities
The following table details the Group’s remaining contractual maturity for its financial instrument liabilities. The table has been drawn up
based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be
paid. The table includes both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may
differ from their carrying amount in the statement of financial position.
1 year or less
$
1 to 2 years
$
2 to 5 years Over 5 years
$
$
FY 2019
Non-derivatives
Trade and other payables
Borrowings
Total
FY 2018
Non-derivatives
Trade and other payables
1,124,138
509,552
1,633,690
-
-
-
-
-
-
822,417
-
-
-
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
2019
$
2018
$
75,104
6,000
62,198
7,663
81,104
69,861
55
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
20. Contingent liabilities
There are no other contingent liabilities as at 30 June 2019.
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
2019 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
2019
$
2018
$
77,500
25,000
-
-
77,500
25,000
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 2019 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)
2019
$
2018
$
-
13,200
-
13,200
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.
This was refreshed at the 2018 AGM on 29 November 2018.
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.
•
•
•
56
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•
Eligible Employees who accept an invitation (ESP Participants) may be offered an interest free loan from the Company to finance the
whole of the purchase of the ESP Shares they are invited to apply for (ESP Loan). ESP Loans will have a term of 5 years and become
repayable in full on the earlier of:
-
-
the fifth anniversary of the issue date of the ESP Shares; and
if the ESP Participant ceases to be an Eligible Employee, either:
•
•
the fifth anniversary of the issue date of the ESP Shares, if the Eligible Employee is a good leaver (as defined in the ESP); or
that date of cessation, if the Eligible Employee is a bad leaver (as defined in the ESP).
if the ESP Participant does not repay the outstanding ESP Loan, or it notifies the Company that it cannot, then such number of ESP Shares
that equal by value (using the price at which the ESP Shares were issued) the outstanding amount of the ESP Loan will become the
subject of a buy-back notice from the Company which the ESP Participant must accept. The buy-back of such number of ESP Shares will
be considered full and final satisfaction of the ESP Loan and the Company will not have any further recourse against the ESP Participant;
any dividends received by the ESP Participant whilst the whole or part of the ESP Loan remains outstanding must be applied to the
repayment of the ESP Loan;
the maximum number of ESP Shares for which invitations may be issued under the ESP together with the number of ESP Shares still to
be issued in respect of already accepted invitations and that have already been issued in response to invitations in the previous 5 years
(but disregarding ESP Shares that are or were issued following invitations to non-residents, that did not require a disclosure document
under the Corporations Act, or that were issued under a disclosure document under the Corporations Act) must not exceed 10% of the
total number of ordinary shares on issue in the Company at the time the invitations are made;
in the event of a corporate reconstruction, the Board will adjust, subject to the Listing Rules (if applicable), any one or more of the maximum
number of shares that may be issued under the ESP (if applicable), the subscription price, the buy-back price and the number of ESP
Shares to be vested at any future vesting date (if applicable), as it deems appropriate so that the benefits conferred on ESP Participants
after a corporate reconstruction are the same as the benefits enjoyed by the ESP Participants before the corporate reconstruction. On
conferring the benefit of any corporate reconstruction, any fractional entitlements to shares will be rounded down to the nearest whole
share;
ESP Participants will continue to have the right to participate in dividends paid by the Company despite some or all of their ESP Shares
not having vested yet or being subject to an ESP Loan. If an ESP Loan has been made to the ESP Participant, then any dividend due must
first be applied to reducing any outstanding ESP Loan amount applicable to the ESP Shares on which the dividend is paid;
ESP Shares which have not vested and/or are subject to repayment of the ESP Loan will be restricted (escrowed) from trading;
the Company may buy-back at the issue price any ESP Shares which:
-
have not vested, or are incapable of vesting at any time (including as a result of the ESP Participant failing to meet any key performance
indicators on which vesting of ESP Shares is conditional); or
-
remain in escrow and/or are the subject of an ESP Loan, on the occurrence of:
the ESP Participant ceasing to be an Eligible Employee (unless the Board, in its sole and absolute discretion determines otherwise, subject
to any conditions that it may apply, including the repayment of any outstanding ESP Loan); or
the expiration of the term of the ESP Loan.
any bonus securities issued in relation to ESP Shares which remain unvested or are subject to an ESP Loan which becomes repayable in
full will be the subject of a buy-back by the Company at the issue price for no consideration;
on the death or permanent disability of an ESP Participant, all ESP Shares held by the ESP Participant or their estate will immediately vest
subject to the repayment of any outstanding ESP Loan by the curator, executor or nominated beneficiary(ies) (as the case may be) within
30 days of their appointment (or such longer period as the Company in its discretion may allow). Failing such repayment, the Company
will buy-back all ESP Shares in respect of which there is an outstanding ESP Loan;
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.
57
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
(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
Balance at
end of year
Balance of
vested ESP
shares
Balance of
unvested
ESP
shares
Grant date
FY 2019
-
-
7,500,000
1,800,000
28-Dec-18
$0.149
5-Sep-18
8-Jun-18
1-Feb-18
$0.194
$0.147
$0.156
1,000,000
1,000,000
13-Dec-17
$0.073
6,000,000
1-Oct-17
$0.058
800,000
22-Dec-16
$0.065
11,803,000
21-Sep-16
$0.077
1,525,000
23-Dec-15
$0.148
3,555,000
-
-
-
-
-
-
-
Total
25,683,000
9,300,000
FY 2018
8-Jun-18
$0.147
1-Feb-18
$0.156
13-Dec-17
$0.073
1-Oct-17
$0.058
-
-
-
-
1,000,000
1,000,000
6,000,000
800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
800,000
6,700,000
1,800,000
-
-
-
6,700,000
-
-
1,000,000
330,000
670,000
300,000
700,000
231,000
469,000
-
-
6,000,000
1,980,000
4,020,000
800,000
264,000
536,000
2,053,000
9,750,000
6,435,000
3,315,000
725,000
800,000
528,000
272,000
60,000
3,495,000
3,495,000
-
5,738,000
29,245,000
13,263,000
15,982,000
-
-
-
-
-
-
1,000,000
1,000,000
6,000,000
800,000
-
-
-
-
1,000,000
1,000,000
6,000,000
800,000
11,803,000
3,894,990
7,908,010
1,525,000
503,250
1,021,750
625,000
3,555,000
1,379,400
2,175,600
22-Dec-16
$0.065
12,100,000
21-Sep-16
$0.077
1,525,000
23-Dec-15
$0.148
4,180,000
-
-
-
297,000
-
-
Total
17,805,000
8,800,000
297,000
625,000
25,683,000
5,777,640
19,905,360
58
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(c) Executive Option Plan (EOP)
During the financial year ended 30 June 2019, the Company established a share based option plan, the Executive Option Plan (EOP) seeks to
closely align the interest of eligible senior executives participating in the EOP (Executive Participants) with those of investors and to ensure
that the EOP Participants are motivated and rewarded for performance, shareholder return and compensated for remuneration in lieu of
cash payments in line with the economic value created.
The options under the EOP (EOP Options) will entitle their holder to receive ordinary shares in the capital of the Company (EOP Shares)
upon satisfaction of certain vesting conditions as determined by the Board from time to time.
The key terms of the EOP are as follows:
EOP Options provide an opportunity to acquire EOP Shares subject to the payment of the exercise price set at the time of the grant of the
EOP Options (Exercise Price) and EOP Participants can continue to hold the EOP Options after they have vested.
EOP Options will vest upon notification by the Company that the EOP Options have vested and the Company.
EOP Options enable the participant to gain the benefit of any excess of the Share price over the Exercise Price paid. In the event the Share
price is equal to or below the Exercise Price, the EOP Options would be of no value.
In order for the EOP Options to vest, the Vesting Conditions set out in the invitation, or otherwise determined by the Board, for the grant
of the EOP Options must have been satisfied. In addition, at the time of vesting, a participant must not have engaged in serious and wilful
misconduct, wilful disobedience, gross negligence or incompetence, insubordination, disqualification under Part 2D.6 of the Corporations
Act 2001 (Cth), a serious breach of an employment agreement and behaviour which damages the business or reputation of the Company
(Proscribed Conduct)
If the participant engages in Proscribed Conduct, then the EOP Options will be forfeited.
The EOP Options will not be quoted nor will they carry an entitlement to dividends or a right to vote at General Meetings of the Company.
The invitation to participate in the EOP will specify the number of EOP Options to be granted. If Vesting Conditions are not met, then
unvested EOP Options will be forfeited. If the relevant targets are achieved the EOP Options will vest and may be exercised, by payment of
the Exercise Price. This can be done at any time up to ten years after the grant of the EOP Options.
(d) EOP share grants
Set out below are summaries of EOP 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 EOP
shares
Balance of
unvested
EOP
shares
Grant date
FY 2019
21-Jan-19
$0.149
28-Dec-18
$0.149
Total
0
0
1,892,282
16,943,289
0
18,835,571
0
0
0
0
0
0
1,892,282
0
1,892,282
16,943,289
2,950,000
13,993,289
18,835,571
2,950,000
15,885,571
59
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
All Eligible Employees who accepted an offer of ESP and EOP 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 and EOP Loan).
The ESP and EOP 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 and EOP shares. The term of the ESP and EOP Loan is five years; however, participants may forfeit their ESP and
EOP shares if they do not repay the ESP and EOP Loan or leave the Company. As the ESP and EOP removes the risk to participants from
decreases in the share price by limiting the maximum loan amount repayable to the value of the ESP and EOP shares disposed and waiving
the ESP and EOP Loan should the participant forfeit their ESP and EOP 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 and EOP shares due to the ESP and EOP 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 $0.088 per option
(2018: $0.0357). 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 2019 include:
• Weighted average exercise price: various 30 day VWAP at time of issue
• Weighted average life of the option: 5 years
• Expected share price volatility: 61%
• Risk-free interest rate: 1.90%
(e) 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
L.Brown
S.O’Malley
J.Adgemis
Director’s fees
Director’s fees
Director’s fees
Value of services
Value of services
Value of services
374,150
374,150
374,150
170,068
136,054
1,428,572
$0.147
$0.147
$0.147
$0.147
$0.147
$0.147
55,000
55,000
55,000
25,000
20,000
210,000
J. Scott
Director’s fees
Value of services
A. Johnson
Director’s fees
Value of services
714,286
714,286
1,428,572
$0.07
$0.07
$0.07
50,000
50,000
100,000
FY 2019
Directors:
29-Nov-18
29-Nov-18
29-Nov-18
29-Nov-18
29-Nov-18
Total
FY 2018
Directors:
24-Nov-17
24-Nov-17
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
2019
$
2018
$
1,468,000
1,180,635
123,335
1,298,795
381,473
114,963
2,771,970
1,795,231
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
2018
$
2019
$
Balance outstanding
2018
$
2019
$
172,131
6,719
-
-
Other payable transactions with directors and key management personnel
At 30 June 2019 the payable balance outstanding with directors and key management personnel relating to expense reimbursements for
supplier payments and business expenses was $nil (2018: $nil).
(e) Receivable transactions with directors and key management personnel
KMP
Related party entity
Transaction
Andrew Johnson DSI Engineering &
Management Services
Shaun Bonett
Precision Group
Data Science
Consultancy
Analytics and Data
Science Services
Transaction value
2018
$
2019
$
Balance outstanding
2018
$
2019
$
-
-
4,500
57,262
-
-
-
57,262
Other receivable transactions with directors and key management personnel
At 30 June 2019, the net 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 $5,456 (2018: $16,706).
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.
61
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
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
2019
$
2018
$
(1,462,596)
(1,462,596)
97,382
97,382
18,884,891
17,918,752
16,313,765
17,310,931
35,198,656
35,229,683
756,529
1,847,831
756,529
1,847,831
34,442,127
33,381,852
71,411,109
70,526,041
2,380,794
742,992
(39,349,776)
(37,887,181)
34,442,127 33,381,852
62
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Contingent liabilities
The parent entity had no contingent liabilities at 30 June 2019 and 30 June 2018.
Capital commitments – plant and equipment
The parent entity had no capital commitments for plant and equipment as at 30 June 2019 and 30 June 2018.
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.
Country of
incorporation
Australia
Australia
Australia
Brazil
Republic of South Africa
United Kingdom
United States of America
Ownership interest
2018
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
26. Events occurring after the reporting date
On 9 July 2019, the Company announced the acquisition of the Beonic business from Beonic Technologies (Beonic) has been completed.
Beonic is a leading Australian customer insights provider specialising in camera and people counting technology.
This transaction possesses an attractive valuation multiple of ~1.05x annual Recurring Revenue contract value. The consideration comprises
of $0.1 cash and $0.4m in Skyfii scrip upon completion, with up to $1.167m in deferred scrip consideration based on successful contract
renewals in the first year post completion.
Other than the above matter there are no other matters or circumstances that have arisen since 30 June 2019 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.
63
SKYFII LIMITED annual report For personal use only
Notes to the financial statements continued
For the year ended 30 June 2019
27. Reconciliation of loss after tax to net cash from operating activities
Loss for the year
(4,035,527)
(2,009,719)
Investment cash flows included in comprehensive loss:
2019
$
2018
$
Non-cash items in operating loss:
Depreciation and amortisation
Share based payments
Share option expense
Directors fees
Accrued interest
Gain from disposal of fixed assets
Changes in operating assets and liabilities:
Decrease / (increase) in trade and other receivables
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 tax liabilities
Net cash used in operating activities
28. Earnings per share (EPS)
(a) Basic earnings per share
2,755,329
2,026,486
1,381,607
282,523
359,034
294,729
5,802
(16,667)
-
100,000
-
-
(739,459)
(27,428)
194,482
214,421
601,302
144,852
(621,876)
(175,516)
(63,739)
41,953
492,993
(10,513)
1,132,478
62,592
2018
Cents per share Cents per share
2019
Basic EPS attributable to ordinary equity holders of the Company
(1.32)
(0.72)
(b) Diluted earnings per share
Diluted EPS attributable to ordinary equity holders of the Company
(1.30)
(0.71)
(c) Weighted average number of shares used as the denominator
Number
Number
Weighted average number of ordinary shares used in calculating basic EPS
306,870,797
279,869,553
Weighted average number of dilutive options outstanding
4,272,472
5,000,000
Weighted average number of ordinary shares used in calculating diluted EPS
311,143,269
284,869,553
(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
(4,035,527)
(2,009,719)
64
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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 2019
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
Andrew Johnson
Chairman
30 August 2019
65
SKYFII LIMITED annual report For personal use only Independent Auditor’s report
66
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68
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SKYFII LIMITED annual report For personal use only Independent Auditor’s report continued
70
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SKYFII LIMITED annual report For personal use only Independent Auditor’s report continued
72
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 2019.
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 13 August 2019.
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
Thorney Technologies
Birketu Pty Ltd
Precision Management Corporation Pty Ltd
The Elsie Cameron Foundation Pty Ltd
Top 20 shareholders as at 13 August 2019
Rank Name
Date of
Notice
Number of
shares
06-Jun-19
04-Jun-19
12-Feb-18
23-Nov-17
14-Feb-17
33,260,006
26,135,555
23,268,756
22,015,874
17,009,380
Number of ordinary % of ordinary
shares held
shares held
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
SOCIALBON INC
BIRKETU PTY LTD
INVIA CUSTODIAN PTY LIMITED
THE ELSIE CAMERON FOUNDATION PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
UBS NOMINEES PTY LTD
KARIBU PTY LTD
BONDUFFMEX PTY LTD
JAGAFII PTY LTD
MONTELLA INVESTMENTS PTY LTD
SHANDERLAY INVESTMENTS PTY LTD
INVICTUS SUPER NOMINEES PTY LTD
BOLLINGER INVESTMENTS LIMITED
DEVERO HOLDINGS PTY LTD
THE CHIMES PRIVATE FOUNDATION
ALTERAC PTY LTD
AUSTER CAPITAL PARTNERS LLC
MR ANDREW RODNEY JOHNSON
JBWERE (NZ) NOMINEES LIMITED
24,810,050
23,268,756
22,015,874
17,009,380
15,076,547
12,572,125
12,500,000
11,496,211
10,911,023
8,449,956
7,581,715
6,935,972
6,167,508
5,285,713
4,553,710
4,548,450
4,096,372
3,800,000
3,585,861
2,960,853
8.90%
8.35%
7.90%
6.10%
5.41%
4.51%
4.48%
4.12%
3.91%
3.03%
2.72%
2.49%
2.21%
1.90%
1.63%
1.63%
1.47%
1.36%
1.29%
1.06%
Total top 20 holders
Total remaining holders
207,676,076
74.49%
71,123,941
24.51%
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SKYFII LIMITED annual report For personal use only
Additional ASX information
Distribution of ordinary shareholders as at 13 August 2019
Name
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Total
Number of
Shareholders
Number of
shares
644
88
94
332
169
8,948
311,853
771,070
13,615,996
264,072,150
1,327
278,780,017
At the closing market price of $0.165 per share on 13 August 2019, there were 640 shareholders with less than a marketable parcel of shares
($500).
Option holders as at 13 August 2019
Rank Name
1
2
3
4
Mr James Scott
Mr Andrew Johnson
Thorney Technologies
BMR Securities
Total
Restricted securities as at 13 August 2019
Number of
% of
options held options held
1,690,000
910,000
5,714,285
476,190
8,790,475
20%
10%
65%
5%
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
Number of shares
ESP shares
Various dates ending no later than 28-Dec-21
Unquoted EOP shares
Various dates ending no later than 30-Jun-21
Total shares subject to escrow
29,245,000
18,835,571
48,080,571
28. 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.
29. 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
Non-Executive Director
Non-Executive Director
Company Directors
Mr Andrew Johnson
Mr Wayne Arthur
Mr Lincoln Brown
Ms Susan O’Malley
Mr Jon Adgemis
Company Secretary
Ms Koreen White
Registered Office
Level 2
100 William Street
Woolloomooloo NSW 2011
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
75
SKYFII LIMITED annual report For personal use only For personal use only