Synertec
2021 Annual Report
Synertec has adopted the Environmental, Social
and Governance (ESG) framework of 21 key
areas designed by the World Economic Forum.
We are dedicated to helping our customers
to reduce their carbon footprint through our
strategic focus on environmentally friendly
and energy efficient technology solutions.
Technology is the key to achieving the
ambition of rapidly reducing emissions in
a way that supports economic growth.
Key events 20:21
Contents
Melbourne Metro Tunnel
Synertec has been awarded further
contracts to provide senior specialist
consulting services, including systems,
controls and automation engineering
following on from several successful
projects delivered over the last few years
into Melbourne’s Metro Tunnel
Project. This represents clear validation
of Synertec’s strategic focus in
developing best-in-class automation,
controls and systems engineering.
PowerHouse validated
Melbourne Water ETP
CTS Progress
Synertec’s multi-channel clean
technology strategy has been
validated after signing a
Memorandum of Understanding
(MOU) with Santos and completing
a strategic $7m cap raise. Synertec
is developing an AI driven renewable
energy power system based on solar
and battery inputs. The power system
is being designed to meet the energy
requirements for sustainable well
de-watering at Santos’ Myalla coal-
seam-gas development in Qld.
Synertec has grown its workforce by
almost 50% since COVID-19 lockdown
restrictions were lifted in Victoria in late
CY20. This has allowed the Company to
win new contracts to design, supply and
construct automation control systems to
support the likes of Melbourne Water’s
power plants with the objective to
reduce operational costs associated with
electricity usage and to reduce green-
house gas emissions as per their pledge
commitment to be net zero by 2030.
The Company’s CTS technology
development is progressing as planned
with Synertec’s strategic global partner
first announced to the ASX on 23
November 2020, with the CTS
technology design now complete.
To assist with its CTS technology
development Synertec was awarded
a grant of $50,000 under the Victorian
Government Technology Adoption and
Innovation Program.
CDP Exclusive worldwide
technology licence
MOU signed with US-Australian
environmental services company
BeneTerra Pty Ltd, whereby
BeneTerra is assisting in the Australian
environmental testing aspects of CDP
and intends to promote Synertec as
preferred supplier of treatment
applications relating to drilling muds,
cuttings and contaminated slurries.
Statement from The Chair
Managing Director’s Report
Synertec Environmental, Social and Governance Report
Synertec Board Members
Financial Report for the year ended 30 June 2021
Corporate Directory
Directors’ Report
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
Shareholder Information
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SYNERTEC ANNUAL REPORT 2021
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Statement from The Chair
Despite the challenges and
disruptions posed by the COVID-19
pandemic, FY21 was a success for
Synertec in many ways. Thanks to
our dedicated people, our actions
have set us up for the future and we
were able to stay on course in our
strategy of becoming a global player
in a low carbon future.
Dennis Lin. Chair
Dear Shareholders,
As Chair and on behalf of the Board of Directors, I am
pleased to present to you the 2021 Annual Report for
Synertec Corporation Limited.
In presenting our year in review, we must first acknowledge
COVID-19 and its ongoing impacts on the communities in
which we operate and our stakeholders including our
people, customers, suppliers and shareholders.
During the year, Governments around the world took steps
to protect their citizens from the worst of the pandemic’s
effects. This was particularly evident in Australia, and
especially the State of Victoria where Synertec and many of
its key customers are based.
Although lockdown restrictions have presented some
operating challenges and impacted demand in some of the
Group’s end markets, Synertec has maintained the health,
well-being and safety of its people as the key priority, and
maintained strong focus on providing a safe and inclusive
work environment for all while continuing to deliver for our
customers.
The business has continued to ensure flexible working from
home solutions are efficient and suitably enabled by our
technology platforms, and mental health support through
an Employee Assistance Program and local initiatives have
been valuable to everyone.
We are proud of the way our Company has dealt with the
COVID-19 pandemic and community lockdowns imposed
by Governments across Australia, which have continued
into calendar 2021. We believe this demonstrates our
strong commitment to our people, our customers and their
mission-critical projects, our alliance partners, our suppliers
and our shareholders.
Synertec’s philosophy continues to be to align all our
activities to our Purpose and to make long term decisions for
superior shareholder returns. During the COVID-19
pandemic, we applied this philosophy to key decisions
regarding protection of our people, our customers and our
capital structure. We successfully retained all of our
employees during the pandemic, maintaining Synertec’s
strong capability and pursuit of innovation in our chosen
markets, grew our revenue from existing customers to
almost 100%, and successfully completed oversubscribed
share placements in July 2020 (2.3 cents per share raising
$1.3 million before costs) and August 2021 (10.0 cents
per share, raising $7.1 million (before costs), substantially
strengthening our capital structure.
Although we did not make any cuts to staff during lockdown
periods, I am grateful to my fellow Directors who elected to
take a reduction of 20% to their remuneration during the
period from 1 May 2020 to 31 March 2021. This initiative
helped to absorb some of the financial impact on the Group
from the COVID-19 pandemic and combined with other cost
reduction measures and assistance from the various
Government support measures during this period, enabled
Synertec to retain and support the well-being of all
employees through this period.
It’s important to note that our traditional business continues
to be an important part of our strategy and our future, with a
focus on sustainability and technology expected to deliver a
higher rate of future growth.
Over the past year, we have rapidly accelerated our strategic
transformation. Having built stable foundations for
sustainable growth across earlier periods, our actions in
FY21 have set us up for the future as we secured important
commercial partnerships and gathered the resources we
need to execute on multiple near-term environmentally-
focused and technology-led growth opportunities, as well as
increased demand for our specialist engineering capability
across our target industries.
This brought renewal at a corporate level as we refined our
strategy and operating levels. After almost 2 years as a
Non-Executive Director, I was honoured to succeed Ms.
Leeanne Bond as Synertec’s Independent Non-Executive
Chair from 1 April 2021. In this new role I have drawn on my
experience as an advisor in corporate activity between
Australia and Asia and executive directorships in other high
growth ASX-listed companies to inform the direction of
Synertec’s technology-led growth strategy.
As outgoing Chair, Leeanne oversaw a period of great
transformation in the business as Synertec successfully
developed into an ASX-listed company with significant
growth aspirations. We are grateful that we will retain
Leeanne’s valuable counsel, strategic contributions and
industry insight as a Non-Executive Director.
This year also marked the retirement of Independent
Non-Executive Director, Mr. Kiat Poh, effective from 31
March 2021. Poh has provided the Company with
outstanding advice and service as a Director since
Synertec’s 2017 ASX listing, and on behalf of my fellow
Directors I thank him for his contributions.
We strengthened our Board in April 2021 by welcoming
Synertec’s CFO and Company Secretary, Mr. David Harris,
joining the Board as Executive Director, Corporate
Development and remaining as Company Secretary. David
has served the Company since 2017 and this appointment
reflects David’s key role in developing the many
technology-led growth opportunities identified by Synertec
and helping to set and deliver our corporate strategy at a
pivotal time for the Company.
As a diversified technology growth company, Synertec
designs, develops and delivers technology that provides a
viable transition for its commercial partners to a low carbon
future. Our niche multi-disciplinary engineering expertise
supporting our Tier-1 blue chip customer base has us
uniquely positioned to generate scalable solutions to
decarbonise industry globally.
Over the course of the year, our focus on developing
innovative ESG-focused solutions culminated in a
Technology division announced following our recent share
placement that now houses a strong portfolio of market
opportunities. Each of these technologies holds a different
solution to achieving the widely-held ambition of rapidly
Synertec share performance
0.12
0.10
0.08
0.06
0.04
Sep 20
Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21 Jul 21
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SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
3
Statement from The Chair
Market Capitalisation & Enterprise Value ($m)
30 June 2020 to 12 August 2021
40
35
30
25
20
15
10
5
-
0.12
0.10
0.08
0.06
0.04
0.02
0.00
30.06.20 31.12.20 30.06.21 12.08.21
Enterprise Value
Total Market Capitalisation
Closing share price (cps)
I would also like to thank our customers and partners for
their support and loyalty to Synertec throughout the year
and for the opportunities they have provided for us to
continue to work together into FY22 and beyond.
Finally, I am grateful to our shareholders for supporting
Synertec’s vision, strategy and development ambitions.
I look forward to your continued support.
Mr. Dennis Lin
Independent Non-Executive Chair
Synertec Corporation Limited
reducing emissions in a way that supports economic growth
and is socially responsible.
Importantly, sustainability is now a growing part of our
business, and we expect it to have more substantial profit
margins and scale than conventional engineering services.
We are supporting our customers as they address the
magnitude of the transition to achieve a low carbon future,
and the scale of the longer-term opportunities we have
identified, particularly in energy and wastewater
management technology, has presented us with exciting
opportunities to partner with companies during the year in
Asia, Europe and Australia, each seeking to expand their
offering across the Asia Pacific region.
To secure these technology-led growth opportunities and
maintain our strong capital structure, the Company
successfully completed fully subscribed share placements in
July 2020 and August 2021 providing a combined total of
$8.0 million (after costs) in important capital funding for
further investment in key growth initiatives. This activity
attracted many new investors for Synertec, including several
high-quality institutions, and we warmly welcome them to our
Company.
For shareholders entering the Company in the July 2020
placement, the return on their investment to 12 August 2021
(closing share price of 10.5 cents when the second
placement was completed) was 357%. As we have
communicated consistently to our shareholders since listing
on the ASX in 2017, with a solid framework becoming
established for a technology-led growth strategy,
commercialising exciting ESG-focused technology through
strategic partners and growing out a high-end engineering
solutions business, we expect the investments our long term
shareholders and the Company have made will drive
outstanding returns from a business delivering scalable
growth in revenue and profitability from a sustainability
mega-trend in the years ahead.
The Company is future-fit and has the balance sheet to
support these growth initiatives, and continues to focus and
deliver on its key stated priorities: Safety; Shareholder Value;
Industry Focus; High Performing Teams; and Innovation.
I would like to thank each and every employee for their
contribution. Their remarkable dedication has underpinned
Synertec’s success in earning further awards of projects and
programs of work during the year from our existing customer
base and in developing our portfolio of technologies.
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SYNERTEC ANNUAL REPORT 2021
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From the Managing Director
Our traditional business continues to be
an important part of our future, with
technology and sustainability providing
a higher rate of future growth.
Michael Carroll. Managing Director
Dear Shareholders,
Welcome to the 2021 Annual Report for Synertec
Corporation Limited. In the year to 30 June 2021 (FY21),
our Company strengthened its position as a diversified
technology development company with a sound foundation
for growth providing highly engineered products and
solutions to tier-1 customers in large global markets.
FY21 has been a transformative year for Synertec. The
conditions of our operating environment have presented
ongoing challenges, but I am pleased to report that these
same conditions have provided opportunities for us to
demonstrate value to our customers, partners and investors.
Although the COVID-19 pandemic continues to impact the
business, our determined leadership, sound strategy and
hardworking team have empowered us to position the
Company for a strong post-COVID growth phase. We are
proud that in FY21 we chose not to make a single employee
redundant or force people to take leaves during the
lockdown periods and continue to invest in our people and
we restructured our business with an eye to the future which
includes innovative, environmentally friendly and energy
efficient technology for the energy sector. We have
continued to execute on our strategy and invest for the
benefit of our people, our customers and our shareholders.
Financial Performance
The initiatives we delivered this year have seen Synertec
make significant progress in establishing a sustainable
growth platform. Overall, the business invested
approximately $1.5 million during the year in establishing a
technology division in which the various technologies we
announced throughout the year have progressed to bolster
our growth platform, and we have restructured the business
accordingly to accommodate this development from FY22
onwards.
Of particular note is that we have re-shaped and
re-positioned the business for growth into a low carbon
future while effectively maintaining our cash position
throughout FY21. We believe this underscores our fiscal
controls and our prudent approach to any application of
funds.
Although our business continued to be impacted by
COVID-19 during FY21, we saw the fruits of our hard work
with growth in revenue during the second half of the year.
The revenue of the Group for the period was $8.4 million,
growing by 40% from H1 ($3.5 million) to H2 ($4.9 million).
This represents the strongest year of Engineering
Consultancy Services revenue the Group has ever delivered,
spurred by growing demand from major energy and critical
infrastructure customers for Synertec to commence
important and long term programs of work on critical
projects within their organisations. As a result, to grasp these
immediate opportunities, we rapidly expanded our billable
workforce through 2H FY21 by almost 50%.
Evident from our results is our focus on solid revenue
diversification across our four target industries of energy,
water, critical infrastructure and advanced manufacturing.
With approximately 25% of revenue coming from each of
these sectors it is fair to say we are building strong and
integral foundations, through deep customer relationships,
for further growth in the engineering solutions business,
while providing a strong platform for our technology business
to expand across all of these sectors.
Our refined philosophy of ‘Projects, Programs, Technology’,
underscored by reputation, value, trust and partnerships, is
reaping results. Appreciating the amazing quality of the
Tier-1, blue-chip customer and our deep domain knowledge
of their respective businesses and industries which we have
developed over two decades, this year we consciously
increased our focus on deepening those relationships and
unlocking more opportunities to help them with their
engineering challenges, and their transition to a low carbon
future.
Synertec’s gross margins continued to improve across
calendar 2020 and 2021 to date, almost doubling the rate
achieved in FY19. This improvement reflects our
prioritisation of higher-value programs of consultancy work
with our blue-chip customer base, creating a growing
pipeline of opportunity and stable work in hand
position.
This year the Group produced an EBITDA loss before
corporate development costs of $1.3 million, in line with
FY20. While we continue striving to achieve near-term
profitability through greater scale, and the commercialisation
of our announced technologies, the operating result also
reflects several significant strategic investments in both
project bidding and additional technology development
opportunities. We firmly believe the combination of our
engineering capabilities with the multiple “shots on goal”
regarding our technologies will deliver sustainable long-term
profitable growth and continue the exceptional shareholder
returns our shareholders have enjoyed this year.
Technology Development
We continue to explore a range of strategic inorganic growth
opportunities across our target markets. The common
theme uniting these opportunities is how they ignite our
imagination to solve current sustainability challenges with
our partners in their pursuit of a low carbon future. To this
end, we see significant opportunities to add technology-led
value in a range of subsectors of the global energy industry.
Synertec’s opportunity with Composite Dry Powder (CDP)
continues to develop toward its promise of an
environmentally friendly and economic treatment of oil and
gas drilling mud. In FY21 Synertec provided critical funding
to the owner of the technology, GreenTech, to complete
important technology pilot programs with major Chinese
State-Owned Enterprise customers responsible for most of
China’s oil and gas production. These pilot programs,
specifically designed to evaluate the technology with regard
to cost competitiveness and environmental benefits,
returned encouraging results.
We also agreed to an exclusive worldwide licence (excluding
China) for the technology and imported CDP to undertake
testing under Australian conditions. As we’ve announced,
the testing has so far revealed results consistent with those
experienced by our partner in China, with the next step
being to test the technology on a commercial scale, most
likely in central Australia.
Our development of a world-leading Custody Transfer
System (CTS) has positioned Synertec with precise, safe
and environmentally friendly technology for LNG transfer, for
both land and marine applications. This is a critical piece of
LNG and gas sampling and metering technology, designed
Synertec’s Tier-1 customers driving growth and technology development
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SYNERTEC ANNUAL REPORT 2021
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7
From the Managing Director
Reputation
Technology
& IP
Projects
Partner
Value
Programs
Trust
by Synertec to produce no fugitive greenhouse gas
emissions. During the year, we secured a strategic partner
to aid our commercialisation of CTS: one of the world’s
largest providers of LNG shipping and floating solutions and
services, which also has interests in Australian projects.
We continue to see demand growing for this environmentally
friendly technology, both in Australia and globally, as
newly-imposed marine regulations are driving a long-term
transition towards LNG as the marine fuel of choice for
cleaner sea vessels and coastal LNG storage and
regasification facilities. We see ourselves still in the early
stages of a global mega-trend in LNG, and very few, if any,
businesses globally can provide the systems, products and
solutions of the quality which Synertec has delivered.
Elsewhere in the Energy sector, during FY21, we worked
towards developing an AI-powered solar renewable base-
load power system for oil & gas sites. We formalised this
work through an MOU with Santos Limited (ASX:STO) that
we announced subsequent to year-end. We expect this
technology to be further developed and field tested
throughout the coming year.
All three of the technologies in our current portfolio are now
evenly poised to launch and offer exciting potential for
commercialisation over the coming years.
To deliver the growth targeted in Synertec’s strategic plan,
we will continue working through these and other technology
opportunities which have diverse global applications and fit
within the Group’s strategy to commercialise replicable and
scalable solutions which enhance industrial clients’
profitability, efficiency and safety, while reducing their
environmental footprint.
Health and Safety
Safety is Synertec’s highest priority, and we continue to
focus sharply on the ongoing safety, well-being and care of
all people associated with Synertec.
Throughout FY21, the COVID-19 pandemic and the
associated community restrictions imposed by Governments
have continued to significantly influence market behaviour.
Through this period, Synertec’s priority has remained the
health, well-being and safety of its people and continuing to
provide a safe and inclusive work environment for all.
We have made a concerted effort to keep our people, and
those who interact with us, safe and to support our
continuing operations. We are therefore proud to have
experienced no lost time injuries during the year, and we
have endeavoured to support our workforce and their
families by providing stable employment, an employee
assistance program and various other activities to help
people cope with these unprecedented conditions.
Strategy
We made substantial progress on our strategic agenda
during FY21, and the Group is now well-positioned to
leverage its unique capabilities in high-tech engineering to
generate scalable solutions to decarbonise industry. With
that as our guiding principle, we are continuing to invest
ambitiously and expect to benefit from the global economic
recovery as we continue to execute our technology-led
growth strategy. We are well-funded to execute this strategy,
having successfully completed an oversubscribed $7.1
million share placement in August 2021, cornerstoned by
several high quality institutional investors.
The Group is now also appropriately structured to accelerate
the development of our Technology initiatives, having
appointed Mr. David Harris as Executive Director of
Corporate Development with oversight of Technology and
Future Business.
Outlook
We are now seeing the benefits of several years of dedicated
effort in developing both our Engineering and Technology
arms. As a result of our experience and ability to replicate,
expand and commercialise high-value proprietary intellectual
property and increase our value to our customers, we are
seeing close to 100% of revenue recurring from our existing
customer base – an important and pleasing development in
one of our key metrics.
Although the impacts of COVID-19 have resulted in the
deferral of some projects, we are beginning to see signs of
these projects restarting. We expect to see some larger
project awards begin to flow through our target markets
(many of which are with our existing customers) as
economic conditions improve through FY22.
We believe that with our strong financial position, careful
resource allocation, intensive sales focus, unique and
scalable global IP and highly-regarded team of multi-
disciplined engineering and technology experts, the
Company remains on a firm and deliberate path to delivering
the long term strategy and sustainable growth for its
shareholders.
I would also like to thank our loyal customers, suppliers and
shareholders for supporting Synertec through what has
been a tumultuous and uncertain period in the world,
particularly for smaller businesses. At the same time, we
take confidence and are grateful for their continued backing
as we remain sharply focused on executing our growth
strategy in FY22 and beyond.
I would like to take this opportunity to thank our
management and staff for their efforts over this past year, as
well as my fellow Directors for their guidance and support.
The Company’s operational and strategic achievements are
a direct result of the significant effort contributed by all of
Synertec’s people.
Mr. Michael Carroll
Managing Director
$25.0
$20.0
$15.0
$10.0
$5.0
$0
Annual Revenue by Half Year ($m)
& Gross Margin (%)
Revenue by Type
Revenue by Industry
56%
44%
27%
25%
Advanced Manufacturing & Others
23%
25%
Critical infrastructure
Water
Energy
FY18 FY19 FY20 FY21
Engineering consulting services
Critical Infrastructure
Fixed price solutions & transfer of goods
Water
1H
2H
Gross Margin
Advanced Manufacturing & Others
Energy
Engineering Consultancy Services
Revenue ($m)
Cash Balance ($m), Annual Net Cash
Flows ($m) and Current Ratio (times)
Annual net cashflows ($m)
by Half Years
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
FY18 FY19 FY20 FY21
1H
2H
$10.0
$8.0
$6.0
$4.0
$2.0
0
-$2.0
2.0
1.5
1.0
0.5
0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
Share placement
completed
12.08.21
FY18 FY19 FY20 FY21
FY18 FY19 FY20 FY21
Operating Total Cash
Net Cash Flows
Current Ratio
Net Cash Flows 1H
Net Cash Flows 2H
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Synertec: Environmental, Social and Governance
A commitment to ESG reporting
In FY21 Synertec made a commitment to commence
Environmental, Social, and Governance (ESG) reporting as
a tangible first step in building robust sustainability
credentials. We are now working toward making disclosures
against the World Economic Forum (WEF) universal ESG
framework. We demonstrate our disclosure progress by
providing quarterly ESG updates and make our disclosures
available in the public domain.
The universal ESG framework
The World Economic Forum has defined common metrics
for sustainable value creation in a core set of 21 disclosures
for organisations to align their mainstream reporting on
performance against ESG indicators. The WEF metrics are
based on existing standards, aiming to accelerate
convergence and consistency in the reporting of ESG
disclosures.
Leading ESG disclosure technology
To track our disclosure progress and demonstrate our
sustainability performance against the WEF ESG framework
we utilise the ESG Go disclosure platform from Socialsuite.
ESG Go enables us to demonstrate our ongoing
commitment to ESG by providing a dedicated solution to
track, report and share our ESG disclosures. With ESG Go
we have started the journey of building robust ESG
credentials.
Our ESG disclosure progress
Our ESG progress and disclosures are
captured under the four pillars of the WEF
ESG framework: Governance, Planet,
People, and Prosperity. The ESG Go
dashboard compares our starting point
Baseline Dashboard with our quarterly
progress and the change between each
period highlights areas of progress and
where disclosures have been made.
We are responding to tightening
environmental regulations with
innovative green technologies.
Governance
People
• Disclosing our corporate purpose which captures how we
create solutions to economic, environmental and social
issues in a way that creates value for all stakeholders,
including shareholders.
• Disclosing the composition, capabilities and perspectives
of our board in making robust decisions on an ongoing
basis, with a focus on competencies relating to economic,
environmental and social topics.
• Disclosing material issues impacting stakeholders, to
ensure that organisational impact and long-term value align
with the interests of a broad range of stakeholders and
provide the foundation for trust in the business.
• Disclosing anti-corruption policies, training, initiatives, and
incidents as well as its ongoing ability to both prevent and
remedy ethical issues.
• Disclosing company-specific risks and opportunities
(including material economic, environmental and social
issues), board oversight, and management of the corporate
response over time as they change.
Planet
• Disclosing greenhouse gases (e.g. carbon dioxide,
methane, nitrous oxide, F-gases etc.) in metric tonnes of
carbon dioxide equivalent (tCO2e) for Scope 1 and Scope
2 emissions, and where appropriate material upstream and
downstream (Scope 3) emissions.
• Disclosing a timeline for full implementation of the
recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) and whether or not the
business has set, or committed to set, GHG emissions
targets in line with the goals of the Paris Agreement.
• Disclosing diversity and inclusion metrics, pay equality,
and wage level ratios to demonstrate and promote social
and economic inclusion, equal pay, and fair compensation
and benefits.
• Disclosing the risk for incidents of child, forced or
compulsory labour to demonstrate identification of
significant human rights risks and approaches to risk
management.
• Disclosing work-related injuries and rate of fatalities to
demonstrate strong standards of health, and safety.
• Disclosing the average hours of training and development
per full-time employee and average expenditure to
demonstrate invest in training, education, skilling and
reskilling of the workforce.
Prosperity
• Disclosing rate of new employee hires and rate of
employee turnover as indicator of employee satisfaction or
dissatisfaction.
• Disclosing the direct economic value generated and
distributed as a basic indication of how a company has
created wealth for stakeholders.
• Disclosing total capital expenditures, investment and
returns of capital to shareholders strategy to demonstrate
the company’s capacity to expand its operations and create
additional employment.
• Disclosing total costs related to research and development
as a basic indication of innovation, new offerings, and
generation of social or environmental benefits.
• Disclosing total tax paid to demonstrate the company’s
contribution to governmental revenues through the different
forms of taxation.
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Members of the Synertec Board
Dennis Lin
Chair
Michael Carroll
Managing Director and Chief Executive Officer
Leeanne Bond
Non-Executive Director
David Harris
Executive Director and Company Secretary
Mr. Lin is founding partner and Chair of Cortina
Capital, an independent private equity firm focused
on middle market businesses with great export
potential to Asia. He is also Executive Chair of ASX
listed companies, Bubs Australia Limited (ASX: BUB)
and Health and Plant Protein Group Limited
(ASX: HPP).
Mr. Lin is an Australian qualified Solicitor and
Chartered Accountant and was formerly a partner of
global accounting and advisory firm, BDO, for eleven
years. He retired from his position as BDO’s Lead
Corporate Finance Partner, specialising in M&A and
China, in June 2020.
Mr. Carroll is a founding principal and Managing
Director of Synertec and a significant beneficial
owner of Synertec. He has successfully grown the
business of Synertec since it was first established in
1996. His leadership style is ‘hands-on’ and
visionary, ensuring efficient and robust internal
processes that directly support the strategic
direction of Synertec.
As Managing Director of Synertec, Mr. Carroll has
negotiated complex agreements with a range of
parties, such as large multinational energy
conglomerates, water utilities, defence and
pharmaceutical companies. Mr. Carroll has direct
experience within the Asian engineering market,
having established and sold successful companies in
both Singapore and Malaysia.
Mr. Carroll is a member of the Australian Institute of
Company Directors and holds a Degree in Applied
Science (Applied Chemistry) and a postgraduate
qualification in Chemical Engineering.
Mr. Harris is an Executive Director and Company
Secretary of Synertec. Mr. Harris oversees Future
Business and Technology, as well as corporate
development, investor relations and finance functions
for the Group.
Mr. Harris is a graduate of the Australian Institute
of Company Directors, an Australian Chartered
Accountant, and fellow of both the Financial Services
Institute of Australasia and the Governance Institute
of Australia. He has over 25 years of local and
international experience in senior leadership and
board positions for global and ASX-listed companies
and is also an experienced Board member and Audit
Risk Committee Chair.
Ms. Bond is a professional company director with
Board roles in the energy, water and engineering
services industries. She has qualifications in
engineering and management, and 30 years’
experience across a broad range of industrial sectors
including energy, minerals, infrastructure and water.
From 1996 to 2006, Ms. Bond held a number of
management roles with Worley in Queensland,
including General Manager (Qld, NT and PNG),
where she negotiated project alliances and
supervised contracts and projects with many
Australian and international companies. From 2017
to 2019, Ms. Bond held the appointment of
Executive for Diversity & Inclusion at Downer EDI.
She has previously held board positions on a number
of other energy and water businesses including
Tarong Energy, the Queensland Bulk Water Supply
Authority (Seqwater) and was Chair of Brisbane
Water.
Ms. Bond is a Non-Executive Director of Snowy
Hydro Limited, Aurecon, QADO group and a board
member of the Clean Energy Finance Corporation.
She is also the independent Non-Executive Director
and chair of Mining3, an industry directed research
and technology organisation formerly known as
CRCMining in partnership with CSIRO.
Ms. Bond is the sole director and owner of
Breakthrough Energy Pty Ltd, a project and business
development consulting firm.
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SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
13
Financial Report
for the financial year ended
30 June 2021
Synertec Corporation Limited
ARBN 161 803 032
[ASX:SOP]
14
SYNERTEC ANNUAL REPORT 2021
Corporate Directory
Directors
Company Secretary
Principal registered office in Bermuda
Registered agent office in Australia
Share registry
Auditor
Mr. Dennis Lin (Non-Executive Director, Chair)
Ms. Leeanne Bond (Non-Executive Director)
Mr. Michael Carroll (Managing Director)
Mr. David Harris (Executive Director)
Mr. David Harris
2-6 Railway Parade
Camberwell VIC 3124
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Synertec Corporation Limited
2-6 Railway Parade
Camberwell VIC 3124
Australia
Telephone: +(61 3) 9274 3000
Boardroom Pty Limited
Grosvenor Place
Level 12, 225 George Street
Sydney NSW 2000
Australia
Telephone: 1300 737 760 (within Australia)
+(61 2) 9290 9600 (outside Australia)
Facsimile: +(61 2) 9290 9655
Grant Thornton Audit Pty Ltd
Collins Square
Tower 5
727 Collins Street
Melbourne VIC 3008
Australia
Stock exchange listing
Synertec Corporation Limited shares are listed on the Australian Securities
Exchange (ASX)
ASX Code: SOP (fully paid ordinary shares)
Website address
www.synertec.com.au
Synertec Corporation Limited
Directors’ Report
30 June 2021
The Directors present their report together with the financial statements of the consolidated entity for the year ended 30 June
2021.
1. Directors
The following persons were directors of Synertec Corporation Limited during or since the end of the financial year and up to the
date of this report:
Mr. Dennis Lin (Non-Executive Director, Chair)
Ms. Leeanne Bond (Non-Executive Director)
Mr. Michael Carroll (Managing Director)
Mr. David Harris (Executive Director, appointed 1 April 2021)
Mr. Kiat Poh (Non-Executive Director, resigned 31 March 2021)
1.1 Information on Directors
Mr. Dennis Lin - Non-Executive Director, Chair
Mr. Lin is founding partner and Chair of Cortina Capital, an independent private equity firm focused on middle market businesses
with great export potential to Asia. He is also Executive Chair of ASX listed companies, Bubs Australia Limited (ASX: BUB) and
Health and Plant Protein Group Limited (ASX: HPP).
Mr. Lin is an Australian qualified Solicitor and Chartered Accountant and was formerly a partner of global accounting and
advisory firm, BDO, for eleven years. He retired from his position as BDO’s Lead Corporate Finance Partner, specialising in M&A
and China, in June 2020.
Ms. Leeanne Bond - Non-Executive Director
Ms. Bond is a professional company director with Board roles in the energy, water and engineering services industries. She has
qualifications in engineering and management, and 30 years’ experience across a broad range of industrial sectors including
energy, minerals, infrastructure and water.
From 1996 to 2006, Ms. Bond held a number of management roles with Worley in Queensland, including General Manager (Qld,
NT and PNG), where she negotiated project alliances and supervised contracts and projects with many Australian and
international companies. From 2017 to 2019, Ms. Bond held the appointment of Executive for Diversity & Inclusion at Downer
EDI. She has previously held board positions on a number of other energy and water businesses including Tarong Energy, the
Queensland Bulk Water Supply Authority (Seqwater) and was Chair of Brisbane Water.
Ms. Bond is a Non-Executive Director of Snowy Hydro Limited, Aurecon, QADO group and a board member of the Clean Energy
Finance Corporation. She is also an independent Non-Executive Director and the Chair of Mining3, an industry directed research
and technology organisation formerly known as CRCMining in partnership with CSIRO.
Ms. Bond is the sole director and owner of Breakthrough Energy Pty Ltd, a project and business development consulting firm.
Mr. Michael Carroll - Executive Director
Mr. Carroll is a founding principal and Managing Director and Chief Executive Officer of Synertec and a significant beneficial
owner of Synertec. He has successfully grown the business of Synertec since it was first established in 1996. His leadership
style is “hands on” and visionary, ensuring efficient and robust internal processes that directly support the strategic direction of
Synertec.
As Managing Director of Synertec, Mr. Carroll has negotiated complex agreements with a range of parties, such as large multi-
national energy conglomerates, water utilities, defence and pharmaceutical companies. Mr. Carroll has direct experience within
the Asian engineering market, having established and sold successful companies in both Singapore and Malaysia.
Mr. Carroll is a member of the Australian Institute of Company Directors and holds a Degree in Applied Science (Applied
Chemistry) and a postgraduate qualification in Chemical Engineering.
Mr. David Harris - Executive Director
Mr. Harris is an Executive Director and Company Secretary of Synertec. Mr. Harris oversees Future Business and Technology,
as well as corporate development, investor relations and finance functions for the Group.
Mr. Harris is a graduate of the Australian Institute of Company Directors, an Australian Chartered Accountant, and fellow of both
the Financial Services Institute of Australasia and the Governance Institute of Australia. He has over 25 years of local and
international experience in senior leadership and board positions for global and ASX-listed companies and is also an experienced
Board member and Audit Risk Committee Chair.
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17
Synertec Corporation Limited
Directors’ Report
30 June 2021
1. Directors (continued)
1.2 Directors’ interest in shares and options
Interest in Ordinary
Shares
Interest in Options
Non-Executive Directors:
Dennis Lin (Chair) -
Leeanne Bond
2,785,576
Executive Directors:
Michael Carroll (Managing Director)
David Harris (Executive Director/Company Secretary,
appointed 1 April 2021)
49,398,496
2,137,733
-
-
-
-
Mr. Michael Carroll is the beneficial owner of 100% of the benefits and rights in the Pinnacle (MCGA) Retirement Fund, which
in turn owns 100% of the ordinary shares in New Concept Corporation Limited. New Concept Corporation Limited is the
registered holder of 49,398,496 shares in Synertec Corporation Limited and is the largest shareholder in the Company.
2. Principal activities
Synertec is a diversified technology design and development growth company enabling a low carbon future through
innovative technology solutions. Commercialising scalable, environmentally friendly and energy efficient technology for global
markets in energy, critical infrastructure and advanced manufacturing through innovative partnerships with a portfolio of
blue-chip customers, Synertec is proactively participating in the world’s transition to a low carbon economy in a practical way
for the benefit of future generations. In doing so, Synertec is a provider of engineering products and solutions which typically
incorporate complex automated and highly instrumented systems and processes designed to enhance clients’ productivity,
efficiency and safety. These services are provided across Australia and overseas through offices in Melbourne and Perth.
3. Significant changes in the state of affairs
No significant changes noted in the year ended 30 June 2021.
4. Review of operations and results of those operations
Profit and loss performance
Throughout FY21 Synertec’s priority has remained the health, well-being and safety of its people and continuing to provide a
safe and inclusive work environment for all.
The impacts of the ongoing COVID-19 pandemic and its restrictions during FY21 in Australia, and in particular the State of
Victoria where Synertec and many of its key clients are based, continued to provide operating challenges and impact demand
in some of the Group’s end markets. The short term focus during the year has been getting through the crisis with an eye to
the future, continuing to execute on our strategy and invest for the benefit of our customers, people and ultimately our
shareholders.
The revenue of the Group for the period was $8.4 million (30 June 2020; $11.2 million), which constitutes revenue produced
from both ongoing and new projects commencing during the period. Over the year, revenue grew by 40% from 1H FY21
($3.5 million) to 2H FY21 ($4.9 million).
In response to growing work in hand and a steadily building opportunity pipeline, Synertec has grown its billable workforce
through the 2H FY21 by 50%, despite further COVID-19 lockdown restrictions in Victoria and other States since December
2020. As a result, Engineering Consultancy Services revenue grew by 15% to $4.7 million (30 June 2020; $4.1 million). This
represents the strongest year of Engineering Consultancy Services revenue the Group has delivered. This growth is expected
to continue through FY22 as customer demand, work in hand and the near-term pipeline of opportunities continues to build.
As a result, gross margin performance continued to improve in FY21 as the Group pivoted towards new higher-value
programs of consultancy work with its blue-chip existing customer base.
Synertec is pleased to report that a significant revenue contribution continued from its highly regarded core expertise in the
water, rail, energy and advanced manufacturing sectors, demonstrating the importance and value of well diversified revenue
channels and long-term customer relationships. Each of these sectors has been specifically identified by the Australian
Government as industries which will lead Australia’s economic recovery from the impacts of the COVID-19 pandemic.
Government has these and other industries targeted for significant funding stimulus in the short-term to accelerate public and
private investment and in-turn, large-scale projects and employment.
Synertec Corporation Limited
Directors’ Report
30 June 2021
4. Review of operations and results of those operations (continued)
Profit and loss performance (continued)
During the period, the Company publicly announced;
• Contracts awarded during 2H FY21 of approximately $4.0 million in aggregate value for works with long standing
customers including high value engineering solutions with Melbourne Water and Metro Trains Melbourne (Rail Systems
Alliance), representing clear validation of Synertec’s strategic focus in developing best-in-class automation, controls and
systems engineering technology for Australia’s critical infrastructure projects in highly regulated industries;
• Service contract extensions with key water infrastructure customers, Melbourne Water and Central Highlands Water;
• Award of a substantial contract with Beon Energy Solutions in our target markets of water and renewable energy, relating
to specialist engineering support of a major energy upgrade project for Synertec’s long-standing customer and one of
Australia’s major bulk water suppliers, Melbourne Water. Beon is a leader in the deployment of large-scale energy and
infrastructure projects and is backed by global infrastructure leader CK Infrastructure with over $100 billion market
capitalisation. Such a strategic award builds upon Synertec’s long-standing experience providing critical solutions to key
Australian water infrastructure sites and provides for the opportunity to diligently grow its exposure to sustainability
projects through major experienced partners such as Beon; and
• Renewal of engineering and construction panel inclusions with CSIRO and Australian Defence.
The Group produced an EBITDA loss before Corporate development costs of $1.3 million (2020; $1.3 million loss) and a
net loss before tax of $2.3 million (2020; $1.8 million loss). The net loss after tax was $3.4 million (2020; $1.3 million loss).
Summary of Operating Result
In Australian dollars ($’000’s)
Revenue
Earnings before interest, income tax, depreciation and amortisation
(EBITDA) and corporate development costs
Corporate development costs
EBITDA
Loss from operations before tax
Income tax (expense) / benefit
Loss from operations after tax
30 June 2021
8,436
30 June 2020
11,228
(1,256)
(554)
(1,810)
(2,288)
(1,063)
(3,351)
(1,302)
(168)
(1,470)
(1,807)
551
(1,255)
The operating result reflects several significant strategic investments in project bidding and technology development across
the Company’s target sectors which are expected to deliver sustainable long-term profitable growth. These investments are
yet to be endorsed by revenue as some large-scale bids for which Synertec is well-positioned are taking longer than expected
to reach final decision.
As previously reported, the Group has identified approximately $2.0 million in revenue during FY21 which can be attributed
to project deferrals or delays with existing projects and customers and was expected to be delivered across FY21. This has
naturally impacted on the operating performance of the Company this year.
However, some of these projects are beginning early-works discussions and nearing final investment decision which is now
more positively supported by improving economic conditions from the situation faced in calendar 2020 when many of these
project decisions and/or awards were deferred until the COVID-19 pandemic and its economic impacts on major long term
asset investments could be better understood.
Synertec continued to heavily explore various strategic inorganic growth opportunities in its target markets. In particular, the
opportunity with Composite Dry Powder (‘CDP’) continues to develop, with Synertec providing critical funding to the owner of
the technology, Sichuan GreenTech Environmental Co., Ltd (‘GreenTech’), to complete important technology pilot programs
with major Chinese State Owned Enterprise customers responsible for most of China’s oil and gas production. These pilot
programs, specifically designed to evaluate the technology with regard to cost competitiveness and environmental benefits,
returned encouraging results.
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19
Synertec Corporation Limited
Directors’ Report
30 June 2021
Synertec Corporation Limited
Directors’ Report
30 June 2021
4. Review of operations and results of those operations (continued)
Profit and loss performance (continued)
In continuing to develop this potentially transformational opportunity, the Company incurred due diligence and exploratory costs
during the period of approximately $0.5 million for legal, advisory and other services which enabled the granting of an exclusive
worldwide technology license to Synertec and contributed to the Company’s ongoing assessment of the market opportunities
both in China and other major global markets, such as Australia, America and Canada.
In addition to revenue impacts, Synertec experienced an increase in the cost (both direct and indirect) of doing business
remotely through the COVID-19 pandemic as a result of the heavy community restrictions imposed by Australian Governments
on the public and industry. In some cases, these restrictions significantly impacted the efficiency of project and service delivery
for Synertec and its customers alike and presented various workforce, procurement and delivery challenges (particularly in the
States of Victoria and New South Wales). While most of these challenges have been overcome, this was reflected most
profoundly in the results for FY21, with this situation contributing to underperformance on a project in a non-core industry
segment which negatively impacted revenue and profit for the period by approximately $0.4 million.
Consistent across the engineering and related industries, the cost of the annual premium for the Group’s professional indemnity
insurance increased unexpectedly by approximately $0.4 million in January 2020 as a result of global conditions in related
insurance markets which was outside the control of Synertec. This increase is now fully reflected for the first time in annual
operating results for FY21.
During the period 1 May 2020 to 31 March 2021 the Board elected to take a reduction of 20% to their remuneration to absorb
some of the financial impact on the Group from the COVID-19 pandemic and enable the business to focus its resources on
retaining talent and avoiding a program of stand-downs and/or retrenchments. This initiative, combined with other cost reduction
measures and assistance from the various Government support measures during this period, enabled Synertec to retain and
support the well-being of all employees through this period.
Synertec has a strong and proud record of retaining and developing a large group of long-serving employees, which is an
integral part of the Group’s ethos. Maintaining its pool of talent and the collective intellectual property for current and future
engineering technology development and solutions was viewed by the Board and Executive as imperative for the Group to carry
out its long term growth strategy, as well as ensuring it was well positioned for the anticipated turnaround and growth in the
Australian economy and resulting demand from its blue-chip customer base, which eventuated during 2H FY21.
The global Coronavirus (COVID-19) pandemic and the associated community restrictions imposed by Governments has
continued to significantly influence market behaviour, including multiple waves of the COVID-19 pandemic throughout 2020 and
2021 which have occurred within Victoria and other parts of Australia resulting in prompt implementation by Australian
Governments of ‘Stage 4’ public lockdown restrictions or the like across most of these jurisdictions for varying periods of time, as
determined by Government. Since the current global COVID-19 pandemic and the resulting short, medium and long term social
and economic impacts on global economies and their recovery remains highly uncertain, the impact on future operations and
financial results of the Group also remains uncertain and cannot be quantified reliably at this time.
While the Board remains confident and optimistic about the long term strategy of the Company and the economic fundamentals
of the target markets in which it operates delivering long term sustainable and profitable growth for its shareholders, the Board
resolved to adopt a prudent approach with respect to the judgements involved in determining the carrying value of the deferred
tax asset. Accordingly, the deferred tax asset of $1,062,631 carried forward from 30 June 2020 was reviewed during the year
considering the current and potential pandemic and economic environment (including the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the Group operates) and written down to nil as at 31
December 2020, with the write down being recognised as a reduction of $1,062,631 in the deferred tax asset balance in the
statement of financial position and a corresponding income tax expense recognised in the consolidated statement of profit and
loss and other comprehensive income for the year ended 30 June 2021.
The deferred tax asset is not subject to any expiry date or limited to a certain type of taxable income and remains available to be
deducted from any future taxable profits of the Company. This includes unused carry forward tax losses not brought to account
as at 30 June 2021 amounting to $1,253,792. At the current Australian corporate income tax rate applicable to the Company of
26%, this equates to approximately $4.8 million in taxable profits that potentially could be earned by the Company before an
income tax expense is incurred, subject to applicable laws and regulations.
COVID-19 stimulus and support measures availed by the Group for the year ended 30 June 2021 include:
(1)
In response to the COVID-19 relief measures announced by the Federal Government in April 2020, the Group received the
JobKeeper subsidy. During the half year, the Group was entitled to $1,500 per employee per fortnight from 1 July 2020 to
30 September 2020, $1,200 per employee per fortnight for the period 1 October 2020 to 31 December 2020 and $1,000
per employee per fortnight for the period 1 January 2021 to 31 March 2021.
(2) Under the Commercial Tenancies Code released and effective from 3 April 2020, the Group received a rental abatement of
50% related to the tenancy of its former head office, consisting of a 25% waiver and 25% deferral, for the period 1 July
2020 to 30 September 2020. Synertec also received a rental abatement to the tenancy of its former warehouse, consisting
of a 17.5% waiver for the period 15 April 2020 to 14 July 2020, 16% deferral for the period 15 July 2020 to 14 October
2020 and 25.5% for the period 15 October 2020 to 17 March 2021.
4. Review of operations and results of those operations (continued)
Profit and loss performance (continued)
(3)
In response to the COVID-19 relief measures announced by the Victorian State Government, deferral of payroll tax liabilities
for eligible employers was announced by the Victorian State Revenue Office in August 2020 and updated in February 2021.
As a result, the Group’s payroll tax liabilities for FY21 have been deferred until FY22 (payable quarterly across the financial
year). Synertec has set aside the cash for this obligation.
(4)
(5)
In response to the COVID-19 relief measures announced by the Federal Government, the Australian Taxation Office has
offered to Synertec the ability to defer and spread its Pay-As-You-Go (PAYG) and Business Activity Statement (BAS)
payments related to the period April 2020 to September 2020 across 36 months commencing from October 2020, with no
interest or penalties. The Group Synertec has set aside the cash for this obligation.
In response to the COVID-19 relief measures announced by the Federal Government in April 2020, the Group applied the
“instant asset write off” available on new assets acquired and installed ready for use during the year ended 30 June 2021.
The total cost of those qualifying assets amounted to $$286,816. This will be reflected in the Company’s 2021 income tax
return.
Capital management
Despite the challenging conditions, and with support from shareholders and COVID-19 stimulus and support measures
announced by Australia’s Federal and State Governments, the Group’s balance sheet remains solid and it has continued to
diligently manage working capital and focus on maintaining liquidity through a challenging economic period.
Net assets of $2.1 million (30 June 2020; $3.9 million) includes cash of $2.6 million (30 June 2020; $3.0 million). The Group
continued to manage cash prudently and maintain a stable liquidity position, achieving positive net cash generated from
operations (before Corporate development costs) of $0.2 million (30 June 2020; $2.4 million outflow/used in operations), and
limited the net cash outflow from overall operations to $0.4 million (30 June 2020; $2.5 million outflow/used in operations), and
the total net decrease in cash to $0.4 million (30 June 2020; $1.3 million outflow/decrease in cash and cash equivalents).
The majority of the decrease in net assets is attributable to the write down of $1.1 million in the deferred tax asset balance in the
statement of financial position and a corresponding income tax expense recognised in the consolidated statement of profit and
loss and other comprehensive income.
As noted in the FY20 financial statements, on 9 July 2020 the Company undertook a share placement and issued 55,175,346
ordinary shares at an issue price of $0.023 per share, raising total proceeds of $1.3 million. A further $0.2 million was raised
from the early exercise of 5,000,000 shareholder-approved broker options in March 2021. Placement funds raised provided
important capital funding for further investment in key growth initiatives.
The Company provided technology partner, GreenTech, with a loan facility of up to AUD $1.0 million to complete the pilot
programs and develop commercial opportunities. The loan facility, to be repaid with interest by 31 December 2021 (subject
to the satisfaction of certain conditions), is secured and subject to customary terms and conditions. As at 30 June 2021,
GreenTech had drawn down $0.8 million of the facility.
The new shareholders attracted to the Company since that share placement represent fresh support for Synertec’s strategic
focus on technology-led high growth engineering-based initiatives with scalable global application in the large and growing
energy market, with a focus on efficiency and environmental impact. This supports the long term strategy of the business which
is designed to deliver profitable and sustainable growth under normal global economic and social conditions. With a solid
framework now established to commercialise exciting technology both in-house and through strategic partners, we expect that
the investments the Company has made will deliver scalable growth in revenue and profitability in the medium-term.
On 1 July 2020, Synertec entered into a lease agreement for its new head office. The lease is for a period of five (5) years with
the option to renew for a further five (5) years. The Group recognised a right-of-use asset and related lease liability of $1.5 million
each in connection with the new lease in the statement of financial position in accordance with IFRS 16.
The Group continued to operate with no working capital debt or covenants from its bank.
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Synertec Corporation Limited
Directors’ Report
30 June 2021
Synertec Corporation Limited
Directors’ Report
30 June 2021
4. Review of operations and results of those operations (continued)
Outlook
The cash position of the Company has strengthened substantially with a strategically important share placement completed on
12 August 2021, raising $7.1 million (before costs). These funds will provide balance sheet support for execution of the dual
strategy of commercialising several large near-term ESG-focused technology opportunities in the energy sector and growing out
a high-end engineering solutions business as follows;
•
$5 million to drive technology development and commercialisation to assist in the decarbonisation of Synertec’s large and
prestigious customer base; and
$2 million to working capital to fund a growing portfolio of engineering solutions with the Company’s blue-chip customer
base.
•
Cash continues to flow from our customers on previously agreed, favourable short-cycle terms, which will enable the Group to
continue to maintain its strong working capital position. Synertec’s philosophy continues to be to align all our activities to our
Purpose and to make long term decisions for superior profitability, rates of growth and shareholder returns. During the
COVID-19 global pandemic, we have adopted this same philosophy towards key decisions regarding our people, our customers
and our capital structure. These key decisions consider;
(1) Our people underpin our long-term growth and profitability and we have protected all of our employees during the
pandemic, maintaining Synertec’s strong capability and pursuit of innovation in our chosen markets;
(2) To support our customers and ensure we continue to provide seamless service, we continued to invest in numerous relief
measures and benefited from past investments in our information technology systems and infrastructure to gradually
improve the remote delivery of services and products securely and capture all revenue opportunities during the period as
best we could under COVID-19 Government-imposed restrictions; and
(3) To ensure we have funding flexibility, we managed discretionary costs and benefited from having successfully
renegotiated our banking arrangements to free-up substantial cash reserves previously required for security and ensure
Synertec remains free of working capital debt and covenants from its bank.
Our team has remained heavily focused on deploying our strategy over the course of FY21. As a result of our ability to replicate,
expand and commercialise our high-value proprietary intellectual property in target growth markets and increase our value to our
customers, we are continuing to experience unprecedented levels of revenue (almost 100%) recurring from our existing
customer base – an important and pleasing development through such an economic environment.
Although the impacts of COVID-19 have resulted in the deferral of some projects, we are beginning to see signs of them
restarting over the next year, and we anticipate some larger project awards will begin to flow in our target markets (many of
which are with our existing customers) as economic conditions improve through FY22.
The business has continued to adapt and improve efficiency of delivery under remote working conditions, focusing on highly
effective management of what is in our control, remaining agile and continuing to respond and deliver to our customers to our
typical high standards. We believe this will provide the Company with a strong platform to grow as the impacts of COVID-19
slowly decline and markets and economies begin to respond more positively.
We believe that with;
•
•
•
our strong financial position;
a continuing program of careful resource allocation and intensive sales-driven initiatives;
our established direction as a technology-led high growth business with scalable global IP application in the large and
growing energy market focused on efficiency and environmental impact; and
an innovative and highly regarded multi-disciplined engineering team of industry and technology experts in our chosen
target markets;
•
the Company remains on a firm and deliberate path to delivering the long term strategy and sustainable growth for its
shareholders.
5. Litigation
There has been no litigation in the year and to the best of the Directors’ knowledge there are no circumstances that would
give rise to any potential litigation relating to this same period.
6. Dividends
There were no dividends paid, declared or recommended during the current or previous financial period.
7. Subsequent events
During the year ended 30 June 2021, the global Coronavirus (COVID-19) pandemic and the associated community
restrictions imposed by Governments has continued to significantly influence market behaviour and as a result, has
impacted the operations and financial results of the Company. Subsequent to balance sheet date, Victoria entered into further
lockdowns due to the COVID-19 pandemic after an outbreak of the “Delta variant” occured in the State and other parts of
Australia. The various Australian State Governments promptly implemented ‘Stage 4’ public lockdown restrictions or the like
across most of these jurisdictions for varying periods of time, as determined by Government. While additional costs in relation
to COVID-19 have been incurred by the Company during the year ended 30 June 2021, the longer term impacts on the oper-
ations of the Group remain uncertain and cannot be reliably quantified at this time. The Board remains confident and optimis-
tic about the long term strategy of the Company and the economic fundamentals of the target markets in which it operates,
delivering long term sustainable and profitable growth for its shareholders.
In order to fund and achieve its strategic objectives, Synertec undertook a share placement to various professional,
sophisticated and institutional investors and successfully raised $7.1 million (before costs) through a placement of
71,472,111 new fully paid ordinary shares at $0.10 per share, as announced by the Company on 4 August 2021.
Capital raised through the Offer will be used to provide balance sheet support for execution of the dual strategy of
commercialising several large near-term ESG-focused technology opportunities in the energy sector and growing out a
high-end engineering solutions business as follows;
• $5 million to drive technology development and commercialisation to assist in the decarbonisation of Synertec’s
large and prestigious customer base; and
• $2 million to working capital to fund a growing portfolio of engineering solutions with the Company’s blue-chip
customer base.
In an ASX announcement made on 4 August 2021, Synertec provided an update of its significant strategic developments and
operational progress within it’s Technology business unit.
Composite Dry Powder (“CDP”) Technology
Synertec currently holds an exclusive worldwide license agreement with Sichuan GreenTech Environmental Co., Ltd
(“GreenTech”), for the right to investigate and commercialise GreenTech’s novel environmentally friendly and cost-effective
CDP technology for the treatment of hydrocarbon drilling mud and allied applications in all jurisdictions outside of China.
The recent progress in its technology development work program in partnership with GreenTech under the licence are as
follows:
1. Synertec has exercised its right to extend the existing worldwide licence agreement for a further 12 months (to 4
September 2022).
2. Synertec has agreed to provide an extension to the repayment of the secured loan funding to GreenTech from 31 July
2021 to 31 December 2021 subject to the satisfaction of certain conditions.
Powerhouse Technology
Synertec has entered into an MOU with leading energy producer Santos Limited (ASX:STO) to develop a solar renewable
energy power system to provide remote-site baseload energy for CSG well de-watering, utilising Artificial Intelligence and
predictive analytics - the first-of-its-kind to be deployed in Australia. It is the intention of both parties to enter into field trials
followed by a commercial agreement for long-term supply to other Santos facilities. Under the MOU, Synertec will progress
the design, construction and field testing of the prototype solar energy power system. Santos will support these activities
by providing pilot field site access, inputs into the project design, technical information pertaining to the pilot field sites, and
technical and other engineering resources.
LNG Custody Transfer System (“CTS”) Technology
World-leading independent marine classification and certification expert, DNV GL, has now completed an international
Hazard and Operability study (HAZOP) based on Synertec’s CTS technology design. The Company expects this design to
be fully certified by DNV in early FY22. This certification covers approval work which will lead to a General Approval for Ship
Application (“GASA”) statement for an LNG sampling system to be installed onboard marine Gas Carriers.
8. Likely developments
Aside from the subsequent events noted above, it is not foreseen that the Group will undertake any change in its general
operations during the coming financial period.
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SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
23
Synertec Corporation Limited
Directors’ Report
30 June 2021
Synertec Corporation Limited
Directors’ Report
30 June 2021
9. Material business risks
The key challenges for the Group going into FY22 are:
• Maintaining and building balance sheet strength;
• Delivering commercialisation of the suite of technology solutions and profitability of its engineering projects and programs of
work for its customers; and
• Selecting technology and projects that can deliver acceptable returns for commensurate risk.
Material risks that could adversely affect the Group include the following:
Impact of COVID-19 and associated market risk on the Company
The global economic outlook is highly uncertain due to the current COVID-19 pandemic. The COVID-19 pandemic had, and
will likely continue to have, a significant impact on global capital markets. In addition, the Company’s projects and/or pipeline
of opportunities may be impacted by our customers’ decisions to delay existing work Synertec is involved in or defer or cancel
projects for which Synertec has bid and/or positioned itself in anticipation of being awarded in the short term, as well as
international supply issues and/or the inability for the Company’s workforce to move between States or overseas.
Synertec’s exposure to economic cycles
The Company is exposed to the impact of economic cycles and, in particular, how these cycles increase and decrease future
capital expenditure by States and Federal Government and by energy and resources companies and organisations involved
in the development of critical infrastructure. These economic cycles are in turn impacted by a number of factors including: the
fiscal condition of the economy; government policies on capital expenditure; and commodity prices.
Profitability of contracts
A portion of the Group’s contracts are ‘fixed price’ in nature and to the extent costs exceed the contracted price, there is a
risk these amounts may not be recovered. From time to time, variations to the planned scope occur or issues arise during the
design or construction phase of a project, not anticipated at the time of bid. This may give rise to claims under the contract
with the principal in the ordinary course of business. Where such claims are not resolved in the ordinary course of business,
they may enter formal dispute and the outcome upon resolution of these claims may be materially different to the position
taken by the Company.
Labour supply
Synertec’s ability to remain productive, profitable and competitive and to affect its planned growth initiatives, depends on its
ability to attract and retain skilled labour. Tightening of the labour market in key regions due to a shortage of skilled labour and
competing employers for skilled labour, may inhibit Synertec’s ability to hire and retain employees. Synertec is exposed to
increased labour costs where the demand for labour is strong. A shortage of skilled labour could limit Synertec’s ability to
grow its business and lead to a decline in productivity and an increase in training costs and adversely affect its safety record.
Each of these factors could materially adversely impact its revenue and, if costs increase or productivity declines, its
operating margins.
Continuing support of Synertec from its bank and insurers
The Company and its bank and insurers undertake an annual review of the business. These reviews could reveal matters that
require the bank or the Company’s insurers to review their current arrangements with the Company.
During FY21, the Company continued to implement many initiatives to address the risks above. These initiatives
included:
• Streamlining of organisational structure and project delivery and contracting;
• Strengthened project targeting and contracting strategy, which has seen a comprehensive filter applied to all potential
new projects, ensuring we select projects that can deliver acceptable returns for commensurate risk. The Company
has also improved its targeting of potential projects through a more strategic view of business and corporate
development efforts, which should deliver greater value from the resources allocated to growing the business;
• Balance sheet strengthening via resetting of bank facilities and share placements in July 2020 and August 2021;
• Maintenance of dedicated State-based workforces in Victoria, Western Australia and Queensland to support projects in
those and other states so as to minimise the need for interstate travel; and
• Synertec management meets regularly with its banker, insurance brokers and insurers to discuss operations,
performance and developments within the business.
10. Environmental legislations
The Group’s operations are not currently subject to significant environmental regulations under both Commonwealth and
State legislation.
11. Company Secretary
Mr. Harris is an Executive Director and Company Secretary of Synertec. Mr. Harris oversees Future Business and Technology,
as well as corporate development, investor relations and finance functions for the Group.
Mr. Harris is a graduate of the Australian Institute of Company Directors, an Australian Chartered Accountant, and fellow of both
the Financial Services Institute of Australasia and the Governance Institute of Australia. He has over 25 years of local and
international experience in senior leadership and board positions for global and ASX-listed companies and is also an experienced
Board member and Audit Risk Committee Chair.
12. Directors’ meetings
The number of meetings of the Company’s Board of Directors (“the Board”) and of each Board committee held during the
period 1 July to 30 June 2021, and the number of meetings attended by each Director were:
Directors
Dennis Lin
Leeanne Bond
Michael Carroll
Kiat Poh
(resigned 31 March 2021)
David Harris
(appointed 1 April 2021)
Others
David Harris - Executive Director /
Company Secretary
Board Meetings
A
8
8
8
5
3
5
B
7
8
8
5
3
5
Audit and Risk
Committee
B
A
2
3
3
2
1
2
2
3
3
2
1
2
Nomination and
Remuneration Committee
A
2
2
2
2
-
2
B
2
2
2
2
-
2
Where:
• column A is the number of meetings the Director/Company Secretary was entitled to attend
• column B is the number of meetings the Director/Company Secretary attended
13. Unissued shares under option
On 12 August 2020, the Group issued 396,846 fully ordinary shares upon conversion of listed options (ASX:SOPOA) at an
issue price of $0.053 per share with an expiry of 7 August 2020. The securities were part of a class of securities which were
quoted on the Australian Securities Exchange (ASX:SOPOA). No other options have been granted or exercised.
On 22 March 2021, the Group issued 5,000,000 fully paid ordinary shares (“Shares”) and received the sum of $180,000
upon early exercise of unlisted options at an exercise price of $0.036 per share with an expiry of 24 August 2021. These
options were issued as settlement of the fee for the share placement (”Placement”) undertaken in July 2020 and were
approved by shareholders at the 2020 Annual General Meeting.
The fees payable to the Joint Lead Managers for the share placement undertaken by the Company in August 2021, include
10 million Facilitation and Lead Manager unlisted options, which will be subject to shareholder approval at the Company’s
2021 Annual General Meeting. This equates to a ratio of approximately 1 for 7 on new shares issued in the share placement.
The options will have a strike price of $0.20, which is a 100% premium to the offer price under the share placement, and a
3-year expiry period from the date of issue.
The options will be spread to key contributors and stakeholders in the share placement. The metrics of the options are aligned
to the continued success of the Company, with a strike price at a material premium to the Company’s share price at the time
of the share placement.
14. Remuneration report
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity.
Key management personnel are those persons having authority for planning, directing and controlling the activities of the
entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns Executive reward with the achievement of strategic objectives and
the creation of value for shareholders. The Board of Directors (“the Board”) ensures that Executive reward satisfies the
following key criteria for good reward governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage/alignment of executive compensation; and
• transparency.
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Synertec Corporation Limited
Directors’ Report
30 June 2021
Synertec Corporation Limited
Directors’ Report
30 June 2021
14. Remuneration report (continued)
Principles used to determine the nature and amount of remuneration (continued)
The Board has established a Nomination and Remuneration Committee which operates in accordance with its charter as
approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and
the Executive Team.
The Nomination and Remuneration Committee assess the appropriateness of the nature and amount of remuneration on a
periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality Board and Executive Team.
The Group seeks to remunerate Directors and Executives in accordance with the general principles recommended by the
ASX. The Group is committed to remunerating Executives in a manner that is market-competitive, reflects duties and
supports the interests of shareholders.
The reward framework is designed to align Executive reward to shareholders’ interest. The Board have considered that it
should seek to enhance shareholders’ interests by:
• focusing on sustained growth in shareholder wealth, consisting of growth in share price, and delivering constant or
increasing return on assets as well as focusing the Executive on key non-financial drivers of value; and
• attracting and retaining high calibre people.
Additionally, the reward framework should seek to enhance Executives’ interests by:
• rewarding capability and experience;
• reflecting competitive reward for contribution to growth in shareholder wealth; and
• providing a clear structure for earning rewards.
Non-executive directors’ remuneration
Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the
Directors. Non-Executive Directors’ fees and payments are reviewed by the Board as a whole.
ASX Listing Rules require that the aggegate Non-Executive Directors’ remuneration shall be determined periodically by a
general meeting. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval
by shareholders at the Annual General Meeting.
During the period 1 May 2020 to 31 March 2021 the Board elected to take a reduction of 20% to their remuneration to
absorb some of the financial impact on the Group from the COVID-19 pandemic and enable the business to focus its
resources on retaining talent and avoiding a program of stand-downs and/or retrenchments. This initiative, combined with
other cost reduction measures and the assistance of the various Australian Governments’ support measures during this
period, enabled Synertec to retain and support the well-being of all employees through this period. Synertec has a strong and
proud record of retaining and developing a large group of long-serving employees, which is an integral part of the Group’s
ethos. Maintaining its pool of talent and the collective intellectual property for current and future technology development and
engineering projects was viewed by the Board and Executive as imperative for the Group to carry out its long-term growth
strategy, and ensuring it was well positioned for the anticipated turnaround and growth in the Australian economy and
increased demand from its blue-chip customer base, which eventuated during the second half of the financial year.
In accordance with best practice corporate governance, the structure of Non-Executive Directors and Executive remuneration
is separate.
Other Key Management Personnel
Joern Buelter - (Chief Operating Officer)
14. Remuneration report (continued)
Details of remuneration
Amounts of remuneration
Details of remuneration of key management personnel of the consolidated entity are set out in the following tables.
Short-term Post-employment
Equity Long-term
benefits benefits benefits
2021
Non-Executive Directors
Dennis Lin (Chair, appointed on 1 April 2021)
Leeanne Bond*
Kiat Poh** (resigned 31 March 2021)
Executive Directors
Michael Carroll (Managing Director)
David Harris - (Executive Director/
Company Secretary, appointed 1 April 2021)
Cash
salary
and fees
$
46,804
63,500
30,000
286,594
255,708
181,500
Shares Long service
Super - Termi- & &
Bonus annuation nation share annual
$
4,446
-
-
$
-
-
-
rights leave Total
$
-
-
-
$
$
786
-
-
52,036
63,500
30,000
27,226
-
-
6,110
319,930
24,292
-
23,972 27,797 331,769
17,243
-
14,383 6,015
219,141
73,207
-
38,355 40,708 1,016,376
$
-
-
-
-
-
-
-
Total remuneration of key management personnel
864,106
* This was paid to Breakthrough Energy Pty Ltd
** This was paid to Asiaphere Pty Ltd
Short-term Post-employment
Equity Long-term
benefits benefits benefits
2020
Non-Executive Directors
Leeanne Bond*
Kiat Poh**
Dennis Lin
Executive Director
Michael Carroll (Managing Director)
Other Key Management Personnel
David Harris - (Chief Finance Officer
/Company Secretary)
Joern Buelter - (Chief Operating Officer)
Total remuneration of key management personnel
Cash
salary
and fees
$
82,167
48,333
36,530
Shares Long service
Super- Termi - & &
Bonus annuation nation share annual
rights leave Total
$
-
-
-
$
-
-
3,470
$
-
-
-
$
-
-
-
$
$
82,167
48,333
40,000
-
-
-
-
-
325,930
-
30,963
-
-
7,790
364,684
255,708
181,500
930,168
-
-
-
24,292
17,243
75,968
-
-
-
4,898
284,898
-
- 2,301 201,044
14,990 1,021,126
-
During the year, the Board approved the grant of 1,493,559 ordinary shares (which was the balance of shares held as
treasury shares by the Company) to eligible and select senior employees for their contribution to the achievement of various
strategic objectives and key performance criteria across the period 1 July 2019 to 31 December 2020. The attributed
equivalent value of this award is accounted for as a share-based payment and reflected in the employee benefits expense for
the year ended 30 June 2021.
As eligible participants in this award, with effect on 31 December 2021, 373,389 ordinary shares were granted to David
Harris and 224,034 ordinary shares to Joern Buelter, relating to share-based payments. These shares were granted with no
vesting conditions.
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Synertec Corporation Limited
Directors’ Report
30 June 2021
14. Remuneration report (continued)
Details of remuneration
Amounts of remuneration (continued)
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
Non-Executive Directors
Dennis Lin
Leeanne Bond1
Executive Directors
Michael Carroll (Managing Director)2
David Harris (Executive Director/
Company Secretary)3
Other Key Management Personnel
Joern Buelter (Chief Operating Officer)
Balance at Received as
1 July 2020
part of
remuneration
Additions/
Options
(Disposals) Exercised 30 June
Balance at
2021
-
2,785,576
49,398,496
-
-
-
-
-
-
-
-
-
2,785,576
- 49,398,496
1,404,531
373,389
-
359,813
2,137,733
Synertec Corporation Limited
Directors’ Report
30 June 2021
15. Indemnities given to, and insurance premiums paid for, officers and auditors
Officers
During the year, Synertec Corporation Limited paid a premium to insure officers of the Group. The officers of the Group
covered by the insurance policy include all Directors.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the
officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of
duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or
someone else to cause detriment to the Group.
Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited
under the terms of the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified
or agreed to indemnify any current or former officer of the Group against a liability incurred as such by an officer.
Auditors
The Group has not agreed to indemnify the auditor of the Group and any related entity against a liability incurred by the
auditor.
During the financial year, the Group has not paid a premium in respect of a contract to insure the auditor of the Group or any
related entity.
250,000
224,034
-
-
474,034
16. Auditor
Grant Thornton Audit Pty Ltd continues in office.
Notes:
1. Shares held by Bondatron Pty Ltd ATF Bondatron Super Fund A/C.
2. Shares held by New Concept Corporation Limited (”New Concept”) in which Michael Carroll is considered to have 100%
interest in the shares in New Concept. All the issued share capital of New Concept is beneficially owned by TMF Trustees
Singapore Limited as trustee of the Pinnacle (MCGA) Retirement Fund.
3. Shares held by David Harris consist of 1,764,344 shares held by DDGG Harris Holdings Pty Ltd ATF DDGG Harris
Superannuation Fund and 373,389 shares held directly by David Harris. Options exercised during the year,
were purchased by Mr. Harris on-market and exercised accordingly upon expiry of the option term (7 August 2020).
Non-Executive Directors
Dennis Lin
Leeanne Bond
Kiat Poh
Executive Directors
Michael Carroll (Managing Director)
David Harris (Executive Director/
Company Secretary)
Other Key Management Personnel
Joern Buelter (Chief Operating Officer)
Balance at Received as
1 July 2020
part of
remuneration
-
-
-
-
359,813
-
-
-
-
-
-
-
Additional disclosures relating to key management personnel
There were no other transactions with key management personnel during the year.
Additions/
(Disposals) Exercised 30 June
Options
Balance at
2021
-
-
-
-
-
-
-
-
- (359,813)
-
-
-
-
-
-
-
-
17. Officers of the Group who are former audit partners of auditor
There are no officers of the Group who are former audit partners of Grant Thornton Audit Pty Ltd.
18. Non-audit services
During the year, the firm of Grant Thornton, the Group’s auditors, performed certain other services in addition to their
statutory audit duties.
The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written
advice provided by resolution of the Audit and Risk Committee, is satisfied that the provision of those non-audit services
during the year is compatible with, and did not compromise, the auditor independence requirements for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Group and have been
reviewed by the Audit and Risk Committee to ensure they do not impact upon the impartiality and objectivity of the
auditor; and
• the non-audit services do not undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly
sharing risks and rewards.
Details of the amounts paid to the auditors of the Group, Grant Thornton, and its related practices for audit and non-audit
services provided during the year are set out in Note 22 to the financial statements.
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Synertec Corporation Limited
Directors’ Report
30 June 2021
Synertec Corporation Limited
Corporate Governance Report
30 June 2021
19. Proceedings on behalf of the Group
No person has applied to the Court for leave to bring proceedings on behalf of the Group, or to 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 part of those
proceedings.
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Synertec
Corporation Limited and its controlled entities (the Group) have adopted the third edition of the Corporate Governance
Principles and Recommendations which was released by the ASX Corporate Governance Council on 27 March 2014 and
became effective for financial years beginning on or after 1 July 2014.
This report is made in accordance with a resolution of directors.
For and on behalf of the Directors,
The Group’s Corporate Governance Statement for the financial year ending 30 June 2021 is dated as at 30 June 2021 and
was approved by the Board on 23 August 2021. The Corporate Governance Statement is available on the Synertec
Corporation Limited website www.synertec.com.au.
Mr. Michael Carroll
Managing Director
Melbourne, Australia
26 August 2021
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31
Synertec Corporation Limited
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2021
Synertec Corporation Limited
Consolidated Statement of Financial Position
As at 30 June 2021
In Australian dollars
Revenue
Revenue
Other income
Expenses
Materials and service expense
Employee benefits expense
Superannuation expense
Depreciation and amortisation expense
Business development expense
IT and telecommunication costs
Legal, professional fees and insurances
Other expenses
Directors fees
Corporate development costs
Results from operating activities
Interest income
Finance costs
Net finance costs
Loss before tax
Income tax (expense)/benefit
Loss from operations
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Earnings per share (cents)
Basic loss per share
Diluted loss per share
Note
30 June 2021
30 June 2020
5
6
7
8
8
9(i)
20
20
8,385,690
50,000
11,120,178
107,326
(1,809,131)
(5,390,842)
(520,774)
(374,256)
(277,129)
(283,086)
(746,452)
(519,412)
(144,750)
(554,074)
(2,184,216)
45,414
(149,563)
(104,149)
(2,288,365)
(1,062,631)
(3,350,996)
-
(3,350,996)
(4,828,995)
(5,513,203)
(525,720)
(279,934)
(365,441)
(292,029)
(516,266)
(297,322)
(190,290)
(167,946)
(1,749,642)
17,514
(74,587)
(57,073)
(1,806,715)
551,249
(1,255,466)
-
(1,255,466)
(1.18)
(1.18)
(0.57)
(0.57)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
In Australian dollars
Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Contract assets
Total current assets
Non-current assets
Net deferred tax assets
Other assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Trade and other payables
Warranty provision
Employee benefits
Contract liabilities
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Total equity
Note
30 June 2021
30 June 2020
10
11
12
13
9
12
14
15
16
17
18
15
18
16
19
2,625,853
1,746,872
1,271,333
655,170
6,299,228
-
5,295
1,923,555
1,928,850
8,228,078
2,996,343
18,989
677,758
201,109
96,581
3,990,780
504,166
1,499,459
137,235
2,140,860
6,131,640
3,039,998
670,178
484,392
1,386,911
5,581,479
1,062,631
-
307,520
1,370,151
6,951,630
2,278,995
18,989
495,890
15,133
87,497
2,896,504
-
12,813
96,247
109,060
3,005,564
2,096,437
3,946,066
2,097,506
(1,069)
2,096,437
596,139
3,349,927
3,946,066
The above statement of financial position should be read in conjunction with the accompanying notes
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33
Synertec Corporation Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
Synertec Corporation Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Issued capital
$
Retained earnings
$
Total
$
641,113
4,607,415
5,248,528
In Australian dollars Note
Balance at 1 July 2019
Adjustment on transition to IFRS 16 -
DTA on initial recognition of leases
Capital raising costs
Deferred tax on capital raising costs booked through equity
Loss for the year
Total comprehensive income
Balance at 30 June 2020
-
(55,480)
10,506
-
-
596,139
Balance at 1 July 2020
Issue of shares
Capital raising costs
Loss for the year
Total comprehensive income
Balance at 30 June 2021 19
596,139
1,608,412
(107,045)
-
-
2,097,506
(2,022)
-
-
(1,255,466)
(1,255,466)
3,349,927
3,349,927
-
-
(3,350,996)
(3,350,996)
(1,069)
(2,022)
(55,480)
10,506
(1,255,466)
(1,255,466)
3,946,066
3,946,066
1,608,412
(107,045)
(3,350,996)
(3,350,996)
2,096,437
The above statement of changes in equity should be read in conjunction with the accompanying notes
In Australian dollars
Note
30 June 2021
30 June 2020
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Payments for corporate development activities
Interest received
Income taxes received
Net cash used in operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Loan to GreenTech and associated costs
Receipt of funds from term deposit held as security
Purchase of property, plant and equipment
Net cash (used in)/from investing activities
Cash flows from financing activities
Payments for capital raising costs
Proceeds from issue of shares
Payment of lease liabilities
Net cash from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalent at beginning of the year
Cash and cash equivalents at end of the year
8,940,522
(8,744,986)
195,536
(554,074)
933
-
(357,605)
18,182
(849,189)
-
(437,493)
(1,268,501)
(107,045)
1,512,526
(193,521)
1,211,960
(414,145)
3,039,998
2,625,853
13,170,679
(15,539,833)
(2,369,154)
(167,946)
17,514
14,187
(2,505,399)
-
-
1,500,000
(41,949)
1,458,051
(55,480)
-
(193,674)
(249,154)
(1,296,502)
4,336,500
3,039,998
10A(i)
10A(iii)
The above statement of cash flows should be read in conjunction with the accompanying notes
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Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
1. General information and statement of compliance
The financial statements cover Synertec Corporation Limited as a consolidated entity consisting of Synertec Corporation
Limited (referred as the ‘Company’ or ‘Parent Company’) and the entities it controlled at the end of, or during, the year ended
30 June 2021 (together referred to as the ‘Group’).
Synertec Corporation Limited is the Group’s Ultimate Parent Company. It is a public company (limited by shares) incorporated
in Bermuda, and listed on the Australian Securities Exchange (ASX:SOP).
Its registered office is: Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
Its registered office in Australia is Ground Floor, 2-6 Railway Parade, Camberwell, VIC 3124, Australia.
A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’
Report, which is not part of the financial statements.
The financial statements were approved and authorised for issue, in accordance with a resolution of directors, on 26 August
2021.
2. Significant accounting policies
2.1 Basis of accounting
The consolidated general purpose financial statements of the Group have been prepared in accordance with the International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Synertec
Corporation Limited is a for-profit entity for the purpose of preparing the financial statements.
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis unless otherwise stated.
2.3 Functional and presentational currency
These financial statements are presented in Australian dollars, which is the Group’s functional currency and presentation
currency.
2.4 Basis of consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2021. The
parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has
the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and
losses on transactions between Group companies.
Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with
the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from
the effective date of acquisition; or up to the effective date of disposal, as applicable.
2.5 Revenue and other income
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price
which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to
the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to
be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to
the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the
form of a separate refund liability.
The Group’s main revenue streams are as follows:
Engineering services
The Group provides engineering services relating to the design and engineering of customised Systems, Process,
Chemical, Mechanical Design, Automation, Safety, Electrical and Software Engineering solutions. Revenue from these
services is recognised on a time-and-materials basis as the services are provided and the performance obligation is satisfied.
Customers are invoiced monthly as work progresses. Any amounts remaining unbilled at the end of a reporting period are
presented in the statement of financial position as Contract assets as only the passage of time is required before payment of
these amounts will be due.
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
2. Significant accounting policies (continued)
2.5 Revenue and other income (continued)
Fixed price solutions
The Group enters into contracts for the design, engineering and construction of customised engineering solutions in
exchange for a fixed fee and recognises the related revenue over time. Due to the high degree of interdependence between
the various elements of these projects, they are accounted for as a single performance obligation. When a contract also
includes a warranty period, the total transaction price is allocated to each of the distinct performance obligations identifiable
under the contract on the basis of its relative stand-alone selling price.
To depict the progress by which the Group transfers control of the systems to the customer, and to establish when and to
what extent revenue can be recognised, the Group measures its progress towards complete satisfaction of the performance
obligation by comparing actual input costs (hours and purchases) spent to date with the total estimated costs required to
design, engineer, and construct each solution. The percentage complete basis provides the most accurate depiction of the
transfer of goods and services to each customer due to the Group’s ability to make reliable estimates of the total number of
costs required to complete the Project, arising from its significant historical experience constructing similar solutions.
Transfer of goods
Revenue from the sale of custom products engineered by the Group for a fixed fee is recognised when or as the Group
transfers control of the assets to the customer and fulfills their performance obligation. Invoices for goods transferred are due
after receipt of the invoice by the customer.
For sales of engineered products that are not subject to significant integration services, control transfers at the point in time
the customer takes undisputed delivery of the goods.
Advanced receipt
When payments received from customers exceed revenue recognised to date on a particular contract, any excess (a contract
liability) is reported in the statement of financial position as Contract liabilities.
Warranty period
The Group provides warranty on some of its engineering solutions. Under the terms of this warranty customers can request
rectification or replacement works if the solution provided by the Group fails to perform in accordance with the agreed
contract and specifications. These warranties are accounted for under IFRS 137 Provisions, Contingent Liabilities and
Contingent Assets.
2.6 Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
2.7 Finance income and lease finance costs
The Group’s finance income and finance costs include:
• interest income;
• interest expense;
• finance costs as a result of IFRS 16; and
Interest income or expense is recognised using the effective interest method.
2.8 Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group at the exchange rates at
the dates of the transactions (spot exchange rate).
Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange
rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are
translated to the functional currency at the exchange rate when the fair value was determined. Foreign currency differences
are generally recognised in profit or loss. Non-monetary items that are measured based on historical cost in a foreign
currency are not translated.
2.9 Income taxes
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and unused tax losses and under and over provision in prior periods, where applicable.
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates
items recognised directly in equity or in other comprehensive income (OCI).
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SYNERTEC ANNUAL REPORT 2021
37
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
2. Significant accounting policies (continued)
2. Significant accounting policies (continued)
2.9 Income taxes (continued)
(i) Current tax
Current income tax assets and / or liabilities comprise those obligations to, or claims from, the Australian Taxation Office
(ATO) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date.
Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax
is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary
differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss.
Deferred tax assets are recognised for unused tax losses, unused 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 used. 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. Deferred tax liabilities are always provided for in full.
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.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group
expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if the Group has a right and intention to set-off current tax assets and
liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except
where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in
equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.
Synertec Corporation Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these
entities are set off in the consolidated financial statements.
Synertec Holdings Pty Ltd is responsible for recognising the current tax liabilities of the Australian tax consolidated group.
The tax consolidated group has entered into an agreement whereby each component in the Group contributes to income tax
payable in proportion to their contributions to the taxable profit of the tax consolidated group.
2.10 Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38 Tangible Assets)
During the financial year the International Financial Reporting Interpretations Committee IFRIC identified that various
approaches to customisation and configuration costs for cloud computing arrangements were utilised by companies
depending on internal policy. These policies varied from expensing all costs in full to capitalisation of all costs in full, with most
entities taking a more nuanced approach in their capitalisation policy and differentiating between expenditure with different
underlying fact patterns.
The Agenda Decision requires that management capitalise those elements of expenditure that meet the definition of an
“Intangible Asset” as defined by IAS 38 Intangible Assets and recognise any additional amounts as an expense as the entity
benefits from the expenditure – either by applying IAS 38 or applying another accounting standard.
The impact of this decision has not had a material impact on the consolidated entity’s financial statements.
2.11 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, 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.
2.12 Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment
losses.
If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the
expenditure will flow to the Group.
(iii) Depreciation
Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values using the
straight-line basis over their estimated useful lives, and is generally recognised in profit or loss. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by
the end of the lease term.
The estimated useful lives of property, plant and equipment are as follows:
• Motor Vehicles 10 years
• Furniture and Equipment 16 years
• Computers 3 years
In the case of leasehold improvements, expected useful lives are determined by reference to comparable owned assets or
over the term of the lease if shorter.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
2.13 Impairment
(i) Non-derivative financial assets
Financial assets not classified as at fair value through profit or loss, are assessed at each reporting date to determine whether
there is objective evidence of impairment.
Objective evidence that financial assets are impaired includes:
• default or delinquency by a debtor;
• restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
• indications that a debtor or issuer will enter bankruptcy;
• adverse changes in the payment status of borrowers or issuers;
• the disappearance of an active market for a security.
(ii) Financial assets measured at amortised cost
The Group considers evidence of impairment for these assets measured at both a specific asset and collective level. All
individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then
collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually
significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.
In assessing collective impairment the Group uses historical information on the timing of recoveries and the amount of loss
incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be
greater or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated
future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected
in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant
amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is
reversed through profit or loss.
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SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
39
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
2. Significant accounting policies (continued)
2.13 Impairment (continued)
(iii) Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than stock on hand and
deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is
based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment
losses are recognised in profit or loss. They are allocated to reduce the carrying amount of assets in the CGU on a pro rata
basis. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
2.14 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed the reimbursement is recognised as a separate but only
when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or
loss net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where
discounting is used, the unwinding of the discount is recognised as finance cost.
No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such situations
are disclosed as contingent liabilities, unless the outflow is remote in which case, no liability is recognised.
2.15 Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(ii) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expect-
ed to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided
by the employee and the obligation can be estimated reliably.
(iii) Other long-term employee benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value
using high quality corporate bond rates. Remeasurements are recognised in profit or loss in the period in which they arise.
2.16 Leases
For any new contracts entered into on or after 1 July 2019, the Group considers whether a contract is, or contains a lease. A
lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period
of time in exchange for consideration’. To apply this definition the Group assesses whether the contract meets three key
evaluations which are whether:
1. the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group.
2. the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of the contract.
3. the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it
has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
2. Significant accounting policies (continued)
2.16 Leases (continued)
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The
right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs
incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease
payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for
impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that
date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental
borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured
to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if
the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense
in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease
liabilities have been included in lease liabilities.
2.17 Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial
position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
2.18 Financial instruments
The Group does not hold derivative financial assets. Where required the Group classifies non-derivative financial assets into
the following categories: financial assets at fair value through profit or loss, and loans and receivables.
The Group classifies non-derivative financial liabilities into the other financial liabilities category.
(i) Non-derivative financial assets and financial liabilities - recognition and derecognition
The Group initially recognises loans and receivables and debt securities issued on the date when they are originated. All other
financial assets and financial liabilities are initially recognised on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership
of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or
retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise
the asset and settle the liability simultaneously.
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SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
41
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
2. Significant accounting policies (continued)
2.18 Financial Instruments (continued)
(ii) Non-derivative financial assets - measurement
Loans and receivables
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the effective interest method.
Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents includes bank overdrafts that are repayable on demand and form
an integral part of the Group’s cash management.
(iii) Non-derivative financial liabilities - measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
(iv) Share capital
Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction
from equity.
3. Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised prospectively.
3.1 Judgements
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts
recognised in the financial statements is included in note 2.5 – Revenue and other income.
Judgement is required to determine whether deferred tax assets are recognised in the balance sheet. Deferred tax assets,
including those arising from un-utilised tax losses, require management to assess the likelihood that the Group will generate
sufficient taxable earnings in the future periods in order to recognise and utilise those deferred tax assets. Judgement is also
required in respect of the expected manner of recovery of the value of an asset or liability (which will then impact the quantum of
the deferred tax assets or deferred tax liabilities recognised) and the application of existing laws.
Estimates of future taxable income are based on forecast cash flows from operations and existing tax laws in each jurisdiction.
These assessments require the use of estimates and assumptions such as exchange rates, commodity prices and operating
performance over the life of the assets. To the extent that cash flows and taxable income differ significantly from estimates, the
ability of the Group to realise the net deferred tax assets reported at the reporting date could be impacted.
Additionally, future changes in tax laws in which the Group operates could limit the ability of the Group to obtain tax deductions
and recover/utilise deferred tax assets in future periods.
While the Board remains confident and optimistic about the long term strategy of the Company and the economic fundamentals
of the target markets in which it operates delivering long term sustainable and profitable growth for its shareholders, the Board
resolved to adopt a prudent approach with respect to the judgements involved in determining the carrying value of the deferred
tax asset. Accordingly, the deferred tax asset of $1,062,631 carried forward from 30 June 2020 has been reviewed
considering the current and potential pandemic and economic environment (including the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the Group operates) and was written down to nil
during the financial year. No further deferred tax assets have been recognised for the year.
3.2 Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment
within the year ended 30 June 2021 are included:
Note 13 - Contract assets - recognition of project revenue
Recognising project revenue requires judgement in determining milestones, actual work performed and/or the estimated costs
to complete the work.
Note 14 - Property, Plant and Equipment - useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected
utility of assets. Uncertainties in these estimates relate to potential obsolescence that may change the utility of certain
equipment.
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
3. Use of judgements and estimates (continued)
3.2 Assumptions and estimation uncertainties (continued)
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the entire measurement.
Further information about the assumptions made in measuring fair values is included in note 23 - financial instruments.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the Company based on known information. This consideration extends to the nature of the products and services offered,
customers, supply chain, staffing and geographic regions in which the Company operates. Other than as addressed in
specific notes, there does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the Company unfavourably as at the reporting
date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
4. Operating segments
The Group has a single reportable segment in which it operates, being engineering based technology and services, and this
is based on information that is internally provided to the Chief Operating Decision Makers (‘CODM’) for assessing
performance and making operating decisions. Therefore, no additional disclosures in relation to the revenues, profit or loss,
assets and liabilities and other material items have been made. The operating entity is based in Australia.
The demand for engineering products and solutions services is not subject to seasonal fluctuations.
The Group earned $4.7 million of its $8.4 million revenues from its top three customers. Of all other clients, no single client
contributes more than 10 per cent to total revenue. All revenues from external customers are attributable to the Group’s
country of domicile and all physical assets are located within Australia.
5. Revenue
Engineering consultancy services
Fixed price solutions and transfer of goods
6. Other income
Government grant
Other
Note
30 June 2021
4,696,765
3,688,925
8,385,690
30 June 2020
4,073,998
7,046,180
11,120,178
50,000
-
50,000
100,000
7,326
107,326
During the year, Synertec was awarded a grant of $50,000 under the Victorian Government Technology Adoption and
Innovation Program for development of its Custody Transfer System (CTS) technology.
During the year ended 30 June 2020, the Company received the “cashflow boost” subsidy provided via the Australian Tax
Office in response to the COVID-19 relief measures announced by the Federal Government in April 2020.
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SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
43
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
7. Employee benefits expense
In response to the COVID-19 relief measures announced by the Australian Federal Government in April 2020, the Group
received the JobKeeper subsidy. During the year, the Group was entitled to $1,500 per employee per fortnight from July to
September 2020, $1,200 per employee per fortnight from October to December 2020 and $1,000 per employee per fortnight
from January to March 2021.
During the year, the Board approved the grant of 1,493,559 ordinary shares (which was the balance of shares held as
treasury shares by the Company) to eligible and select senior employees for their contribution to the achievement of various
strategic objectives and key performance criteria across the period 1 July 2019 to 31 December 2020. The attributed
equivalent value of this award is accounted for as a share-based payment and reflected in the employee benefits expense for
the year ended 30 June 2021.
Below is a reconciliation of the employee benefits expense recognised in the statement of profit or loss and other
comprehensive income.
Recognised in profit or loss
30 June 2021
30 June 2020
Gross employee benefits expense
JobKeeper benefit
Share-based payments
Employee benefits expense in the Statement of Profit or Loss
and Other Comprehensive Income
6,289,455
(994,500)
95,887
5,846,203
(333,000)
-
5,390,842
5,513,203
8. Finance income and finance costs
Recognised in profit or loss
Interest income
Finance income
Facility interest & charges
Leases finance costs
Interest expense
Finance costs
Net finance costs recognised in profit or loss
8(i)
8(ii)
45,414
45,414
(51,907)
(97,582)
(74)
(149,563)
(104,149)
17,514
17,514
(63,759)
(10,828)
-
(74,587)
(57,073)
8(i) Interest income comprised of interest receivable on loan provided to GreenTech.
8(ii) The Group incurred finance costs during the year related to its bank guarantee facility provided by ANZ.
9. Taxes
(i) Tax recognised in profit or loss
Deferred tax (expense)/benefit
Origination and reversal of temporary differences
Income tax (expense)/benefit
(ii) Reconciliation of effective tax rate
Loss before tax
Income tax benefit using the Group’s domestic tax rate (26%)
Non-deductible expenses
Carried forward section 40-880 ITAA expenditure not booked in prior year
Current year DTA movement not recognised
Prior year DTA derecognised
Income tax expense/(benefit)
(iii) Movement in deferred tax assets
Opening balance
Charged to profit and loss
Closing balance
(1,062,631)
(1,062,631)
551,249
551,249
(2,288,373)
(594,977)
9,938
-
648,496
999,174
1,062,631
(1,806,715)
(496,847)
(36,476)
(17,926)
-
-
(551,249)
1,074,779
(999,174)
75,605
1,074,779
-
1,074,779
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
9. Taxes (continued)
(iv) Movement in deferred tax liabilities
Opening balance
Charged to profit and loss
Closing balance
(v) Movement in net deferred tax asset/(liability)
Opening balance
Charged to profit and loss
Closing balance
30 June 2021 30 June 2020
(12,148)
(12,148)
(63,457)
(75,605)
-
(12,148)
1,062,631
(1,062,631)
-
(1,062,631)
-
(1,062,631)
The carrying amount of recognised and unrecognised deferred tax assets was reviewed at 31 December 2020 and 30 June 2021.
While the Board remains confident and optimistic about the long term strategy of the Company and the economic fundamentals
of the target markets in which it operates delivering long term sustainable and profitable growth for its shareholders, the Board
resolved to adopt a prudent approach with respect to the judgements involved in determining the carrying value of the deferred tax
asset. Accordingly, the deferred tax asset of $1,074,779 carried forward from 30 June 2020 was reviewed considering the current
and potential pandemic and economic environment (including the nature of the products and services offered, customers, supply
chain, staffing and geographic regions in which the Group operates) and written down to $75,605 as at 30 June 2021 (being an
amount equal to the deferred tax liability as at 30 June 2021), with the write down being recognised as a reduction of $999,174
in the deferred tax asset balance in the statement of financial position and a corresponding income tax expense recognised in the
consolidated statement of profit and loss and other comprehensive income for the year ended 30 June 2021. No further deferred
tax assets have been recognised for the year. The remaining income tax expense of $63,457 which has been recognised in the
consolidated statement of profit and loss relates to the increase in the deferred tax liability, from $12,148 as at 30 June 2020 to
$75,605 as at 30 June 2021.
Since the current global COVID-19 pandemic and the resulting short, medium and long term social and economic impacts on
global economies and their recovery remains highly uncertain, the impact on future operations and financial results of the Company
also remains uncertain and cannot be quantified reliably at this time.
(vi) Deferred tax assets not brought to account at reporting date
Temporary differences
Unused carry forward tax losses
360,015
1,253,792
1,622,807
-
-
-
Deferred tax asset is not subject to any expiry date or limited to a certain type of taxable income and remain available to
be deducted from any future taxable profits of the Company. This includes unused carry forward tax losses not brought to
account as at 30 June 2021 amounting to $1,253,792. At the current Australian corporate income tax rate applicable to the
Company of 26%, this equates to approximately $4.8 million in taxable profits that potentially could be earned by the
Company before an income tax expense is incurred, subject to applicable laws and regulations.
(vii) Movement in deferred tax balances during the year
Balance
30-Jun-2019
Recognised Recognised Balance
in profit or
loss
in other 30-Jun-2020
compre-
hensive
income
Recognised Recognised Balance
30-Jun-2021
in profit
or loss
in other
compre-
hensive
income
159,405
(2,901)
111,473
63,600
171,316
502,893
-
-
-
-
-
502,893
3,432
2,901
1,822
(5,860)
575,589
577,884
-
(11,074)
-
-
(11,074)
566,810
-
-
(6,128)
-
-
(6,128)
-
-
(944)
-
(944)
(7,072)
162,837
-
107,167
57,870
746,905
1,074,779
(130)
(11,074)
(944)
-
(12,148)
1,062,631
(87,232)
-
(107,167)
(57,870)
(746,905)
(999,174)
115
(52,708)
944
(11,808)
(63,457)
(1,062,631)
-
-
-
-
-
-
-
-
-
-
-
-
75,605
-
-
-
-
75,605
(15)
(63,782)
-
(11,808)
(75,605)
-
Deferred tax assets
Employee benefits
Deferred income
Corporate transaction costs
Other payables
Carry forward tax losses
Total Deferred tax assets
Deferred tax liabilities
Prepayments
Fixed assets
Leases
Accrued interest
Total Deferred tax liabilities
Net Deferred taxes
44
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
45
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
10. Cash and cash equivalents
Bank balances
Cash on hand
Cash and cash equivalents
10A. Cash flow information
(i) Reconciliation of cash flows from operating activities
Cash flows from operating activities
Loss for the year
Adjustments:
Depreciation and amortisation
Interest costs
Share-based payments
Loss on sale of property, plant and equipment
Tax expense/(benefit)
Change in contract assets
Change in other assets
Change in trade and other receivables
Change in trade and other payables
Change in employee benefits
Change in contract liabilities
Cash used in operating activities
Interest paid net of interest received
Realised foreign currency gains
Income taxes received
Net cash used in operating activities
Note
30 June 2021
2,624,522
1,331
2,625,853
30 June 2020
3,038,651
1,347
3,039,998
(3,350,996)
(1,255,466)
14
7
9(i)
374,256
104,149
95,887
16,758
1,062,631
(1,697,315)
731,741
431,401
(1,237,694)
1,009,987
222,856
185,976
(353,049)
(6,567)
2,011
-
(357,605)
279,934
57,073
-
-
(551,249)
(1,469,708)
(153,971)
(242,459)
861,133
(1,290,583)
12,483
(190,236)
(2,473,341)
(46,245)
-
14,187
(2,505,399)
600,000
50,000
650,000
440,584
9,817
450,401
(ii) Credit standby arrangement
The Company has the following credit standby facilities which are subject to bank review annually:
Bank guarantee (1)
Credit Card
Total
Utilised
Bank guarantee
Credit Card
Total
700,000
50,000
750,000
346,226
20,311
366,537
(1) Effective from 1 May 2021, Synertec received an extension of its existing bank guarantee facility with ANZ, from
$0.6 million to $0.7 million. The Company is not subject to any covenants on its facilities with ANZ.
(iii) Reconciliation of cash and cash equivalents at end of year
Synertec Pty Ltd
Synertec Corporation Limited
11. Trade and other receivables
Current
Trade receivables
Other receivables
Current
2,267,665
358,188
2,625,853
3,013,300
26,698
3,039,998
1,746,872
-
1,746,872
509,178
161,000
670,178
The Company’s exposure to credit and market risks, and impairment losses related to trade and other receivables, are
disclosed in Note 23.
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
12. Other assets
30 June 2021 30 June 2020
Current
Prepayments and other debtors
Loan receivable(a)
Deposits
Stock on hand
Current
391,850
845,414
21,807
12,262
1,271,333
428,485
-
43,645
12,262
484,392
Non-Current
Other receivables
Note: (a)
In July 2020, the Company entered into an agreement to provide Sichuan Greentech Environmental Co. Ltd (‘GreenTech’) with a
secured loan facility of AUD $1.0 million at an interest rate of 7% and subject to customary terms and conditions, to complete a pilot
program of its Composite Dry Powder (‘CDP’) technology with two major Chinese State Owned Enterprises. The secured loan facility
has been extended from 31 July 2021 to 31 December 2021 subject to the satisfaction of certain conditions. As at 30 June 2021,
the amount due from GreenTech was $845,414 including interest.
5,295
-
13. Contract assets
Work in progress 655,170 1,386,911
Determining when to recognise contract revenue requires a degree of judgement. Contract revenue and expenses are recognised in
accordance with the percentage of completion method (input) unless the outcome of the contract cannot be reliably estimated. The
percentage of completion is estimated by assessing milestones, actual work performed and the estimated costs to complete the work.
At 30 June 2021, aggregate costs incurred under open contracts and recognised profits earned, net of recognised losses, amounted
to $655,170 (2020: $1,386,911).
14. Property, plant and equipment
Cost
Balance at 1 July 2019
Adjustment on transition to IFRS16
Lease modifications
Additions
Disposals
Balance at 30 June 2020
Balance at 1 July 2020
Additions
Disposals
Balance at 30 June 2021
Accumulated depreciation
Balance at 1 July 2019
Disposals
Depreciation/amortisation expense
Balance at 30 June 2020
Balance at 1 July 2020
Disposals
Depreciation/amortisation expense
Balance at 30 June 2021
Carrying amounts
at 1 July 2019
at 30 June 2020
at 1 July 2020
at 30 June 2021
Computers
559,000
-
-
41,949
-
600,949
600,949
133,461
(316,757)
417,653
Computers
456,743
-
64,473
521,216
521,216
(312,662)
75,633
284,187
102,257
79,733
79,733
133,466
Furniture
and
equipment
156,081
-
-
-
-
156,081
156,081
4,525
(130,565)
30,041
Furniture
and
equipment
108,923
-
11,393
120,316
120,316
(104,406)
5,963
21,873
Leasehold
improvements
Motor
vehicles
Right-of-use
assets
TOTAL
21,157
-
-
-
-
21,157
21,157
299,507
(21,157)
299,507
937,333
201,096
280,516
-
(2,609)
-
47,199
-
-
-
1,262,439
201,096
1,262,439
201,096
2,029,163
-
(38,000)
(506,479)
163,096 1,874,827 2,785,123
-
280,516
(2,609)
5,250
-
283,157
283,157
1,591,670
-
Leasehold
improvements
Motor
vehicles
Right-of-use
assets
TOTAL
19,534
-
325
19,858
19,858
(19,923)
22,993
22,928
89,785
-
24,327
114,113
114,113
(30,615)
16,581
100,079
-
-
179,416
179,416
179,416
-
253,086
432,502
674,984
-
279,934
954,918
954,918
(467,606)
374,256
861,568
47,159
35,766
1,623
1,299
111,310
86,983
-
103,741
262,349
307,520
35,766
8,168
1,299
276,579
86,983
63,017
103,741
1,442,325
307,520
1,923,555
46
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
47
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
14. Property, plant and equipment (continued)
Net carrying amount of right-of-use assets is comprised of the following:
Furniture and equipment
Buildings
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
18. Leases
Lease liabilities are presented in the statement of financial position as follows:
30 June 2021
8,118
1,434,207
1,442,325
30 June 2020
12,546
91,195
103,741
Lease liabilities (current)
Lease liabilities (non-current)
30 June 2021
30 June 2020
96,581
1,499,459
1,596,040
87,497
12,813
100,310
The amount of depreciation that has been recognised on the right-of-use assets at 30 June 2021 is $253,086.
15. Trade and other payables
Current
Trade payables
Other payables
Deferred tax obligations(1)
Fixed price project accruals
Non-Current
Other payables
Deferred tax obligations(1)
1,228,178
985,938
570,470
211,757
2,996,343
117,960
386,206
504,166
1,272,544
647,939
-
358,512
2,278,995
-
-
-
(1) In response to the COVID-19 relief measures announced by the Victorian State Government, deferral of payroll tax
liabilities for eligible employers was announced by the Victorian State Revenue Office in August 2020 and updated in
February 2021. As a result, Synertec’s payroll tax liabilities for FY21 have been deferred until FY22 (payable quarterly
across the financial year). Synertec accepted this offer and has accrued for this arrangement accordingly in the FY21
results and set aside the cash for this commitment.
In response to the COVID-19 relief measures announced by the Federal Government, the Australian Taxation Office
offered to Synertec the ability to defer and spread its Pay-As-You-Go (PAYG) and Business Activity Statement (BAS)
payments related to the period April 2020 to September 2020 across 36 months commencing from October 2020,
with no interest or penalties. Synertec accepted this offer and has accrued for this arrangement accordingly in the FY21
results and set aside the cash for this commitment.
The Company’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 23.
16. Employee benefits
Annual leave
Long service leave
Current
Long service leave
Non-Current
17. Contract liabilities
Billing in advance of work completed
466,522
211,236
677,758
137,235
137,235
201,109
201,109
318,368
177,522
495,890
96,247
96,247
15,133
15,133
Where progress billings and recognised losses exceed costs incurred plus recognised profits earned, the Group recognises
these amounts as billing in advance of work completed.
Under the Commercial Tenancies Code released and effective from 3 April 2020, Synertec received a rental abatement of 50%
related to the tenancy of its former head office, consisting of a 25% waiver and 25% deferral, for the period 1 July 2020 to 30
September 2020. Synertec also received a rental abatement to the tenancy of its former warehouse, consisting of a 17.5% waiver for
the period 15 April 2020 to 14 July 2020, 16% deferral for the period 15 July 2020 to 14 October 2020 and 25.5% for the period 15
October 2020 to 17 March 2021.
Synertec also engaged with the Perth office landlord during April 2020 and negotiated a reduction in rent as from 1 May 2020 and an
extention of the lease until August 2021. This lease has been renewed for a further 12 months to August 2022.
Future minimum lease payments at 30 June 2021 were as follows:
Minimum lease payment due
Lease payments
Finance charges
Within one
year
189,101
(92,520)
One to two
years
248,523
(85,266)
Two to three Three to four Four to five After five
Total
years
years
years
years
245,093
(75,408)
243,580
(65,137)
216,864
(54,878)
933,259
(107,171)
2,076,420
(480,379)
Net present values
96,581
163,257
169,685
178,443
161,986
826,088
1,596,040
Out of the total finance costs of $149,563, an amount of $97,582 was attributable to the lease liabilities during the year ending 30
June 2021.
On 1 July 2020, the Group entered into a lease for a new head office in Camberwell, Victoria. The Group received lease incentives
from the lessor which have been applied across the first 5-year term of the lease. The Group has the option, at its discretion, to
renew the lease for a further 5-year term.
19. Issued capital
Ordinary shares - fully paid
Capital raising costs
Deferred tax on capital raising costs booked through equity
30 June 2021 30 June 2020 30 June 2021 30 June 2020
Shares
Shares
$
$
285,888,449 220,701,389
-
-
285,888,449 220,701,389
-
-
2,204,552
(107,045)
-
2,097,506
641,113
(55,480)
10,506
596,139
On 9 July 2020, the Group issued 55,175,346 fully paid ordinary shares (“Shares”) at an issue price of $0.023 per share to various
professional and sophisticated investors in a share placement (“Placement”).
On 12 August 2020, the Group issued 396,846 fully ordinary shares upon conversion of listed options (ASX:SOPOA) at an issue
price of $0.053 per share. The securities are part of a class of securities which were quoted on the Australian Securities Exchange
(ASX:SOPOA). The balance of the listed options (15,779,012) expired on 7 August 2020.
In December 2020, following approval by shareholders at the 2020 Annual General Meeting held on 25 November 2020, the Group
issued:
- 2,690,521 fully paid ordinary shares at an issue price of $0.023 per share to TayCol Nominees Pty Ltd and 620,000 fully paid
ordinary shares at an issue price of $0.023 per share to Indian Ocean Corporate Pty Ltd in lieu of cash payable for services provided
by the parties in relation to the share placement successfully completed in July 2020; and
- 1,304,347 fully paid ordinary shares at an issue price of $0.023 per share to TayCol Nominees Pty Ltd in lieu of cash payable in
relation to a monthly retainer fee for corporate services.
48
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
49
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
19. Issued capital (continued)
On 22 March 2021, the Group issued 5,000,000 fully paid ordinary shares (“Shares”) and received the sum of $180,000
upon early exercise of unlisted options at an exercise price of $0.036 per share with an expiry of 24 August 2021. These
options were issued as settlement of the fee for the share placement (“Placement”) undertaken in July 2020 and were
approved by shareholders at the 2020 Annual General Meeting.
Capital raising costs
As detailed in the Directors’ report, the Company undertook a successful share placement and issued 55,175,347 shares
on 9 July 2020. As a result, legal and other related costs associated with the share placement and issue of shares incurred
during the year ended 30 June 2021 have been deducted from contributed equity. The net proceeds of $1.3 million from the
share placement were received by the Company on 8 July 2020.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
20. Earnings per share
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the Parent
Company as the numerator.
In accordance with the principles of reverse acquisition accounting, the weighted average number of ordinary shares
outstanding during the year ended 30 June 2021 has been calculated as:
(a) the weighted average number of ordinary shares of Synertec Pty Ltd outstanding during the period before acquisition
multiplied by the exchange ratio established in the acquisition accounting, and
(b) the actual number of ordinary shares of Synertec Corporation Limited outstanding during the period after acquisition.
The basic earnings per share for the comparative period before the acquisition date presented in the consolidated statements
following a reverse acquisition is calculated by dividing (a) by (b):
(a) the profit or loss of Synertec Corporation Limited attributable to ordinary equity holders of the Company in the period.
(b) Synertec Corporation Limited’s historical weighted average number of ordinary shares outstanding multiplied by the
exchange ratio established in the acquisition accounting.
In accordance with IFRS 33 ‘Earnings Per Share’, as potential ordinary shares may only result in a situation where their
conversion results in an increase in loss per share or decrease in profit per share from continuing operations, no dilutive effect
has been taken into account.
Earnings per share
Loss after income tax (in Australian dollars)
Weighted average number of ordinary shares used in calculating
basic earnings per share
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
30 June 2021
30 June 2020
(3,350,996)
(1,255,466)
282,929,628
220,701,389
282,929,628
(1.18)
(1.18)
220,701,389
(0.57)
(0.57)
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the
number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of
these financial statements.
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
21. Related parties
The key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits
Equity
Other long-term employment benefits
30 June 2020
930,168
75,968
-
14,990
1,016,376 1,021,126
30 June 2021
864,106
73,207
38,355
40,708
Compensation of the Company’s key management personnel includes salaries, accrued leave balances, non-cash benefits and
contributions to an employee defined contribution plan.
During the period 1 May 2020 to 31 March 2021 the Board elected to take a reduction of 20% to their remuneration to absorb some
of the financial impact on the Group from the COVID-19 pandemic and enable the business to focus its resources on retaining talent
and avoiding a program of stand-downs and/or retrenchments. This initiative, combined with other cost reduction measures and the
assistance of the various Australian Governments’ support measures during this period, enabled Synertec to retain and support the
well-being of all employees through this period. Synertec has a strong and proud record of retaining and developing a large group
of long-serving employees, which is an integral part of the Group’s ethos. Maintaining its pool of talent and the collective intellectual
property for current and future technology development and engineering projects was viewed by the Board and Executive as
imperative for the Group to carry out its long-term growth strategy, and ensuring it was well positioned for the anticipated turnaround
and growth in the Australian economy and increased demand from its blue-chip customer base, which eventuated during the second
half of the financial year.
22. Auditor’s remuneration
Audit and review services
Auditors of the Company - Grant Thornton Audit Pty Ltd
Audit and review of financial statements 78,314 72,000
72,000
78,314
Other services
Auditors of the Company - Grant Thornton Australia Limited
In relation to taxation
In relation to other services
11,049
-
89,363
10,000
13,686
95,686
50
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
51
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
23. Financial Instruments
Financial risk management
Overview
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risk, and the Group’s management of capital.
Risk management framework
The Group’s Directors have overall responsibility for the establishment and oversight of the risk management framework.
The Group’s 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 adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities. The Group, through their training and
management standards and procedures, aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations.
(i) 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 and investment securities.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
end of the reporting period was as follows:
Trade and other receivables
Cash and cash equivalents
Loan receivable
Deposits
Carrying amount
Note
11
10
12
12
30 June 2021
1,746,872
2,625,853
845,414
21,807
5,239,946
30 June 2020
670,178
3,039,998
-
43,645
3,753,821
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the demographics of the Group’s customer base, including the default risk of the industry and
country in which customers operate, as these factors may have an influence on credit risk.
As the Group provides services under contract, each new customer is analysed individually for creditworthiness before the
Group’s standard payment and delivery terms and conditions are offered.
The Group historically has had negligible bad debts and as such does not consider it necessary to establish an allowance for
impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
23. Financial Instruments (continued)
(i) Credit risk (continued)
The Group does not require collateral in respect of trade and other receivables. The maximum exposure to credit risk for
trade and other receivables at the reporting date by type of counterparty was as follows:
Australia
Carrying amount
Note
30 June 2021
1,746,872
1,746,872
30 June 2020
670,178
670,178
The Group’s most significant balance outstanding to a single customer, accounts for $725,372 of the trade and other
receivables carrying amount at 30 June 2021 (2020: $135,249). The amount was received subsequent to year end within the
agreed terms.
Impairment losses
The aging of the trade and other receivables balance at the end of the reporting period that were not impaired was as
follows:
Neither past due nor impaired
Past due 1 - 30 days
1,746,872
-
1,746,872
426,145
83,034
509,179
Cash and cash equivalents (including deposits)
The Group held cash and cash equivalents of $2,625,853 at 30 June 2021 (2020: $3,039,998) which represents its
maximum credit exposure on these assets. The cash and cash equivalents are held with a reputable bank and financial
institution counterparties.
(ii) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group uses detailed project plans, which assists it in monitoring cash flow requirements and optimising its cash return on
projects delivered. The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected
cash outflows on financial liabilities (other than trade payables) over the succeeding 60 days. The Group also monitors the
level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other
payables. At 30 June 2021, the expected cash flows from trade and other receivables maturing within two months are
$1,746,872 (2020: $509,178). This excludes the potential impact of extreme circumstances that cannot reasonably be
predicted, such as natural disasters.
52
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
53
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
23. Financial Instruments (continued)
23. Financial Instruments (continued)
(ii) Liquidity risk (continued)
The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including
estimated interest payments and excluding the impact of netting agreements:
30 June 2021
Non-derivative financial liabilities
Lease liabilities
Trade and other payables
30 June 2020
Non-derivative financial liabilities
Lease liabilities
Trade payables
Carrying
amount
Total
Contractual cashflows
0-1 years
1-2 years
2-5 years
1,596,040
1,596,040
3,500,509
3,500,509
5,096,549 5,096,549
96,581
2,996,343
3,092,924
163,257
504,166
667,423
1,336,202
-
1,336,202
Carrying
amount
Total
Contractual cashflows
1-2 years
0-1 years
2-5 years
100,310
2,278,995
2,379,305
100,310
2,278,995
2,379,305
88,028
2,278,995
2,367,023
8,254
-
8,254
4,028
-
4,028
Market risk is the risk that changes in market prices – such as foreign exchange rates and interest rates – will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and
purchases and cash and cash equivalents are denominated. The currencies in which these transactions are primarily
denominated are AUD, GBP, EUR and USD.
At any point in time, the Group typically holds EUR, GBP and USD in anticipation of future purchase orders. The Group
reviews the market regularly to evaluate if the cost of obtaining derivatives outweighs the risk of currency movement. They
have not invested in any derivative financial assets. The Group has reviewed contract terms with customers where significant
currency risk on purchase orders may occur, and have enforceable provisions protecting them from adverse currency
movements.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group’s policy is to ensure that its
net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address
short-term imbalances.
(iii) Market risk (continued)
Exposure to currency risk
The summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is
as follows.
30 June 2021
30 June 2020
USD
GBP
EURO
USD
GBP
EURO
Trade and other receivables
Cash and cash equivalents
Financial assets
Trade and other payables
Financial liabilities
3,849
-
3,849
-
-
-
28
28
-
-
-
5,525
5,525
28
28
11,298
42,599
53,897
558
558
-
2
2
-
-
-
13,657
13,657
-
-
Net exposure
3,849
28
5,552
54,455
2
13,657
Currency risk sensitivity analysis for currencies in which monetary assets are held
A reasonably possible change of 10% in exchange rates at the reporting date would have increased/(decreased) equity and
profit or loss by the amounts shown below. This analysis assumes an increase/(decrease) in the value of the Australian dollar
against the currencies shown below.
30 June 2021
USD
GBP
Euro
Currency exchange risk (net)
30 June 2020
USD
GBP
Euro
Currency exchange risk (net)
Profit or loss, net of tax
10%
decrease
10%
increase
Equity, net of tax
10%
increase
10%
decrease
(238)
-
(222)
(460)
(2,711)
-
(869)
(3,580)
291
-
271
562
3,313
-
1,062
4,375
(238)
-
(222)
(460)
(2,711)
-
(869)
(3,580)
291
-
271
562
3,313
-
1,062
4,375
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments as reported to the management of the Group is
as follows.
Variable rate instruments
ANZ Chatel mortgage
Nominal amount
30 June 2021
30 June 2020
7.30%
-
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SYNERTEC ANNUAL REPORT 2021
55
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
Synertec Corporation Limited
Notes to the financial statements
For the year ended 30 June 2021
23. Financial Instruments (continued)
(iii) Market risk (continued)
Cash flow sensitivity analysis for variable rate instruments
A reasonably possible change of 1% in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates,
remain constant.
30 June 2021
Variable rate instruments
Cash flow sensitivity (net)
30 June 2020
Variable rate instruments
Cash flow sensitivity (net)
Profit or loss
Equity, net of tax
1% increase 1% decrease 1% increase % decrease
5,600
5,600
(5,600)
(5,600)
5,600
5,600
(5,600)
(5,600)
-
-
-
-
-
-
-
-
Capital Management
The Board’s policy is to maintain a strong capital base to sustain future development of the business. Capital consists of total
equity. The Directors monitor the return on capital as well as the level of dividends to ordinary shareholders.
The Directors seek to maintain a balance between the higher returns that might be possible with higher levels of borrowings
and the advantages and security afforded by a sound capital position.
There were no changes in the Group’s approach to capital management during the year.
Accounting classifications and fair values vs carrying amount
The fair values of financial assets and liabilities, together with the carrying amounts (which approximate fair value) shown in
the statement of financial position are as follows:
30 June 2021
Cash and cash equivalents
Trade and other receivables
Loan receivable
Deposits
Finance lease liabilities
Trade and other payables
30 June 2020
Cash and cash equivalents
Trade and other receivables
Deposits
Finance lease liabilities
Trade and other payables
Note
Loans and
receivables
2,625,853
1,746,872
-
-
4,372,725
10
11
12
12
18
15
Other
financial
assets
-
-
845,414
21,807
867,221
Other
financial
liabilities
Total
carrying
amount
- 2,625,853
- 1,746,872
845,414
-
-
21,807
- 5,239,946
-
-
-
-
-
-
1,596,040 1,596,040
3,500,509 3,500,509
5,096,549 5,096,549
Note
receivables financial
assets
Loans and
Other
Other
financial
liabilities
Total
carrying
amount
10 3,039,998
670,178
11
-
12
3,710,176
-
-
43,645
43,645
3,039,998
-
670,178
-
-
43,645
- 3,753,821
15
-
-
-
-
-
-
100,310
100,310
2,278,995
2,278,995
2,379,305 2,379,305
24. Interest in subsidiaries
Composition of the Group
Name of subsidiary
Synertec Holdings Pty Ltd
Synertec Pty Ltd
Country of
incorporation /
principle place
of business
Australia
Australia
Principal
activity
Group proportion of
ownership interests
30 June 2021 30 June 2020
100%
100%
100%
100%
Holding company
Engineering
products
and solutions
25. Contingent liabilities
The consolidated entity does not have any contingent liabilities at reporting date.
26. Subsequent events
During the year ended 30 June 2021, the global Coronavirus (COVID-19) pandemic and the associated community
restrictions imposed by Governments has continued to significantly influence market behaviour and as a result, has
impacted the operations and financial results of the Company. Subsequent to balance sheet date, Victoria entered into further
lockdowns due to the COVID-19 pandemic after an outbreak of the “Delta variant” occured in the State and other parts of
Australia. The various Australian State Governments promptly implemented ‘Stage 4’ public lockdown restrictions or the like
across most of these jurisdictions for varying periods of time, as determined by Government. While additional costs in relation
to COVID-19 have been incurred by the Company during the year ended 30 June 2021, the longer term impacts on the oper-
ations of the Group remain uncertain and cannot be reliably quantified at this time. The Board remains confident and optimis-
tic about the long term strategy of the Company and the economic fundamentals of the target markets in which it operates,
delivering long term sustainable and profitable growth for its shareholders.
In order to fund and achieve its strategic objectives, Synertec undertook a share placement to various professional,
sophisticated and institutional investors and successfully raised $7.1 million (before costs) through a placement of
71,472,111 new fully paid ordinary shares at $0.10 per share, as announced by the Company on 4 August 2021.
Capital raised through the Offer will be used to provide balance sheet support for execution of the dual strategy of
commercialising several large near-term ESG-focused technology opportunities in the energy sector and growing out a
high-end engineering solutions business as follows;
• $5 million to drive technology development and commercialisation to assist in the decarbonisation of Synertec’s
large and prestigious customer base; and
• $2 million to working capital to fund a growing portfolio of engineering solutions with the Company’s blue-chip
customer base.
In an ASX announcement made on 4 August 2021, Synertec provided an update of its significant strategic developments and
operational progress within its Technology business unit.
Composite Dry Powder (“CDP”) Technology
Synertec currently holds an exclusive worldwide license agreement with Sichuan GreenTech Environmental Co., Ltd
(“GreenTech”), for the right to investigate and commercialise GreenTech’s novel environmentally friendly and cost-effective
CDP technology for the treatment of hydrocarbon drilling mud and allied applications in all jurisdictions outside of China.
The recent progress in its technology development work program in partnership with GreenTech under the licence are as
follows:
1. Synertec has exercised its right to extend the existing worldwide licence agreement for a further 12 months (to 4
September 2022).
2. Synertec has agreed to provide an extension to the repayment of the secured loan funding to GreenTech from 31 July
2021 to 31 December 2021 subject to the satisfaction of certain conditions.
Powerhouse Technology
Synertec has entered into an MOU with leading energy producer Santos Limited (ASX:STO) to develop a solar renewable
energy power system to provide remote-site baseload energy for CSG well de-watering, utilising Artificial Intelligence and
predictive analytics - the first-of-its-kind to be deployed in Australia. It is the intention of both parties to enter into field trials
followed by a commercial agreement for long-term supply to other Santos facilities. Under the MOU, Synertec will progress
the design, construction and field testing of the prototype solar energy power system. Santos will support these activities
by providing pilot field site access, inputs into the project design, technical information pertaining to the pilot field sites, and
technical and other engineering resources.
LNG Custody Transfer System (“CTS”) Technology
World-leading independent marine classification and certification expert, DNV GL, has now completed an international
Hazard and Operability study (HAZOP) based on Synertec’s CTS technology design. The Company expects this design to
be fully certified by DNV in early FY22. This certification covers approval work which will lead to a General Approval for Ship
Application (“GASA”) statement for an LNG sampling system to be installed onboard marine Gas Carriers.
56
SYNERTEC ANNUAL REPORT 2021
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57
Synertec Corporation Limited
Directors’ Declaration
30 June 2021
Synertec Corporation Limited
Independent Auditor’s Report
1. In the opinion of the Directors of Synertec Corporation Limited (“the Group”):
(a) the financial statements and notes thereto, set out on pages 32 to 57:
(i) present fairly the financial position of the Group as at 30 June 2021 and its performance, as represented by the
results of its operations and its cash flows, for the year ended on that date;
(ii) comply with International Financial Reporting Standards as issued by the International Accounting Standards Board
as described in Note 2 to the financial statements; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. In respect of the year ended 30 June 2021, the persons performing the roles of Chief Executive Officer and Chief Financial
Officer have declared that the Company has:
(a) kept such accounting records as correctly record and explain its transactions and financial position;
(b) kept its accounting records such that financial statements of the Group that are presented fairly can be prepared from
time to time; and
(c) kept its accounting records accordingly so that the financial statements of the Company can be conveniently and
properly audited.
Signed in accordance with a resolution of the Directors:
Dated at 26 August 2021
Mr. Michael Carroll
Director
Melbourne, Australia
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Synertec Corporation Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Synertec Corporation Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit
or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group gives us a true and fair view of the Group’s financial
position as at 30 June 2021 and of its performance for the year ended on that date and is in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence requirements and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
58
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
59
Synertec Corporation Limited
Independent Auditor’s Report
Synertec Corporation Limited
Independent Auditor’s Report
Key audit matters
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the International Standards of
Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.pdf. This description forms part of
our auditor’s report.
Grant Thornton Audit Pty Ltd
Chartered Accountants
A C Pitts
Partner – Audit & Assurance
Melbourne, 26th August 2021
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Revenue (Note 2.5 and 5)
How our audit addressed the key audit matter
Synertec Corporation Limited recognised a large portion of
their revenue using the percentage completion input method
for fixed price projects. In addition, hourly rate projects are
recognised as the associated labour expense is incurred. As
these projects may be ongoing at year end, there is significant
estimation required when recognising the work in progress
(Contract Asset) or deferred revenue (Contract Liability) and
ensuring that the appropriate amount of revenue has been
recognised under IFRS 15 Contracts with Customers.
The engagement team has identified this area as a significant
risk due to the significant judgement involved in estimating the
percentage completion method for fixed price projects and in
appropriately capturing the time and material costs for hourly
rate projects to recognise revenue under IFRS 15.
Due to the significant estimation involved and recognition
under IFRS 15, the engagement team has determined this as
a key audit matter.
Our procedures included, amongst others:
• Obtaining an understanding the process and controls
implemented around revenue recognition with customers,
including the development of estimates involved in
determining percentage of completion;
• Analytically assessing revenue for all significant revenue
categories;
• Testing a sample of revenue transactions to supporting
documentation and assessed whether revenue has been
accurately recorded in the correct period;
• Testing a sample of contracts to ensure compliance with
IFRS 15;
• Reviewing the progress of fixed price contracts to gain an
understanding of the project stage of completion and
progress against project budget, including the recalculating
of contract asset and liability balances; and
• Assessing the adequacy of disclosures for compliance in
accordance with International Accounting Standards.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with International Accounting Standards as issued by the International Accounting Standards Board and for such
internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
60
SYNERTEC ANNUAL REPORT 2021
SYNERTEC ANNUAL REPORT 2021
61
Synertec Corporation Limited
Shareholder Information
As at 24 August 2021
Analysis of Holdings
Securities
Fully Paid Ordinary Shares
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Holders
75
47
47
383
253
805
Total Units
17,203
132,769
377,171
16,199,360
340,634,057
357,360,560
%
0.000
0.040
0.110
4.530
95.320
100.000
The number of unmarketable parcel holders as at 24 August 2021 based upon a share price of $0.100 (10.0 cents) is 120
shareholders holding in aggregate 139,972 ordinary shares. The number of unmarketable parcel holders as at 25 August 2020 (date
of last report) based upon a share price of $0.056 (5.6 cents) was 117 shareholders holding in aggregate 176,912 ordinary shares.
Top 20 Holdings
Name
NEW CONCEPT CORPORATION LIMITED
NORTHWEST NONFERROUS AUSTRALIA MINING PTY LTD
MRS KERRY ABDALLAH
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
GP SECURITIES PTY LTD
KIPBERG PTY LTD
FIRST TRUSTEE COMPANY (NZ) LIMITED
CS THIRD NOMINEES PTY LIMITED
CALAMA HOLDINGS PTY LTD
PONDEROSA INVESTMENTS (WA) PTYLTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
TAYCOL NOMINEES PTY LTD <211 A/C>
LYNTER PTY LTD
MR ANDREW MACBRIDE PRICE
MR SIMON CHARLES DOHERTY
BONDATRON PTY LTD
PUNTERO PTY LTD
MR STEPHEN HAROLD BAKER
Total Securities of Top 20 Holdings
Total of Securities
Substantial shareholders of the Company are set out below:
NEW CONCEPT CORPORATION LIMITED
NORTHWEST NONFERROUS AUSTRALIA MINING PTY LTD
MRS KERRY ABDALLAH
NATIONAL NOMINEES LIMITED (PERENNIAL VALUE MANAGEMENT FUND)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Number held
49,398,496
39,375,000
38,218,496
20,000,000
18,228,713
6,735,711
6,727,160
5,582,240
5,500,000
5,404,340
5,000,000
4,117,308
3,817,958
3,717,694
3,500,000
3,500,000
3,027,174
2,785,576
2,500,000
2,500,000
%
13.823%
11.018%
10.695%
5.597%
5.101%
1.885%
1.882%
1.562%
1.539%
1.512%
1.399%
1.152%
1.068%
1.040%
0.979%
0.979%
0.847%
0.779%
0.700%
0.700%
229,635,866
357,360,560
64.259%
100.000%
49,398,496
39,375,000
38,218,496
20,000,000
18,228,713
13.823%
11.018%
10.695%
5.597%
5.101%
Voting rights attached to ordinary shares
Upon poll each share shall have one vote, and on a show of hands every member present at a meeting in person or by proxy shall have
one vote.
Unissued equity securities Securities exchange
There were no unissued securities at the date of this report.
Securities exchange
The Company is listed on the Australian Securities Exchange (ASX:SOP).
62
SYNERTEC ANNUAL REPORT 2021
LEADERSHIP
EXCELLENCE
Our people have the courage
to take ownership and
responsibility for
new challenges
We are passionate and
deliver the highest value
outcomes, always striving
to do things in the best
way possible
INTEGRITY
Our people have the
resolve to do the
right thing, even
when nobody
is looking
SYNERTEC
VALUES
SAFETY
We value the health
and personal well being
of people before
all else
RELATIONSHIPS
We work with trust and respect
to build strong, positive
relationships with our
Clients, Stakeholders
and each other