Do IT with Spirit
Annual Report 2021
ASX:ST1
If you do business,
Do IT with Spirit
2
Annual Report 2021
Annual Report 2021
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Table of Contents
Highlights of the Year
Letter from the Chair
Letter from the Managing Director
Spirit Technology Solutions New Look
Board Members
Executive Team
Spirited Women
Introducing our Brands
Directors' Report
Auditor’s Independence Declaration
Statement of Profit or Loss & Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
6
9
11
14
16
18
22
24
36
61
63
65
67
71
73
133
135
141
144
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Annual Report 2021
Annual Report 2021
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FY21
Highlights
Underlying
$11.5M
EBITDA
209%
Underlying Earnings Before Interest, Taxes,
Depreciation and Amortization 2
Underlying
Integration
10 Completed
integrations
3 remaining acquisitions to be integrated
$4.5M
NPBT
1010%
Underlying Net Profit Before Tax (NPBT) 3
$104.5M
Revenue
200%
Year on Year revenue 1
Annual
Recurring Revenue
$65M
$1.34M
Statutory
NPBT
166%
FY21 exit Run Rate Annual Recurring Revenue
Statutory Net Profit Before Tax
1. Revenue refers to sales revenue and other income
2. EBITDA is a financial measure which is not prescribed by Australian Accounting Standards ('AAS') and
represents the profit under AAS adjusted for depreciation, amortisation, interest and tax. Underlying EBITDA
adjusts the Statutory financial metrics to exclude business acquisition & integration costs, net fair value loss
on remeasurement of contingent consideration on business combinations, business restructuring costs and
share-based payments.
3. Underlying Net Profit Before Tax takes into account the Underlying EBITDA adjustments and also adjusts
depreciation & amortisation to exclude the impact of amortisation of customer relationships.
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Annual Report 2021
FY21
Evolved to Spirit Technology
Solutions (from Spirit Telecom)
New purpose and brand launched
“Do IT with Spirit” activated in April 2021
Launched Spirited Women May 2021
Transformational acquisition of
Nexgen in April 2021
Google Rating
4.3
Google business 4.3 star rating
Customers
10.5K
B2B customers nationally
Staff
445
445 staff currently employed.
250% increase from FY20
Resellers
350
Resellers nationally
Annual Report 2021
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A Letter
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Annual Report 2021
A Letter
From the Chair
Dear Shareholder,
growth, complementary products and scale going forward.
We are working hard to identify more opportunities for Spirit
I’m pleased to share our Annual Report for 2021 – a year in
to deliver our strategic vision.
which Spirit has focused on consolidating our base and
investing for the future as we prepare for the next phase of
Unifying our team has been central to our integration strategy
growth.
and forms the backbone to any growth strategy which
remains an ongoing focus for the business. We have recruited
Over the last 18 months, we have made no secret about
the best in class talent including Todd Brooker as new Chief
Spirit’s ambitious growth plans and goal to become Australia’s
Sales Officer and Zoe Rosenwax as our Head of People.
leading provider of Technology & Telecommunication services
for businesses of all sizes.
As a result of our investments across the board, we had
record new business lead flow coming through Spirit. And the
In April, we were delighted to introduce our new purpose and
performance of our business goes from strength to strength
positioning “Do IT with Spirit” with the launch of our new
with consistent growth in contract value, recurring revenue
brand and name ‘Spirit Technology Solutions’. It’s a line in
and retention growing quarter on quarter.
the sand that heralds a rethink of our strategy, ambition and
spirit. This new identity reflects our vision and values in how
Importantly, we now provide a complete customer offering
we work with our customers, to become a valued partner and
at Spirit which includes Cyber Security, Cloud, high-speed
support their vital work.
Internet, Mobile, Voice, Managed Service and Security
solutions. We are now selling across the whole spectrum of
As we have grown and learned over the past 12 months, for
Australian businesses and our intention is to bundle more to
Spirit to realise our strategy and full potential, it’s more than
grow a recurring revenue book, grow the contract tenure and
just improving sales, profit, customer experience, footprint
improve customer stickiness. We expect to see strong organic
and product. We are a partner for businesses.
growth opportunities going forward through cross selling
products and services with Nexgen.
Today, we are laser-focused on our vision to create a modern
telco and IT business that is profitable and sustainable, and
Spirit has not been immune from the impacts of the COVID-19
helping Australian businesses from SMB to mid-market and
pandemic however the robust nature of the business has
corporates. For Spirit to stand out confidently in an ever-
meant that we have continued to deliver record growth and
consolidating market we need to be better than we ever have
profits the past year, with high demand for our products and
been. And we are, but we aren’t stopping.
services set to continue.
As part of our ongoing transformation journey, we have made
We are confident our plans will solidify our intention to
further successful acquisitions and worked hard to ensure
provide the best customer experience and be the one stop
these businesses are fully integrated. Of the 13 most recent
shop for our Australian businesses. We have grown, we have
acquisitions, Spirit has successfully integrated 10 of those
matured, we are vibrant and we have a high-market product
companies into our standard operating environment with only
offering.
Reliance and the recent purchases of Intalock and Nexgen
remaining.
On behalf of the Board and the team at Spirit, I thank you,
our shareholders, for your ongoing support.
The Nexgen acquisition in April this year has been
transformational, with synergies and combined technology
opportunities providing new business and scale. The deal
brings 5,000 new business customers, doubling our B2B
customer base, and 100 new salespeople to drive organic
James Joughin | Chairman
Annual Report 2021
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A Letter
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Annual Report 2021
A Letter
From the Managing Director
Dear Shareholders,
I would like to start by thanking you for your support during
Acquisitions to become a fully integrated
Financial Year 2021. Despite unique challenges caused by the
technology provider
pandemic, Spirit Technology Solutions has transformed from
a small Telco to a national fully integrated technology provider
for businesses across Australia.
Over the past year Spirit has been rebuilt and repositioned to
become the go-to tech provider for Australian businesses –
both big and small. We have created a truly modern Telco and
IT business with a refreshed brand that is resonating with the
market – ‘If you do business, Do IT with Spirit.’
Our vision is to be the first port of call for Australian
businesses to meet all their technology needs. We are striving
to give Australian businesses the service they deserve, along
with an integrated product suite – one monthly bill, one
account manager and one provider – to manage their needs
from collaboration, managed IT services, Cloud migration,
high-speed Internet and Cyber Security.
Our financial results, demonstrate the successful integration
of our acquisitions and bundling of services as we build a
business of scale with growing profitable margins. We are
genuinely excited to embark on realising the synergies and
growth opportunities as the business positions further into
the mid and corporate markets across FY22-FY23.
Spirit strategy delivers record growth and profit
Spirit’s record growth and revenue have been boosted by
the transformational acquisition of telecommunications
provider and sales-led powerhouse, Nexgen for $50 million
in April, providing scale, a portfolio of 5,500 new business
customers and a very impressive sales process. After multiple
acquisitions during the year, including cybersecurity firm
Intalock in December 2020, Spirit is now a fully integrated
Telco and IT business.
The Intalock acquisition brings a highly sophisticated
Cyber Security offering, including an international security
operations centre. A number of esteemed Cyber Security
leaders from Intalock have joined Spirit, along with a blue-chip
customer base of household brands. This has propelled Spirit
into a new area of the market and positions us as a credible
contender for market share in the enterprise and government
space and provides us with a sophisticated Cyber Security
offering.
Through these acquisitions, we are now focused on
transitioning to being a pure business to business provider.
We see an opportunity to move the revenue mix towards
mid-level and larger corporates which is more defensive and
attracts larger and longer contract sizes to create clearer
revenue stability for Spirit.
Spirit recorded record revenue 1 of $104.5M, up 200% in
Building a national brand
FY21 which was driven by strong performances across new
business sales in the mid-corporate markets and SMB market.
The business also became profitable with Underlying Net
Profit Before Tax 3 of $4.5M up 1010%. Our growth strategy
is paying off as we see strong and growing demand for our
product set across Data, Cyber, Managed Services and Voice.
We trebled Underlying EBITDA2 to $11.5M, up 209% and are
increasingly seeing this momentum carry us into larger
contract success in the mid and corporate markets. This is
backed by a strong balance sheet with $8.5M of cash at 30
June 2021.
References
1, 2, 3 refer to page 6.
Annual Report 2021
FY21 saw Spirit expand into new product markets and
geographies across Australia. The product sets include Cloud,
re-seller, virtual collaboration, Cyber Security and a vast array
of managed IT services in a bundled offering.
We now have more than 10,000 business customers
nationally, an army of salespeople and a very active reseller
channel. This gives Spirit a competitive advantage across the
product suite and creates demand driven growth. This has
also enabled Spirit to win larger accounts nationally via IT and
Telco products.
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Looking forward, we see continued consolidation in the fragmented IT & Telco markets, in which Spirit will thrive. Australian
businesses are becoming more dependent on the technology that only an integrated IT & Telco business like Spirit can
provide, which has created structural change in the industry that we are responding early to.
In closing, I would like to thank my fellow Board members and the entire Spirit team for their hard work, motivation and
commitment to our evolution to a fully immersed technology provider for businesses across Australia; and doing it with
excellence.
To our shareholders, thank you for your support of the company – we look forward to sharing the next phase of our growth
with you.
Sol Lukatsky | Managing Director
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2021, the birth of
Spirit Technology Solutions
Spirit
Brand Evolution
Telecom
2016
2021
Sydney
International Airport
Sydney
George St
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Annual Report 2021
Melbourne
Monash Freeway
Melbourne
Westgate Freeway
Melbourne
International Airport
Annual Report 2021
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The Spirit Group's
Board Members
James Joughin
Chairman
James brings over 30 years of general corporate experience,
having been a senior partner of Ernst & Young until 2013.
He was a partner of the firm for 17 years and headed the
Mergers and Acquisitions division in Melbourne.
Sol Lukatsky
Managing Director
Sol is a Spirit executive and board member. He has
experienced multiple company transactions across ASX
and Private Equity backed firms. Sol has over 15 years
experience in senior leadership roles covering; marketing,
sales management, digital, customer experience, big data,
capital markets, innovation and operations within blue
chip organisations including: Dun & Bradstreet, Challenger
Financial Services and NAB.
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Inese Kingsmill
Non-executive Director
Inese brings over 20 years of experience in major
corporations and is recognised as one of Australia’s most
effective customer-focused business leaders. Her wealth
of experience has seen Inese drive growth and transform
brands and culture across large enterprises, including
Microsoft, Telstra and Virgin Australia. Inese is also currently
a Non-executive Director of ASX-listed IT Professional
Services company, Rhipe Limited, hipages Group Holdings
Limited and NobleOak Life Limited.
Mark Dioguardi
Executive Director and Chief Operating Officer
Mark is a Spirit executive and board member.
An experienced CTO and COO with over 25 years’ experience
predominantly in Tier 1 and 2 Telco operators in Australia and
Asia. A qualified engineer, Mark commenced his career in
engineering at Telstra before building his corporate career
as CTO at Maxis, where he led 1,350 engineers and managed
a $600m USD budget to grow their network.
Greg Ridder
Non-executive Director
Greg is currently the Chairman of Kogan.com. Formerly Asia
Pacific Regional President at NYSE-listed Owens-Illinois,
Greg led growth and diversification from its traditional
Australian base through joint ventures and acquisitions
in China and Southeast Asia. Recently he has focused on
intensive business improvement, acting as CEO at the
Australian Institute of Architects, CEO at Phoenix Australia
and as CFO at World Vision Australia. Greg is experienced in
leading businesses in multiple countries, cultures, economic
circumstances and market conditions.
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The Spirit Group's
Executive Team
Paul Miller
Chief Financial Officer
Paul is a Chartered Accountant with more than 25 years of
financial experience. Having commenced his career with
PwC in Australia and London, Paul has specialised expertise
working in high growth companies.
Chris Hayes
Chief Commercial Officer
Chris is an experienced executive with over twenty years'
financial management and professional practice experience.
He has worked in Australia, China and the UK across publicly
listed entities and private equity backed operations.
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Julian Haber
CEO Intalock
Julian is a highly respected Cyber Security leader and
has built the Intalock brand as a leading security service
provider over the past 11 years. He has business experience
within Industry-leading security vendors and integrators
with over 20 years’ in information security solutions,
Managed Services and sales.
Katie Bentley
CEO Trident
As CEO of Trident, Katie places a strong emphasis on leading
business transformation, value creation and growth for
clients in essential services.
Jason Wade
Chief Product & Technology Officer
Jason is Spirit's Chief Growth Officer, with a wealth of
technical knowledge and strong commercial acumen.
A modern-day veteran within the IT and
Telecommunications sector, he brings more than 25 years
of experience to the table. Jason is innovative and client-
focused, with a proven ability to deliver results.
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Todd Brooker
Chief of Sales
Todd has over 20 years experience helping Australia's
leading businesses solve their most complex technology
challenges. Under Todd's guidance, the Spirit sales team
have a very impressive track record working direct and also
via our partner channel to find the best and most cost-
effective solutions for customers.
Elie Ayoub
Co Managing Director - Nexgen
Elie co-founded Nexgen in 2009 and has over 23 years’
experience in the telco industry across SMB, residential,
corporate & government segments.
James Harb
Co Managing Director - Nexgen
James co-founded Nexgen in 2009 and has over 20
years’ experience in the telco industry. He has led the
development of structure, strategy, systems and coaching
disciplines required to maintain a high-performance sales
culture.
Kate Hawker
Head of Corporate Services
Kate brings valuable experience supporting business
operations across various industries. Highly experienced
in business strategy execution, particularly in business
growth and expansion, Kate's skills are diverse, assisting and
supporting most aspects of the business, from the Board to
our technicians.
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Spirit Technology Solutions,
Shaking Things Up in
the Tech Industry
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Connect, Empower & Inspire Women in Technology
Spirited Women
About the Initiative
Spirited Women is a safe and supportive network dedicated to the advancement of women in the technology sector to
connect, empower and inspire each other. We serve to tackle the challenges women face in the technology industry. We drive
and lead the future of tech diversity.
With technology changing faster than ever before, it is necessary to stay up to date. Spirited Women allows women in
technology to come together to learn from one another, find mentors and new business or partnership opportunities. We want
to inspire and be inspired by the women in our group.
Through our range of events and gatherings, you can expect knowledge sharing, collaboration, fun and spirited conversation.
Let us connect, start sharing your success stories, grow your network and keep informed of our upcoming events.
Start your journey today and join Spirited Women!
Of course, you are welcome to invite all the women and men in your organisation to join.
Empower, Advance & Grow
Learning & Development
Support Network
Our Goals
About
The Initiative
Short term
▶ To cultivate an internal culture that will resonate across all departments within the Spirit Group
▶ To create momentum and traction across all levels and departments
▶ To foster a safe environment where Spirit employees can grow and be respected by their peers
Mid/Long term
▶ To establish a nurturing culture that sets the benchmark across the Telco & Techo industry
▶ To generate external interests and attract high caliber talents to join the Spirit team
▶ To set a benchmark that Spirit is the desired career destination
▶ To set a benchmark that Spirit is the desired partner of choice by customers and vendors
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Annual Report 2021
Connect, Empower & Inspire Women in Technology
About
The Initiative
Introducing
our Brands
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We Make IT Happen
The Spirit Technology
Group Difference
So, Who are We?
Put simply. We’re a disruptor in the Australian business technology industry.
What started with incredibly fast, Sky-Speed Internet has become a full tech service offering. In less than two decades, we have
established ourselves as Australia's leading Cyber Security experts, built one of the nation's leading Voice platforms, and offer a
huge range of hardware, software, Managed IT services, and Cloud-based solutions.
Our solutions feature a range of best-of-breed products, so Australian businesses can count on us to keep them running,
no matter what gets thrown at them.
We’re agents of change. And because of that, we’ve paved the way for the nation to do business better, by merging the worlds
of IT and Telco under one roof. That’s why we take care of IT. And by that, we mean all of it.
So whatever the technology needs...
Do IT with Spirit.
Your entire IT & Telco
A single point of contact
A single clean invoice for all
Stack under one roof
for everything
your tech, every month
An all Australian based business
One of Australia's top ASX
Industry-leading
listed tech companies
customer satisfaction
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Annual Report 2021
Experts in best of
breed communication
solutions
Masters of merging
the worlds of telco &
IT under one roof
World-class account
management and bespoke
technology solutions
Industry-leading
cyber security
solutions
Small business
specialists
Medium-large business
specialists
Essential services
specialists
Enterprise & Government
specialists
The Spirit Difference
By doing business with any member of the Spirit family, our customers immediately have
access to the finest technology specialists and solutions available in the country.
Our group portfolio allows them to have one single point of contact for all tech needs, whilst
also ensuring that you are delivered the best-in-class solutions for businesses of any shape and
size.
On the surface, you won't realise you are dealing with other business units across the group.
By having a structured portfolio we are able to give customers a single brand and contact to
work with.
This also allows us to focus and grow our research & development in specialist tech areas to
deliver you the latest & greatest innovations.
All services cyber
secure by design
Annual Report 2021
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Nexgen's Story
Powering Business Communications
We’re more than just business telecommunication specialists. We’re here to simplify the way Australia does business.
By providing businesses with the right tools, we help improve your customer journey and enhance productivity and
efficiency. All while helping your staff communicate and collaborate more effectively. It’s what we do.
Today’s sales processes have seemingly endless touchpoints, and keeping up with them all is critical to business success.
We have the tech to make that possible. When a customer gets in touch, our solutions ensure our customers have all the
information they need at their fingertips, right down to what was discussed on their last call to the products they own.
Together, we improve customer service and help our customers grow as a result of this.
At Nexgen, we only partner with best-of-breed vendors to bring the most innovative and affordable communications
solutions to the market.
We're not just here to meet current needs. We're here to future proof businesses.
24x7 Australian
support team available
Australia owned
and operated
Trusted, with over 5,000
business customers
One bill & one touchpoint for
all your services
Expert in-house
technicians
Tailored solutions
for your business
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Annual Report 2021
Nexgen's Key Customers
Customer
Diversification
Nexgen has a diversified and resilient customer base.
Ī Medical & Health Care
Ī Construction & Engineering
Ī Prof. Serv. - Finance, Acctg. & Legal
Ī Prof. Serv. - Other
Ī Manufacturing & Industrial
Ī Other services - Beauty Services, etc.
Ī Automotive
Ī Retail
Ī Wholesale, Transport, & Logistics
Ī Accommodation & Dining
Ī Real Estate Services
Ī Education, NGOs, & Government
Ī Other
3%
4%
13%
5%
5%
5%
8%
8%
13%
10%
8%
9%
9%
Customer breakdown by industry
Nexgen's Key Customers
Over 5,500 Business
Customers, Including…
Annual Report 2021
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Spirit's Story
To build a successful business, you need to throw everything at it, with purpose, ambition and energy.
And when you have a technology partner who is efficient, reliable and future focused it means that you can get on with doing
what you do best.
When choosing the perfect partner to do the things you can’t, make sure that they do what they do, with the same spirit.
So when it comes to your technology needs...
Do IT with Spirit
Specialties
We’re prepared to challenge the old way to deliver new solutions, platforms, products and services. We’ll partner with you to
improve the way your business technology operates, because we believe in making Australian businesses even better.
Our expert teams are on the ground all around Australia and available to help you 24/7.
With decades of Industry-leading experience and an arsenal of world-leading tech, there’s nobody better placed to deliver
solutions that can be relied on. No confusing jargon, just great service (and even better results).
Internet Connections
Communications
Cyber Security
Managed Services
Cloud Solutions
▶
Business Fibre
▶ Mobile
▶ NBN Enterprise
▶
▶
Fixed Wireless
Private Network
▶ Managed Router
▶
▶
▶
▶
LivePBX
LivePBX + Mitel
LiveCall
Teams Connector
▶
▶
▶
▶
▶
SD-WAN
▶ Managed Print
▶ Hybrid Cloud
Custom SD-WAN
▶ DR & BCP
Firewall
▶
IT Support
Endpoint Security
▶ Managed IT
Advanced
▶ Managed Wi-Fi
Security Services
▶
Professional Service
▶
▶
▶
▶
▶
Private Cloud
Public Cloud
LiveOffice
LiveOffice Desktop
LiveOffice Exchange
One-stop-shop for all Telco
Best-practice design and
Tech solutions shaped to
Bundle and save with other
and Technology needs
configuration
each business
Spirit solutions
24x7 Australian
One bill & one touchpoint for
Available as a fully
support team available
all your services
Managed Service
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Annual Report 2021
Spirit's Customers
Over 3,000 Business
Customers, Including…
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Trident's Story
To provide essential services, organisations on the front-line need a technology partner they can count on. That’s where Trident
comes in.
We have over 30 years experience delivering tailored information technology, infrastructure and services to schools, healthcare
and organisations across Australia. From PC installation through to end-to-end IT solutions, we deliver solutions that are unique
to essential services needs. Off-the-peg has never really been our style!
In 2020, Trident joined with ASX listed Spirit Technology Solutions, to become one of Australia’s most trusted Internet
and technology businesses. Our partnership means we can offer an unrivaled portfolio of services to keep our essential
organisation's performing at their best.
We are innovators and known as one of Australia’s leading integration providers. Our priority is to deliver innovative technical
design, thoughtful Managed Service solutions, beneficial consulting outcomes and exceptional events.
We understand that every organisation is different – because we are too! Our expert team and dedicated account managers
ensure our customers find the right technology solutions to suit their needs. We can be counted on for ongoing support to
make sure that essential operations never stop.
Deep industry
Experts in designing
Greatly experienced
Agile and adaptable
knowledge in education
and delivering complex
technical team
and healthcare/aged care
tailored solutions
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Annual Report 2021
Technology Solutions
Trident's Clients
Over 100+ Clients, Including…
Customer Testimonials
The difference with Trident is that they always deliver on what they promise, which can’t be said of every
technology provider. The skill sets and experience of their engineers means they can get the solution
implemented faster, and ensure it works from day one.
Graeme Newland Director of Information Technology Peninsula Grammar
Trident is working collaboratively and quickly with us to adapt our IT services and high-speed Internet. I am
very pleased this critical service can be provided reliably and effectively from the Spirit and Trident teams.
Tim Rowler Business Manager and Company Secretary, Loreto Mandeville Hall Toorak
From our perspective, Trident are always reliable and efficient with every piece of technology they deliver, and
this scenario was no different. From the proposal through to the team working on-site, the entire process ran
smoothly and on-time
Ian Foster The Knox School
The real difference with Trident is their Customer Service. You can easily pick up the phone, explain a problem,
and have it solved immediately
Peter Gunn Homestyle Aged Care
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Intalock's Story
Peace of mind with Cyber Security services from experts
We are one of Australia’s leading Cyber Security partners. And we’re leading the way for a reason.
For over ten years we have specialised in developing innovative and effective Cyber Security services, and we haven’t stopped
doing it since. It’s in our DNA.
Our expertise comes from working with a variety of leading enterprises and government organisations, which has given us the
knowledge and experience to develop world-class security solutions that’ll be sure to keep your business (and its data) safe.
Specialties
Many businesses believe that good security means building higher walls around their networks. This takes a lot of time, money
and resources, which isn't effective or sustainable. We show our customers a better, more cost-effective way. Giving them more
time and money to focus on what their organisation does best.
We pride ourselves on being different. And we’re willing to bet our customers do to. That’s why we take a strategic, data centric
approach to Cyber Security. We will always take the time to understand our customer's data, its sensitivity, and how it gets used,
stored and shared. In fact, we’ll get to know everything about a client, all so we can better protect them from online threats.
Advisory services
Technical Services
Managed Services
▶ Gap Assessments against NIST,
▶ Design, deploy and configure
▶
Security Operations Centre (SOC) and
ISO27001, CPS234, ASD Essential
technical security controls
Managed Detection and Response
Eight or Government ISM
▶
Identity management, threat and
(MDR)
▶
ISMS implementation, audit and
information protection platforms
▶
Vulnerability Management as a
compliance
▶
Cloud Security implementation
Service
▶
Cyber Security Roadmaps & Risk
and migrations
▶
Backup as a Service
Management Frameworks
▶
Security testing and threat
▶ Managed security operations and
▶
Threat and risk assessments, incl
emulation, incl penetration testing,
tools
3rd party, supply chain risk
phishing and red/purple teaming
▶ Digital Forensics and Incident
▶
Cyber incident response planning
Response
▶ Ongoing Information Security
Awareness Training program
Intalock Security Operations Centre (SOC)
The Intalock Security Operation Centre (SOC) provides protection for some of Australia's leading organisation’s information and
systems, including the network, endpoints and data. It provides 24x7 management, threat detection and response.
Our managed SOC services are delivered by a dedicated, specialist team of technical leaders, analysts and engineers. We apply
our own, unique methodology and processes alongside leading Cyber Security technologies, offering our national businesses
the best possible protection. Our SOC is supported by our Advanced Threat Response Unit, whose specialists provide threat
intelligence, threat emulation and digital forensics support to our partners.
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Some of
Intalock's Customers
Annual Report 2021
35
Directors' Report
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Annual Report 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
The Directors present their report, together with the financial statements, on the consolidated
entity (referred to hereafter as the 'Consolidated Entity') consisting of Spirit Technology Solutions
Ltd (referred to hereafter as the 'Company', 'parent entity' or 'Spirit') and the entities it controlled
at the end of, or during, the year ended 30 June 2021.
Directors
The following persons were Directors of Spirit Technology Solutions Ltd during the whole of the
financial year and up to the date of this report, unless otherwise stated:
Mr James Joughin (Non-Executive Chairman)
Mr Sol Lukatsky (Managing Director)
Mr Mark Dioguardi (Executive Director)
Mr Gregory Ridder (Non-Executive Director)
Ms Inese Kingsmill (Non-Executive Director) (appointed on 1 July 2020)
Mr Terence Gray (Non-Executive Director) (resigned on 7 July 2020)
Principal activities
During the financial year the principal activities of the Consolidated Entity consisted of the
provision of IT&T services. This includes the provision of Telecommunication services, Cloud
services, Managed IT services and Cyber Security services (referred to hereafter as IT&T Services).
Dividends
There were no dividends paid, recommended or declared during the current or previous financial
year.
Review of operations
The profit for the Consolidated Entity after providing for income tax amounted to $1.157M (30 June
2020: loss of $1.515M).
Total revenue and other income for the Consolidated Entity for the financial year ended 30 June
2021 was $104.5M (30 June 2020: $34.9M).
The following table summarises key financial metrics for the period:
Annual Report 2021
37
2
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Sales revenue
Other income
Earnings before interest, taxes, depreciation &
amortisation (EBITDA*)
Business acquisition & integration costs
Net fair value loss on remeasurement of
contingent consideration on business
combinations
Business restructuring costs
Share-based payments
Underlying EBITDA*
Profit/(Loss) after income tax
(expense)/benefit
2021
$'000
2020
$'000
Change Change
$'000
%
102,786
1,683
104,469
34,429
445
34,874
68,357
1,238
69,595
8,619
2,100
2,182
640
6,437
1,460
199%
278%
200%
295%
228%
168
-
621
11,508
-
426
479
3,727
168
(426)
142
7,781
100%
(100%)
30%
209%
1,157
(1,515)
2,672
176%
*EBITDA is a financial measure which is not prescribed by Australian Accounting Standard (‘AAS’)
and represents the profit under AAS adjusted for depreciation, amortisation, interest and
tax. Underlying EBITDA is EBITDA adjusted to exclude business acquisition & integration costs, net
fair value loss on remeasurement of contingent consideration on business combinations, business
restructuring costs and share-based payments.
The basic and diluted earnings per share for the financial year ended 30 June 2021 was $0.21 (30
June 2020: loss of $0.42).
The net assets of the Consolidated Entity increased by $71.6M to $109.7M as at 30 June 2021 (30
June 2020: $38.1M).
During the financial year the Consolidated Entity continued its evolution to become a Modern
Telco, by providing a complete offering across Telecommunications, Internet, Cloud, IT Managed
Services and Cyber Security. Spirit accelerated its acquisition strategy to enable the Consolidated
Entity to create a contemporary and customer relevant IT&T company for Australian businesses.
Spirit continues to execute to strategy and is building a highly valuable IT&T asset for its
shareholders and customers. Organic demand for the product set across: Data, Cyber, Managed
Services, Voice and importantly Spirit’s bundled offering continues to be very positive. The
Company is seeing continued growth momentum with larger contracts in the mid and corporate
markets. The acquisition of the Nexgen Group in April 2021 expanded the Consolidated Entity’s
customer base in the Small & Medium Business market with the addition of over 5,500 Data &
Voice business customers and 100+ sales team members.
The Consolidated Entity has invested heavily in integration and migration projects throughout the
year and now has a truly scalable and end-to-end customer focused platform to enable the sales
organisation to execute and provide multiple product solutions to our customers.
Spirit enters financial year 2022 in a position to take advantage of growth opportunities and
leverage the investments made in financial year 2021.
38
Annual Report 2021
3
Spirit Technology Solutions Limited
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Significant changes in the state of affairs
On 1 July 2020, the Consolidated Entity announced it completed the acquisition of the VPD Group
and 29,000,000 fully paid ordinary shares were issued (subject to voluntary escrow until 1 July 2021),
at a fair value issue price of $0.25 (25 cents) per share.
On 20 August 2020, the Consolidated Entity announced the agreement to acquire three Managed
IT Service providers, which were rebranded as Spirit Solutions Partners. The three providers were:
1. Reliance IT, a Cloud Managed Services provider based in Central NSW and one of the largest
providers of IT services in regional NSW; 2. Beachhead Group, a Sydney based Managed IT Services
provider, specialising in Cloud and Infrastructure deployment to businesses and private schools;
and 3. Altitude IT, a Sydney based Managed IT Services provider with a diverse base of recurring
revenue across the commercial and industrial sectors. The total purchase price of up to $10.4M
including an earnout component, will be settled as a combination of cash and Spirit equity.
The acquisition of the three IT Managed Service providers was completed on 1 September 2020
and 7,940,080 fully paid ordinary shares were issued (subject to voluntary escrow until 1 September
2021), at a fair value issue price of $0.36 (36 cents) per share.
On 20 August 2020, the Consolidated Entity announced:
●
●
●
that it successfully raised $18.2M in a strongly supported Placement, which comprised an
unconditional placement of approximately $17.88M to institutional and sophisticated investors
and a conditional placement to Directors and Management of approximately $0.36M (subject
to shareholder approval).
the launch of a Share Purchase Plan (SPP) to raise up to $5.0M at the same issue price as the
Placement.
CBA (the Group’s banker) had expanded the Spirit debt facility by $5.0M, raising the debt
facility limit to $15.9 M.
On 27 August 2020, 55,881,401 fully paid ordinary shares were issued under the unconditional
placement to institutional and sophisticated investors at an issue price of $0.32 (32 cents) per share
for a total consideration of $17.9M.
On 17 September 2020, the Consolidated Entity announced that the SPP had received
overwhelming support and was heavily oversubscribed. On 18 September 2020, 15,624,581 fully
paid ordinary shares were issued under the SPP at an issue price of $0.32 (32 cents) per share for a
total consideration of $5M.
$5.0M.
On 14 October 2020, the Consolidated Entity advised that following approval by shareholders at
the Annual General Meeting (“AGM”) held on Tuesday, 13 October 2020, the Company changed its
name from “Spirit Telecom Limited” to “Spirit Technology Solutions Ltd”, effective from 13 October
2020.
On 22 October 2020, following shareholder approval at the 2020 AGM, 1,125,000 fully paid ordinary
shares were issued under the conditional placement to Directors and Management at an issue
price of $0.32 (32 cents) per share for a total consideration of $360,000.
On 22 October 2020, the Consolidated Entity issued 189,320 fully paid ordinary shares for $nil
consideration, upon conversion of vested Performance Rights.
Annual Report 2021
39
4
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
On 12 November 2020, the Consolidated Entity announced the issue of a total of 2,232,387
Performance Rights to Managing Director, Sol Lukatsky and Chief Operating Officer, Mark
Dioguardi, following shareholder approval at the Company’s Annual General Meeting held on 13
October 2020, pursuant to the terms of the Spirit Technology Solutions Employee Incentive Plan,
of which 1,418,115 vest on satisfaction of performance hurdles over the three-year period from 1 July
2020 to 30 June 2023 and 814,272 vest subject to both the Company's share price reaching $0.30
(30 cents) at any time prior to 1 July 2023 (already achieved) and continued employment until 1 July
2023.
On 2 December 2020, the Consolidated Entity announced the acquisition of Intalock Technologies
Pty Ltd (“Intalock”), one of Australia’s leading cyber security services businesses with a market
leading and sophisticated full Security Operations Centre (SOC) for $15.0M upfront consideration.
The acquisition allows Spirit to cross sell and deliver highly secure bundled Cyber Security Services
with Data, Cloud and Voice. The upfront consideration of $15.0M was paid as a combination of cash
(85%) and Spirit equity (15%) with a deferred consideration component. An additional earn-out
consideration component is also available for out-performance in FY22 capped to maximum total
transaction value of $22.5M. Any earnout component payable remains contingent upon certain
agreed hurdles being met in FY22.
The acquisition of Intalock was completed on 3 December 2020 and 5,921,053 fully paid ordinary
shares were issued (subject to voluntary escrow until 3 December 2021), at a fair value issue price
of $0.415 (41.5 cents) per share.
On 27 January 2021, the Consolidated Entity announced Trident's achievement of the Target 1
Incentive (earnout) terms and accordingly issued 703,366 fully paid ordinary shares at a fair value
issue price of $0.39 (39 cents) per share.
On 18 March 2021, in line with the Consolidated Entity’s shift to focus on the business market, it
announced the intention to divest its consumer infrastructure assets.
On 31 March 2021, the Consolidated Entity announced the acquisition of Nexgen. Nexgen sells a
range of high growth Data, Security & Voice products and represented a material geographic and
commercial expansion with the acquisition being the largest completed by Spirit to date – which
doubles the Consolidated Entity’s portfolio of B2B customers.
Consideration for the acquisition of Nexgen is capped at $50M, including a deferred component
of up to $10M linked to milestone incentives based on performance targets for the FY22 and FY23
years. Both the up front and deferred consideration comprised 70% cash and 30% shares in the
Consolidated Entity.
On 31 March 2021, the Consolidated Entity also announced:
●
●
the successful raising of approximately $23.8M through an unconditional placement to
institutional and sophisticated investors; and
an increase of $10M in the CBA debt facility to $25M to support the Nexgen acquisition.
On 8 April 2021, the Consolidated Entity announced the completion of the Nexgen acquisition and
issued $12.2M in shares to Nexgen vendors, being 32,876,712 fully paid ordinary shares (subject to
voluntary escrow until 8 April 2021) at a fair value issue price of $0.37 (37 cents) per share.
On 8 April 2021, the Consolidated Entity completed the $23.8M placement to institutional and
sophisticated investors and issued 72,121,213 fully paid ordinary shares at a fair value issue price of
$0.33 (33 cents) per share.
40
Annual Report 2021
5
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
On 11 June 2021, the Consolidated Entity announced the issue of 620,685 Performance Rights to
employees pursuant to the terms of the Spirit Technology Solutions Employee Incentive Plan,
vesting on satisfaction of performance hurdles over the three-year period from 1 July 2020 to 30
June 2023.
There were no other significant changes in the state of affairs of the Consolidated Entity during
the financial year.
Matters subsequent to the end of the financial year
The Consolidated Entity navigated the business disruptions related to COVID-19 during the
financial year ended 30 June 2021 and was not materially impacted. The Consolidated Entity did
not receive any Government subsidies by way of Job Keeper.
In July and August 2021, the Australian economy has experienced disruption related to COVID-19
triggered State-wide lockdowns across all major markets. These lockdowns have caused
disruption to the broader business community and Spirit’s operations have not been immune. The
Company continues to manage its operations to navigate through the uncertainty and impacts
that these lockdowns create and more broadly assist its customer base respond and adapt.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or
may significantly affect the Consolidated Entity's operations, the results of those operations, or the
Consolidated Entity's state of affairs in future financial years.
Likely developments and expected results of operations
The Consolidated Entity is well placed to continue its strategy execution in FY22 through the
integration of recent acquisitions and leveraging cross selling and bundling to its expanded
customer base. The Consolidated Entity continues its growth momentum with larger contracts
being secured in the mid and corporate markets and executing consistently in this market space
is a core focus in the forward 12 months. The organic demand that Spirit is seeing in its product set
capability must be balanced by the cost pressures being experienced in the current tight labour
market combined with our intention to accelerate investment in brand, sales people and systems.
As outlined, the organic growth focus will be challenged by the continuing lockdowns being
experienced across Australia as a consequence of COVID-19.
Environmental regulation
The Consolidated Entity is not subject to any significant environmental regulation under Australian
Commonwealth or State law.
Annual Report 2021
41
6
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
Mr James Joughin
Non-Executive Chairman
Bachelor of Business, CPA, GAIDC
James Joughin brings over 30 years of general corporate experience,
having been a senior partner of Ernst & Young until 2013. He was a
partner of that firm for 17 years and headed the Mergers and
Acquisitions division in Melbourne. James is also an experienced
company Director and holds non-executive Directorships of a
number of private companies and a public company. He has wide
business experience and has previously held the position of Chair of
a private company and is currently Chair of a number of Risk and
Audit Committees. For most of his career, James has been providing
advice to Boards in relation to growth strategies, improving
shareholder value, mergers and acquisitions, funding (both debt and
equity) and IPO’s.
Other current Directorships: MyDeal.com.au Ltd (ASX: MYD)
Former Directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Bio-Gene Technology Ltd (ASX:BGT)
None
Member, Audit and Risk Committee,
Member, Nomination and Remuneration Committee
4,353,736 fully paid ordinary shares
Nil
Nil
Mr Sol Lukatsky
Managing Director
Masters of Marketing, Bachelor of Business (Marketing)
Mr Lukatsky
is a C-Suite Executive with multiple company
transactions across: ASX and Private Equity backed companies. He
has over 15 years in senior leadership roles covering: marketing, sales
management, digital, customer experience, big data, capital
markets, innovation and operations within blue chip organisations
including: Dun & Bradstreet, Challenger Financial Services and NAB.
In addition, as CEO he has led two Private Equity backed companies
in the online services and digital technology markets (GLS &
Workstar). This included, Global P&L responsibilities, +650 team
members with offices across Australia, Asia and Europe. Educated at
Harvard, Melbourne Business School, RMIT and awarded a
Fellowship by Leadership Victoria.
Other current Directorships: None
None
Former Directorships (last 3
years):
Interests in shares:
Interests in options:
Interests in rights:
3,252,583 fully paid ordinary shares
3,000,000 unlisted options, vesting on 1 July 2022, exercisable at $0.15
(15 cents) per option, expiring 1 July 2023;
3,000,000 unlisted options, vesting on 1 July 2022, exercisable at $0.18
(18 cents) per option, expiring 1 July 2023;
3,000,000 unlisted options, vesting on 1 July 2022, exercisable at
$0.215 (21.5 cents) per option, expiring 1 July 2023.
1,619,428 Performance Rights
42
Annual Report 2021
7
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Name:
Title:
Qualifications:
Experience and expertise:
Mr Mark Dioguardi
Executive Director
Master of Business Administration, Bachelor of Engineering Hons
Mr Dioguardi is an experienced CTO and COO with over 25 years’
experience predominantly in Tier 1 and 2 Telco operators in Australia
and Asia. A qualified engineer, Mark commenced his career in
engineering and engineering construction management in Telstra
before building his corporate career as CTO at Maxis, where he led
1350 engineers and managed a USD600mil budget to grow their
network. He then moved into a Chief Operating Officer role at Maxis
before returning to Australia to join iiNet as Chief Technology Officer.
Mark joined Spirit as Chief Operating Officer in November 2018 to
develop and lead Spirit’s network growth and drive operational
excellence across the business. He is also an Executive Director of
Spirit and a Non-Executive Director of TimedotCom (a listed Malaysia
telecommunications company).
Other current Directorships: Time Dotcom Bhd (KLSE: TIMECOM)
Former Directorships (last 3
years):
Interests in shares:
Interests in options:
None
1,444,128 fully paid ordinary shares
3,000,000 unlisted options, vesting on 1 July 2022, exercisable at $0.15
(15 cents) per option, expiring 1 July 2023;
3,000,000 unlisted options, vesting on 1 July 2022, exercisable at $0.18
(18 cents) per option, expiring 1 July 2023;
3,000,000 unlisted options, vesting on 1 July 2022, exercisable at
$0.215 (21.5 cents) per option, expiring 1 July 2023;
1,380,018 Performance Rights
Mr Gregory Ridder
Non-Executive Director
BBus (Acc), Grad Dip (Mktg), GAICD, CPA
Mr Ridder is an experienced Non-Executive Director currently
serving on the boards of Kogan.com, Life Without Barriers, Ethical
Property Australia, all of which he chairs, and PNG Sustainable
Development Program.
Formerly Asia Pacific Regional President at NYSE-listed Owens-
Illinois, he led growth and diversification from its traditional
Australian base through numerous joint ventures and acquisitions.
.
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Other current Directorships: Chairman, Kogan.com (ASX: KGN)
None
Former Directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Chair, Audit and Risk Committee from 15 July 2020
Member, Nomination and Remuneration Committee from 15 July
2020
1,650,000 fully paid ordinary shares
Nil
Nil
Annual Report 2021
43
8
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Name:
Title:
Qualifications:
Experience and expertise:
Ms Inese Kingsmill
Non-Executive Director (appointed 1 July 2020)
B. Bus in Marketing, MAICD
Over the course of a career spanning 25 years, Inese has earned a
reputation as a growth focussed and customer orientated business
leader, with leadership experience across a broad spectrum of
accountabilities at Microsoft, Telstra and Virgin Australia.
Inese has been involved with and led major transformations across a
range of scenarios including enterprise -wide business restructuring,
culture change, digital transformations, customer experience and
design, brand re-launches and re-positioning as well as developing
fit for purpose operating models.
In addition to the Company Directorships detailed below, Inese is
also a Director of WorkVentures Ltd and a member of the Advisory
Board of Waltzing Matilda Aviation.
Other current Directorships: Non-Executive Director, Rhipe Limited (ASX: RHP)
Former Directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Name:
Title:
Qualifications:
Experience and expertise:
Non-Executive Director, hipages Group Holdings Limited (ASX: HPG)
Non-Executive Director, NobleOak Life Limited (ASX: NOL)
None
Chair, Nomination and Remuneration Committee from 15 July 2020
Member, Audit and Risk Committee from 15 July 2020
187,500 fully paid ordinary shares
Nil
Nil
Mr Terence Gray
Non-Executive Director (to 7 July 2020)
B.Bus, Grad Dip App Fin
Terence is a corporate consultant to Lodge Partners Pty Ltd offering
investment management and corporate advisory services. He has
over 20 years’ financial markets experience
including funds
management and corporate finance. Terence has held roles as Head
of Equities at ANZ Funds Management, Chief Investment Officer at
Allianz Equity Management, Head of Research with Allianz Dresdner
Asset Management and Director of Corporate Finance with Grange
Securities. He has deep knowledge of funds management and the
Australian equity market. His grounding as an institutional investor
running large investment teams and as a corporate advisor to junior
companies provides insight and expertise in company valuation,
corporate fund raising and M&A activity.
Other current Directorships: None
None
Former Directorships (last 3
years):
Special responsibilities:
Interests in shares:
Interests in options:
Interests in rights:
Chair, Audit and Risk Committee to 7 July 2020
Member, Nomination and Remuneration Committee to 7 July 2020
1,825,360 fully paid ordinary shares (on the date of resignation)
Nil
Nil
44
Annual Report 2021
9
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
'Other current Directorships' quoted above are current Directorships for listed entities only and
excludes Directorships of all other types of entities, unless otherwise stated.
'Former Directorships (last 3 years)' quoted above are Directorships held in the last 3 years for listed
entities only and excludes Directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Melanie Leydin, BBus (Acc. Corp Law) CA FGIA
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a
member of the Institute of Chartered Accountants, Fellow of the Governance Institute of Australia
and is a Registered Company Auditor. She graduated from Swinburne University in 1997, became
a Chartered Accountant in 1999 and since February 2000 has been the principal of Leydin Freyer.
The practice provides outsourced company secretarial and accounting services to public and
private companies across a host of industries including but not limited to the Resources,
technology, bioscience, biotechnology and health sectors.
Melanie has over 25 years’ experience in the accounting profession and over 15 years as a Company
Secretary. She has extensive experience in relation to public company responsibilities, including
ASX and ASIC compliance, control and implementation of corporate governance, statutory
financial reporting, reorganisation of Companies and shareholder relations.
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board
committee held during the year ended 30 June 2021, and the number of meetings attended by
each Director were:
Full Board
Nomination and
Remuneration
Committee
Audit and Risk
Committee
Attended
Held
Attended
Held
Attended
Held
Mr James Joughin
Mr Sol Lukatsky
Mr Mark Dioguardi
Mr Gregory Ridder
Ms Inese Kingsmill *
Mr Terence Gray **
15
15
15
15
15
-
15
15
15
15
15
-
9
-
-
9
9
-
9
-
-
9
9
-
3
-
-
3
3
-
3
-
-
3
3
-
Held: represents the number of meetings held during the time the Director held office or was a member of
the relevant committee.
*
**
Ms Inese Kingsmill was appointed to the Board effective 1 July 2020.
Mr Terence Gray resigned from the Board on 7 July 2020. No Board meeting was held from the start of
the financial year to the date of his resignation.
Remuneration Report (audited)
The Remuneration Report details the key management personnel remuneration arrangements
for the Consolidated Entity, in accordance with the requirements of the Corporations Act 2001 and
its Regulations.
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the entity, directly or indirectly, including all Directors.
10
Annual Report 2021
45
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
'Other current Directorships' quoted above are current Directorships for listed entities only and
excludes Directorships of all other types of entities, unless otherwise stated.
'Former Directorships (last 3 years)' quoted above are Directorships held in the last 3 years for listed
entities only and excludes Directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Melanie Leydin, BBus (Acc. Corp Law) CA FGIA
Melanie Leydin holds a Bachelor of Business majoring in Accounting and Corporate Law. She is a
member of the Institute of Chartered Accountants, Fellow of the Governance Institute of Australia
and is a Registered Company Auditor. She graduated from Swinburne University in 1997, became
a Chartered Accountant in 1999 and since February 2000 has been the principal of Leydin Freyer.
The practice provides outsourced company secretarial and accounting services to public and
private companies across a host of industries including but not limited to the Resources,
technology, bioscience, biotechnology and health sectors.
Melanie has over 25 years’ experience in the accounting profession and over 15 years as a Company
Secretary. She has extensive experience in relation to public company responsibilities, including
ASX and ASIC compliance, control and implementation of corporate governance, statutory
financial reporting, reorganisation of Companies and shareholder relations.
The number of meetings of the Company's Board of Directors ('the Board') and of each Board
committee held during the year ended 30 June 2021, and the number of meetings attended by
Meetings of Directors
each Director were:
Full Board
Nomination and
Remuneration
Committee
Audit and Risk
Committee
Attended
Held
Attended
Held
Attended
Held
15
15
15
15
15
-
15
15
15
15
15
-
9
-
-
9
9
-
9
-
-
9
9
-
3
-
-
3
3
-
3
-
-
3
3
-
Mr James Joughin
Mr Sol Lukatsky
Mr Mark Dioguardi
Mr Gregory Ridder
Ms Inese Kingsmill *
Mr Terence Gray **
the relevant committee.
Held: represents the number of meetings held during the time the Director held office or was a member of
*
**
Ms Inese Kingsmill was appointed to the Board effective 1 July 2020.
Mr Terence Gray resigned from the Board on 7 July 2020. No Board meeting was held from the start of
the financial year to the date of his resignation.
D I R E C T O R S' R E P O R T
Remuneration Report (audited)
The Remuneration Report details the key management personnel remuneration arrangements
for the Consolidated Entity, in accordance with the requirements of the Corporations Act 2001 and
its Regulations.
Spirit Technology Solutions Limited
Directors' report
Key management personnel are those persons having authority and responsibility for planning,
30 June 2021
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
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
10
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 and it is considered to conform to the market best practice for the delivery of reward.
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
●
transparency.
The Board is responsible for determining and reviewing remuneration arrangements for its
Directors and executives. The performance of the Consolidated Entity depends on the quality of
its Directors and executives. The remuneration philosophy is to attract, motivate and retain high
performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board
has considered that it should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, particularly growth in share price, and
delivering constant or increasing return on capital as well as focusing the executive on key
non-financial drivers of value
attracting and retaining high calibre executives.
●
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
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive Director
and executive Director remuneration is separate.
46
Annual Report 2021
11
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Non-executive Directors remuneration
The annual Non-Executive Director Chairman fees for the financial year increased from $80,000
per annum to $100,000 per annum for the period 1 January 2021 to 30 June 2021 and increased
from $100,000 to $120,000 per annum from 1 July 2021.
The annual Non-Executive Director member fees for the financial year increased from $60,000 per
annum to $67,500 per annum for the period 1 January 2021 to 30 June 2021 and increased from
$67,500 to $75,000 per annum from 1 July 2021.
During the financial year, the Board agreed to implement additional Committee Chair fees, with
the Chair of the Audit and Risk Committee and Nomination and Remuneration Committee to each
receive $5,000 per annum for the period 1 January 2021 to 30 June 2021 and increased from $5,000
per annum to $10,000 per annum from 1 July 2021. Committee members will not receive any
additional fees at this time.
Under the Constitution the Directors decide the total amount paid to each Director as
remuneration for their services. Under ASX Listing Rules, the total amount paid to all non-executive
Directors must not exceed in total in any financial year the amount fixed at the annual general
meeting of the Company held on 13 October 2020, which is presently $500,000. Remuneration
must not include a commission on, or a percentage of, the profits or income of the Company.
Non-executive Directors' fees and payments are reviewed annually by the Board. The Board may,
from time to time, receive advice from independent remuneration consultants to ensure non-
executive Directors' fees and payments are appropriate and in line with the market. No advice was
sought during the course of the financial year. The Chairman's fees are determined independently
of the fees of other non-executive Directors based on comparative roles in the external market.
The Chairman is not present at any discussions relating to the determination of his own
remuneration.
Directors may also be reimbursed for travel and other expenses incurred in attending to the
Company's affairs.
Non-executive Directors may be paid such additional or special remuneration as the Directors
decide is appropriate where a Director performs extra work or services which are not in the
capacity as a Director of the Company.
There are no proposed retirement benefit schemes for Directors other than statutory
superannuation contributions.
Executive remuneration
The Consolidated Entity aims to reward executives based on their position and responsibility with
a level and mix of remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
long-term incentives in the form of share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Annual Report 2021
47
12
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Fixed remuneration consisting of base salary, superannuation and non-monetary benefits, are
reviewed annually by the Nomination and Remuneration Committee based on individual and
business unit performance, the overall performance of the Consolidated Entity and comparable
market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for
example motor vehicle benefits) where it does not create any additional costs to the Consolidated
Entity and provides additional value to the executive.
Use of remuneration consultants
The Company engages the services of independent and specialist remuneration consultants from
time to time to benchmark the remuneration of Directors and Key Management Personnel, and
to assist the Company in ensuring that its remuneration arrangements remain competitive.
During the year ended 30 June 2021, the Company engaged a specialist remuneration consultant,
SLM Corporate for remuneration benchmarking purposes (2021: $11,000 for consultancy assistance
provided).
Consolidated Entity performance and link to remuneration
Currently, the consolidated entity assesses its performance from achievement of operational goals
and shareholder value. The performance measures for both the Company’s Short-term Incentive
Plan (STI Plan) and Long-term Incentive Plan (LTI Plan) are tailored to align at-risk remuneration
and performance hurdle thresholds to the delivery of the Consolidated Entity’s operational and
financial objectives and sustained shareholder value growth.
This is achieved through certain executives being entitled to both short-term and long-term
incentives. The STI Plan primarily incorporates operational and financial performance objectives
into its hurdles. The LTI Plan incorporates into its performance measures both a Total Shareholder
Return (TSR) and actual performance against budgeted Return on Invested Capital (ROIC) hurdles.
The relative TSR measures performance against peers and reflects investor returns generated by
the Consolidated Entity compared to a broad index of other investment opportunities for
shareholders. The relative TSR is only achieved subject to the Performance Period being met and
subject to the Company's TSR being at least equal to the median of the comparator group
performance. The ROIC hurdle was chosen as a measure that reflects returns generated relative to
the deployment of the Company’s capital. The Board retains the right to, at its discretion, to
determine if the rights holder has met the ROIC hurdle at the end of the 3 Years Series Return.
Further details on the LTI Plan are presented in Share Based Compensation on page 15 of this
Directors’ report.
page 51
Voting and comments made at the Company's 13 October 2020 Annual General Meeting ('AGM')
At the 13 October 2020 AGM, 99.39% of the votes received supported the adoption of the
remuneration report for the year ended 30 June 2020. The Company did not receive any specific
feedback at the AGM regarding its remuneration practices.
48
Annual Report 2021
13
Spirit Technology Solutions Limited
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Details of remuneration
The key management personnel of the Consolidated Entity consisted of the following Directors
and the Chief Financial Officer of Spirit Technology Solutions Ltd:
●
●
●
●
●
●
●
James Joughin, Non-Executive Chairman
Sol Lukatsky, Managing Director
Mark Dioguardi, Executive Director
Gregory Ridder, Non-Executive Director
Inese Kingsmill, Non-Executive Director (appointed 1 July 2020)
Terence Gray, Non-Executive Director (resigned 7 July 2020)
Paul Miller, Chief Financial Officer
Amounts of remuneration
Details of the remuneration of key management personnel of the Consolidated Entity are set out
in the following tables.
Short-term benefits
Post-
employme
nt benefits
Long-term
benefits
Share-
based
payments
2021
Non-Executive Directors:
James Joughin
Terence Gray*
Gregory Ridder
Inese Kingsmill**
Executive Directors:
Sol Lukatsky***
Mark Dioguardi***
Other Key Management
Personnel:
Paul Miller***
Cash salary
and fees
Cash
bonus
Non-
Super-
monetary annuation
Long
service
leave
Equity-
settled
$
$
$
$
$
$
81,815
1,249
66,250
66,250
-
-
-
-
381,538
330,000
163,000
89,650
241,667
66,250
1,168,769
318,900
-
-
-
-
-
-
-
-
8,181
-
-
-
-
-
-
-
Total
$
-
-
-
-
89,996
1,249
66,250
66,250
47,154
33,000
14,766
7,016
341,092
299,022
947,550
758,688
24,167
112,502
2,541
20,069
354,694
24,323
660,183 2,284,677
*
**
***
Mr Terence Gray resigned from the Board on 7 July 2020.
Ms Inese Kingsmill was appointed to the Board effective 1 July 2020.
Mr Lukatsky, Mr Dioguardi and Mr Miller were awarded cash bonuses in respect of their FY21 performance,
determined and paid in FY22.
Annual Report 2021
49
14
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Short-term benefits
Post-
employme
nt benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
Cash
bonus
Non-
Super-
monetary annuation
Long
service
leave
Equity-
settled
$
$
$
$
$
$
Total
$
73,357
59,000
35,500
-
-
-
277,577
250,667
311,934
90,000
20,000
-
131,827
93,812
-
27,864
1,233,674
137,864
-
-
-
-
-
-
-
-
-
5,336
-
-
-
-
-
-
-
-
78,693
59,000
35,500
27,758
27,067
21,270
5,068
2,376
-
211,731
218,006
34,320
612,134
518,116
367,524
13,183
10,836
440
-
3,314
-
148,764
132,512
105,450
7,884
467,371
1,952,243
2020
Non-Executive Directors:
James Joughin
Terence Gray*
Gregory Ridder**
Executive Directors:
Sol Lukatsky***
Mark Dioguardi****
Geoff Neate
Other Key Management
Personnel:
Paul Miller
Donovan Newton****
Mr Terence Gray resigned from the Board on 7 July 2020.
*
**
*** Mr Sol Lukatksy was awarded a cash bonus for FY 2020, determined and paid in FY 2021
**** Cash bonuses awarded to Mr Mark Dioguardi and Mr Donovan Newton as disclosed were in respect of their
Mr Gregory Ridder was appointed to the board on 21 November 2019.
Mr Sol Lukatsky
FY19 performance, determined and paid in FY20.
****
*****
*
Following the outbreak of COVID-19 in March 2020, the Directors elected to take a short term 10% pay
reduction whilst the Company assessed the impacts. As outlined, there has not been a material impact to
business operations and accordingly the pay reduction was only applied for a two-month period.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
James Joughin
Terence Gray*
Gregory Ridder
Inese Kingsmill**
Executive Directors:
Geoff Neate***
Sol Lukatsky
Mark Dioguardi
Other Key Management
Personnel:
Paul Miller
Donovan Newton****
Fixed remuneration
2021
2020
At risk - STI
At risk - LTI
2021
2020
2021
2020
100%
100%
100%
100%
-
47%
49%
100%
100%
100%
-
91%
51%
54%
-
-
-
-
-
17%
12%
76%
-
98%
79%
19%
-
-
-
-
-
-
15%
4%
-
21%
-
-
-
-
-
-
-
-
-
36%
39%
9%
34%
42%
5%
-
2%
-
Mr Terence Gray resigned from the Board on 7 July 2020.
Ms Inese Kingsmill was appointed to the Board on 1 July 2020.
Mr Geoff Neate resigned from the Board on 2 September 2019.
*
**
***
**** Mr Donovan Newton resigned on 30 August 2019.
50
Annual Report 2021
15
Spirit Technology Solutions Ltd
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in
service agreements. Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Sol Lukatsky
Managing Director
23 April 2018; terms revised on 27 July 2020
No fixed term. Ongoing until terminated by either party with three
months written notice.
Effective 1 July 2020, fixed remuneration of $400,000 per annum,
plus 10% superannuation. In the 2021 financial year, Mr Lukatsky will
be entitled to a potential short-term incentive (STI) of up to $200,000,
representing 50% of his base remuneration. In the 2021 financial year,
Mr Lukatsky was also entitled to a long-term incentive (LTI) of up to
$200,000, representing 50% of his base remuneration (excluding
superannuation), which was approved by shareholders at the Annual
General Meeting held on 13 October 2020.
Mr Mark Dioguardi
Executive Director and Chief Operating Officer
7 November 2018, terms revised on 27 July 2020
No fixed term. Ongoing until terminated by either party with three
months written notice.
Effective 1 July 2020, fixed remuneration of $330,000 per annum, plus
10% superannuation. In the 2021 financial year, Mr Dioguardi will be
entitled to a potential short-term incentive (STI) of up to $110,000,
representing 33.3% of his base
(excluding
superannuation). In the 2021 financial year, Mr Dioguardi was also
entitled to a potential long-term incentive (LTI) of up to $110,000,
representing 33.3% of his base
(excluding
superannuation) which was approved by shareholders at the Annual
General Meeting held on 13 October 2020.
remuneration
remuneration
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Mr Paul Miller
Chief Financial Officer
25 November 2019
No fixed term. Ongoing until terminated by either party with three
months written notice.
Effective 1 February 2021, fixed remuneration of $265,000 per annum,
plus 10% superannuation. In 2021 financial year Mr Miller is entitled to
a potential short-term incentive (STI) of up to $66,250, representing
25% of his base remuneration (excluding superannuation). Mr Miller
is eligible to participate in the Spirit Long Term Incentive program
(LTI).
Key management personnel have no entitlement to termination payments in the event of removal
for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to Directors and other key management personnel as part of
compensation during the year ended 30 June 2021.
Annual Report 2021
51
16
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of
Directors and other key management personnel in this financial year or future reporting years are
as follows:
Grant date
14 May 2019
14 May 2019
14 May 2019
Name
Sol Lukatsky
Sol Lukatsky
Sol Lukatsky
Mark Dioguardi
Mark Dioguardi
Mark Dioguardi
Vesting date and
exercisable date
1 July 2022
1 July 2022
1 July 2022
Expiry date
1 July 2023
1 July 2023
1 July 2023
Grant date
Number of
options
granted
3,000,000 14 May 2019
3,000,000 14 May 2019
3,000,000 14 May 2019
3,000,000 14 May 2019
3,000,000 14 May 2019
3,000,000 14 May 2019
Vesting date and
exercisable date
Expiry date
1 July 2022
1 July 2022
1 July 2022
1 July 2022
1 July 2022
1 July 2022
1 July 2023
1 July 2023
1 July 2023
1 July 2023
1 July 2023
1 July 2023
Exercise
price
Fair value
per option
at grant date
$0.0780
$0.0690
$0.0600
$0.150
$0.180
$0.215
Exercise
price
Fair value
per option
at grant date
$0.0780
$0.0690
$0.0600
$0.0780
$0.0690
$0.0600
$0.150
$0.180
$0.215
$0.150
$0.180
$0.215
Options granted carry no dividend or voting rights.
There were no options over ordinary shares granted to or vested by Directors and other key
management personnel as part of compensation during the year ended 30 June 2021.
Performance Rights
The terms and conditions of each grant of Performance Rights over ordinary shares affecting
remuneration of Directors and other key management personnel in this financial year or future
reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
12 September 2018
12 September 2018
18 February 2019
18 February 2019
22 April 2020
22 April 2020
13 October 2020
13 October 2020
13 October 2020
11 June 2021
11 June 2021
1 July 2021
1 July 2021
1 July 2021
1 July 2021
1 July 2022
1 July 2022
30 June 2023
1 July 2023
30 June 2023
30 June 2023
30 June 2023
12 September 2021
12 September 2021
18 February 2022
18 February 2022
22 April 2023
22 April 2023
12 November 2023
12 November 2023
12 November 2023
11 June 2024
11 June 2024
Share price Fair value
hurdle for per right
at grant
date
vesting
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.300
$0.000
$0.000
$0.000
$0.1692
$0.2000
$0.0355
$0.1400
$0.1084
$0.1250
$0.3417
$0.3661
$0.3700
$0.1815
$0.2800
52
Annual Report 2021
17
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
Name
Number of
rights
Grant date
Vesting date
and
exercisable date
Expiry date
granted
D I R E C T O R S' R E P O R T
Share price
Fair value
hurdle for per right
at grant
date
vesting
Sol Lukatsky
123,530
Sol Lukatsky
Name
Mark Dioguardi
Mark Dioguardi
Paul Miller
Paul Miller
Sol Lukatsky
Sol Lukatsky
Sol Lukatsky
Sol Lukatsky
Sol Lukatsky
Mark Dioguardi
Mark Dioguardi
Paul Miller
Paul Miller
Sol Lukatsky
Sol Lukatsky
Sol Lukatsky
Mark Dioguardi
Mark Dioguardi
Mark Dioguardi
Mark Dioguardi
Paul Miller
Paul Miller
Paul Miller
Paul Miller
Mark Dioguardi
Mark Dioguardi
exercisable date
12 September
2018
12 September
2018
1 July 2021
1 July 2021
Vesting date
123,529
Number of
rights
and
Grant date
457,457
457,456
granted
1 July 2023
260,000 18 February 2019 1 July 2021
260,000 18 February 2019 1 July 2021
1 July 2022
164,634 22 April 2020
1 July 2022
164,634 22 April 2020
1 Jul 2021
30 June 2023
1 Jul 2021
1 Jul 2021
1 Jul 2021
1 Jul 2022
30 June 2023
1 Jul 2022
30 June 2023
1 Jul 2023
30 June 2023
30 June 2023
1 Jul 2023
30 June 2023
30 June 2023
30 June 2023
123,530 12 Sept2018
13 October 2020
123,529 12 Sept2018
260,000 18 Feb2019
13 October 2020
260,000 18 Feb2019
164,634 22 Apr 2020
13 October 2020
164,634 22 Apr 2020
457,457 13 Oct 2020
13 October 2020
457,456 13 Oct 2020
457,456 13 Oct 2020
13 October 2020
251,601 13 Oct 2020
356,816 13 Oct 2020
13 October 2020
251,601 13 Oct 2020
154,391 11 June 2021
154,392 11 June 2021
251,601
154,391 11 June 2021
154,392 11 June 2021
30 June 2023
30 June 2023
30 June 2023
30 June 2023
1 July 2023
457,456
356,816
251,601
12 September
2021
12 September
2021
Expiry date
18 February 2022
18 February 2022
22 April 2023
22 April 2023
12 November
2023
12 November
2023
12 November
2023
12 November
2023
12 November
2023
12 November
2023
11 June 2024
11 June 2024
12 Sept2021
12 Sept2021
18 Feb2022
18 Feb2022
22 Apr 2023
22 Apr 2023
12 Nov 2023
12 Nov 2023
12 Nov 2023
12 Nov 2023
12 Nov 2023
12 Nov 2023
11 June 2024
11 June 2024
$0.000
$0.1692
$0.2000
Fair value
$0.0355
hurdle for per right
$0.1400
at grant
$0.1084
date
$0.1250
$0.000
Share price
$0.000
$0.000
$0.000
$0.000
vesting
$0.000
$0.3417
$0.300
$0.3661
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.300
$0.000
$0.000
$0.300
$0.000
$0.000
$0.000
$0.000
$0.3700
$0.000
$0.3417
$0.300
$0.3661
$0.000
$0.000
$0.000
$0.3700
$0.1815
$0.2800
$0.1692
$0.2000
$0.0355
$0.1400
$0.1084
$0.1250
$0.3417
$0.3661
$0.3700
$0.3417
$0.3661
$0.3700
$0.1815
$0.2800
Performance Rights granted carry no dividend or voting rights.
The Performance Rights were issued for $Nil consideration, and the vesting of the rights is
contingent on the Company achieving certain hurdles over a three-year performance period, and
in some cases share price performance hurdles.
The number of Performance Rights which vest is determined by assessing the performance of the
Company, as measured by Total Shareholder Return (TSR) at the Performance Date relative to a
comparator group of companies. The VWAP of the Shares in the one-month preceding the
Performance Date compared to the VWAP of the Shares in the one-month preceding the grant
date, will be used in calculating the TSR over the three year period. The TSR incorporate capital
returns as well as dividends notionally reinvested and is considered the most appropriate means
of measuring the Company’s performance.
The performance hurdles will be split 50% subject to meeting the TSR, and 50% for exceeding the
budgeted Return on Invested Capital (ROIC).
For the Performance Rights granted during FY20 and FY21, 30% of the maximum amount of
Performance Rights that may vest are at risk, if appropriate behaviours, as measured by a 360-
degree feedback review are not met. An overall 75% of agreed or strongly agreed needs to be
achieved in the 360-degree feedback result.
Each year the Board will determine the budgeted ROIC. This budgeted ROIC will be the hurdle
return used to calculate the 3 years series return. The Board may exercise its discretion in
determining if the rights holder has met the ROIC hurdle at the end of the 3 Years Series Return.
18
Annual Report 2021
53
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
In relation to the 50% portion meeting the TSR, the Performance Rights will only convert to shares
subject to the Performance Period being met and subject to the Company's TSR being at least
equal to the median of the comparator group performance. The entire annual allocation will
convert if the Company's TSR is at the 75th percentile or higher than the comparator group
performance. The detailed breakdown of the relationship between the Company's performance
and the conversion of Performance Rights is:
●
●
●
0% converting if the Company TSR performance is below the median performance of the
comparator group.
Straight line pro-rata conversion if the Company TSR performance is at or above the median
performance of the comparator group, but below the 75th percentile performance of the
comparator group.
100% converting if the Company TSR performance is at or above the 75th percentile
performance of the comparator group.
The number of Performance Rights over ordinary shares granted to and vested by Directors and
other key management personnel as part of compensation during the year ended 30 June 2021
are set out below:
Number of Number of Number of Number of
rights
rights
granted
during the during the during the during the
granted
rights
vested
rights
vested
Name
Sol Lukatsky
Mark Dioguardi
Paul Miller
year
2021
1,372,369
860,018
308,783
year
2020
-
-
329,268
year
2021
year
2020
-
-
-
-
-
-
Additional information
The earnings of the Consolidated Entity for the five years to 30 June 2021 are summarised below:
Revenue and other income
Net profit/(loss) before tax
Net profit/(loss) after tax
Share price
2021
$'000
104,469
1,345
1,157
$0.26
2020
$'000
2019
$'000
2018
$'000
2017
$'000
34,874
(2,043)
(1,515)
$0.24
17,452
(1,009)
(824)
$0.26
16,300
1,031
571
$0.245
11,539
829
468
$0.12
54
Annual Report 2021
19
Spirit Technology Solutions Ltd
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each Director of the
Company and other members of key management personnel of the Consolidated Entity, including
their personally related parties, is set out below:
Balance at Balance
Additions Disposals/ Balance at
the start of
the year
on the date
of
appointmen
t
Ordinary shares
James Joughin
Sol Lukatsky
Terence Gray*
Mark Dioguardi
Gregory Ridder
Inese Kingsmill**
Paul Miller
4,045,455
2,957,755
1,825,360
1,287,878
1,000,000
-
121,213
11,237,661
-
-
-
-
-
-
-
-
other
the end of
308,281
294,828
-
156,250
650,000
187,500
74,914
-
-
(1,825,360)
-
-
-
-
the year
4,353,736
3,252,583
-
1,444,128
1,650,000
187,500
196,127
1,671,773
(1,825,360)
11,084, 074
*
**
Mr Terence Gray resigned from the Board on 7 July 2020. The balance disclosed in "Disposals/other"
column represents his shareholding on the date of resignation.
Ms Inese Kingsmill was appointed to the Board effective 1 July 2020. Upon appointment, Ms Kingsmill
had no shareholding in the Company.
Option holding
The number of options over ordinary 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:
Options over ordinary shares
Sol Lukatsky
Mark Dioguardi
Balance at Granted
the start of
the year
Exercised Expired/ Balance at
forfeited/ the end of
other*
the year
9,000,000
9,000,000
18,000,000
-
-
-
-
-
-
-
-
-
9,000,000
9,000,000
18,000,000
Performance Rights holding
The number of Performance Rights over ordinary 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:
Performance Rights over ordinary shares
Geoff Neate*
Sol Lukatsky
Mark Dioguardi
Paul Miller
Balance at Granted
the start of
the year
Vested
Expired/ Balance at
forfeited/ the end of
other
the year
512,820
247,059
520,000
329,268
-
1,372,369
860,018
308,783
(189,320)
-
-
-
(323,500)
-
-
-
-
1,619,428
1,380,018
638,051
1,609,147
2,541,170
(189,320)
(323,500)
3,637,497
*
Mr Geoff Neate resigned from the Board on 2 September 2019.
This concludes the remuneration report, which has been audited.
Annual Report 2021
55
20
Spirit Technology Solutions Ltd
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Shares under option
Unissued ordinary shares of Spirit Technology Solutions Ltd under option at the date of this report
are as follows:
Description
Unlisted options
Unlisted options
Unlisted options
Expiry date
1 July 2023
1 July 2023
1 July 2023
Exercise
Number
price
under
option
$0.150
$0.180
$0.215
6,000,000
6,000,000
6,000,000
18,000,000
No person entitled to exercise the options had or has any right by virtue of the option to participate
in any share issue of the Company or of any other body corporate.
Shares under Performance Rights
Unissued ordinary shares of Spirit Technology Solutions Ltd under Performance Rights at the date
of this report are as follows:
Grant date
12 September 2018
18 February 2019
22 April 2020
13 October 2020
11 June 2021
Expiry date
12 September 2021
18 February 2023
22 April 2023
12 November 2023
11 June 2024
Number
under rights
247,059
520,000
653,943
2,232,387
620,685
4,274,074
No person entitled to exercise the Performance Rights had or has any right by virtue of the
performance right to participate in any share issue of the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Spirit Technology Solutions Ltd issued on the exercise of options
during the year ended 30 June 2021 and up to the date of this report.
Shares issued on the exercise of Performance Rights
The following ordinary shares of Spirit Technology Solutions Ltd were issued during the year ended
30 June 2021 and up to the date of this report on the exercise of Performance Rights granted:
Date Performance Rights granted
20 November 2018
Conversion Number of
price
shares
issued
$0.000
189,320
Indemnity and insurance of officers
The Company has indemnified the Directors and executives of the Company for costs incurred in
their capacity as a Director or executive, for which they may be held personally liable, except where
there is a lack of good faith.
56
Annual Report 2021
21
Spirit Technology Solutions Limited
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
During the financial year the Company paid a premium in respect of a contract to insure the
Directors and executives of the Company against a liability to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability
and the amount of the premium.
Indemnity and insurance of auditor
The Company has not during or since the end of the financial year indemnified or agreed to
indemnify the auditor of the Company or any related entity against a liability incurred by the
auditor.
During the financial year the Company has not paid a premium in respect of a contract to insure
the auditor of the Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Company, or to intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or part
of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 33 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the
auditor (or by another person or firm on the auditor's behalf), is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 33 to the financial statements
do not compromise the external auditor's independence requirements of the Corporations Act
2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional and Ethical Standards Board, including reviewing or auditing the auditor's own
work, acting in a management or decision-making capacity for the Company, acting as
advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Company who are former partners of PKF Melbourne Audit & Assurance Pty
Ltd
There are no officers of the Company who are former partners of PKF Melbourne Audit & Assurance
Pty Ltd.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have
been rounded off in accordance with that Corporations Instrument to the nearest ,000 dollars, or
in certain cases, the nearest dollar.
Annual Report 2021
57
22
Spirit Technology Solutions Limited
Directors' report
30 June 2021
D I R E C T O R S' R E P O R T
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the
Corporations Act 2001 is set out immediately after this Directors' report.
Auditor
PKF Melbourne Audit & Assurance Pty Ltd continues in office in accordance with section 327 of the
Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of
the Corporations Act 2001.
On behalf of the Directors
___________________________
James Joughin
Non-Executive Chairman
24 August 2021
58
Annual Report 2021
23
This page is intentionally
left blank.
Annual Report 2021
59
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE
DIRECTORS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
In relation to our audit of the financial report of Spirit Technology Solutions Ltd for the year ended 30 June 2021, I
declare to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(b) no contraventions of any applicable code of professional conduct.
PKF
Melbourne, 24 August 2021
Steven Bradby
Partner
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE
DIRECTORS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
In relation to our audit of the financial report of Spirit Technology Solutions Ltd for the year ended 30 June 2021, I
declare to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(b) no contraventions of any applicable code of professional conduct.
PKF
Melbourne, 24 August 2021
Steven Bradby
Partner
21
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
Auditor’s Independence
Declaration
60
Annual Report 2021
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
21
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE
DIRECTORS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
In relation to our audit of the financial report of Spirit Technology Solutions Ltd for the year ended 30 June 2021, I
declare to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(b) no contraventions of any applicable code of professional conduct.
PKF
Melbourne, 24 August 2021
Steven Bradby
Partner
A U D I T O R’ S I N D E P E N D E N C E D E C L A R A T I O N
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE
DIRECTORS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
In relation to our audit of the financial report of Spirit Technology Solutions Ltd for the year ended 30 June 2021, I
declare to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(b) no contraventions of any applicable code of professional conduct.
PKF
Melbourne, 24 August 2021
Steven Bradby
Partner
21
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
21
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
Annual Report 2021
61
Statement of Profit or Loss &
Other Comprehensive Income
62
Annual Report 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
S T A T E M E N T O F P R O F I T O R L O S S A N D O T H E R C O M P R E H E N S I V E I N C O M E
Revenue
Other income
Cost of sales
Expenses
Employee benefits expense
Share-based payments
Administration and corporate expenses
Business acquisition and integration costs
Selling
Marketing
Net fair value loss on remeasurement of financial liabilities
Depreciation and amortisation expense
Finance costs
Note
Consolidated
2021
$'000
2020
$'000
5
102,786
34,429
6
7
7
7
1,683
(51,220)
445
(12,701)
(31,550)
(621)
(7,497)
(2,100)
(1,163)
(1,531)
(168)
(6,666)
(608)
(11,826)
(479)
(5,267)
(640)
(888)
(891)
-
(3,855)
(370)
Profit/(loss) before income tax (expense)/benefit
1,345
(2,043)
Income tax (expense)/benefit
8
(188)
528
Profit/(loss) after income tax (expense)/benefit for the year
attributable to the owners of Spirit Technology Solutions Ltd
1,157
(1,515)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income/(loss) for the year attributable to
the owners of Spirit Technology Solutions Ltd
1,157
(1,515)
Earnings per share for profit/(loss) attributable to the owners of
Spirit Technology Solutions Ltd
Basic earnings per share
Diluted earnings per share
41
41
0.21
0.21
(0.42)
(0.42)
Cents
Cents
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
25
Annual Report 2021
63
Statement of
Financial Position
Spirit Technology Solutions Ltd
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
(Formerly known as Spirit Telecom Limited)
Statement of financial position
Statement of financial position
As at 30 June 2021
As at 30 June 2021
S T A T E M E N T O F F I N A N C I A L P O S I T I O N
Assets
Assets
Current assets
Current assets
Cash and cash equivalents
Cash and cash equivalents
Trade and other receivables
Trade and other receivables
Inventories
Inventories
Contract assets
Contract assets
Other
Other
Total current assets
Total current assets
Non-current assets
Non-current assets
Contract assets
Contract assets
Property, plant and equipment
Property, plant and equipment
Assets held for sale
Assets held for sale
Right-of-use assets
Right-of-use assets
Intangible assets
Intangible assets
Deferred tax
Deferred tax
Deposits and other receivables
Deposits and other receivables
Total non-current assets
Total non-current assets
Total assets
Total assets
Liabilities
Liabilities
Current liabilities
Current liabilities
Trade and other payables
Trade and other payables
Borrowings
Borrowings
Lease liabilities
Lease liabilities
Provisions
Provisions
Unearned revenue
Unearned revenue
Deferred consideration
Deferred consideration
Contingent consideration
Contingent consideration
Total current liabilities
Total current liabilities
Non-current liabilities
Non-current liabilities
Borrowings
Borrowings
Lease liabilities
Lease liabilities
Deferred tax
Deferred tax
Provisions
Provisions
Unearned revenue
Unearned revenue
Contingent consideration
Contingent consideration
Total non-current liabilities
Total non-current liabilities
Total liabilities
Total liabilities
Net assets
Net assets
Equity
Equity
Issued capital
Issued capital
Reserves
Reserves
Accumulated losses
Accumulated losses
Total equity
Total equity
Note
Note
10
10
11
11
12
12
14
14
13
13
14
14
15
15
9
9
16
16
17
17
18
18
19
19
20
20
21
21
27
27
22
22
37
37
23
23
24
24
25
25
26
26
27
27
37
37
28
28
29
29
Consolidated
Consolidated
2021
2021
$'000
$'000
2020
2020
$'000
$'000
8,493
8,493
12,784
12,784
2,577
2,577
143
143
4,130
4,130
28,127
28,127
1,544
1,544
13,895
13,895
1,301
1,301
3,891
3,891
119,403
119,403
2,619
2,619
1,375
1,375
144,028
144,028
172,155
172,155
16,142
16,142
-
-
2,004
2,004
3,444
3,444
3,655
3,655
15,327
15,327
2,399
2,399
42,971
42,971
10,000
10,000
2,016
2,016
712
712
352
352
2,823
2,823
3,603
3,603
19,506
19,506
62,477
62,477
109,678
109,678
112,689
112,689
1,187
1,187
(4,198)
(4,198)
109,678
109,678
6,400
6,400
4,410
4,410
950
950
-
-
838
838
12,598
12,598
-
-
13,821
13,821
-
-
1,563
1,563
25,359
25,359
1,479
1,479
234
234
42,456
42,456
55,054
55,054
5,656
5,656
20
20
816
816
951
951
1,775
1,775
-
-
998
998
10,216
10,216
3,268
3,268
787
787
-
-
165
165
1,557
1,557
997
997
6,774
6,774
16,990
16,990
38,064
38,064
42,852
42,852
567
567
(5,355)
(5,355)
38,064
38,064
The above statement of financial position should be read in conjunction with the accompanying notes
The above statement of financial position should be read in conjunction with the accompanying notes
26
26
Annual Report 2021
65
Statement of
Changes in Equity
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Statement of changes in equity
For the year ended 30 June 2021
Consolidated
Reserves Accumulate
Issued
capital
$'000
$'000
d losses
$'000
Total
equity
$'000
Balance at 1 July 2019
25,512
476
(3,932)
22,056
S T A T E M E N T O F C H A N G E S I N E q U I T Y
-
-
-
-
(1,515)
(1,515)
-
-
Issued
capital
$'000
-
(1,515)
Reserves Accumulate
-
$'000
d losses
$'000
Spirit Technology Solutions Ltd
Loss after income tax benefit for the year
(Formerly known as Spirit Telecom Limited)
Other comprehensive income for the year, net of
Statement of changes in equity
tax
For the year ended 30 June 2021
Total comprehensive loss for the year
Transactions with owners in their capacity as
Consolidated
owners:
Contributions of equity, net of transaction costs
Balance at 1 July 2019
(note 28)
Share-based payments (note 42)
Loss after income tax benefit for the year
Transfers
Other comprehensive income for the year, net of
Issue of shares to the vendor as part
tax
consideration in relation to the Arinda IT
acquisition
Total comprehensive loss for the year
Issue of shares to the vendor as part
consideration in relation to the Phoenix Austec
Transactions with owners in their capacity as
Group acquisition
owners:
Issue of shares to the vendor as part
Contributions of equity, net of transaction costs
consideration in relation to the Cloud Business
(note 28)
Technology acquisition
Issue of shares to the vendor as part
Share-based payments (note 42)
consideration in relation to the Trident &
Transfers
Neptune Group acquisition
Issue of shares to the vendor as part
consideration in relation to the Arinda IT
acquisition
Balance at 30 June 2020
Issue of shares to the vendor as part
consideration in relation to the Phoenix Austec
Group acquisition
Issue of shares to the vendor as part
consideration in relation to the Cloud Business
Technology acquisition
Issue of shares to the vendor as part
consideration in relation to the Trident &
Neptune Group acquisition
(1,515)
Total
equity
$'000
22,056
14,766
478
(1,515)
-
-
607
(1,515)
(3,932)
-
-
(1,515)
92
-
-
(1,515)
-
320
-
-
-
92
-
14,766
130
478
-
1,222
25,512
14,766
20
-
275
476
-
458
-
(367)
-
607
-
320
-
-
-
-
14,766
130
20
275
1,222
-
-
458
(367)
-
42,852
607
567
-
(5,355)
-
607
38,064
320
130
1,222
-
-
-
-
-
-
320
130
1,222
Balance at 30 June 2020
42,852
567
(5,355)
38,064
The above statement of changes in equity should be read in conjunction with the accompanying notes
27
The above statement of changes in equity should be read in conjunction with the accompanying notes
27
Annual Report 2021
67
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Statement of changes in equity
For the year ended 30 June 2021
Consolidated
Issued
capital
$'000
Reserves Accumulate
$'000
d losses
$'000
Total
equity
$'000
S T A T E M E N T O F C H A N G E S I N E q U I T Y
42,852
567
(5,355)
38,064
Spirit Technology Solutions Ltd
Balance at 1 July 2020
(Formerly known as Spirit Telecom Limited)
Statement of changes in equity
Profit after income tax expense for the year
For the year ended 30 June 2021
Other comprehensive income for the year, net of
tax
Total comprehensive income for the year
Consolidated
Transactions with owners in their capacity as
Balance at 1 July 2020
owners:
Contributions of equity, net of transaction costs
Profit after income tax expense for the year
(note 28)
Other comprehensive income for the year, net of
Share-based payments (note 42)
tax
Issue of shares to the vendor as part
consideration in relation to the VPD Group
Total comprehensive income for the year
acquisition
Issue of shares to the vendor as part
Transactions with owners in their capacity as
consideration in relation to the Ancore Pty Ltd
owners:
acquisition
Contributions of equity, net of transaction costs
Issue of shares to the vendor as part
(note 28)
consideration in relation to the Beachhead
Share-based payments (note 42)
acquisition
Issue of shares to the vendor as part
Issue of shares to the vendor as part
consideration in relation to the VPD Group
consideration in relation to the Reliance IT
acquisition
acquisition
Issue of shares to the vendor as part
Issue of shares to the vendor as part
consideration in relation to the Ancore Pty Ltd
consideration in relation to the Intalock
acquisition
acquisition
Issue of shares to the vendor as part
Issue of shares to the vendor as part
consideration in relation to the Beachhead
consideration in relation to the Nexgen
acquisition
acquisition
Issue of shares to the vendor as part
Issue of shares to vendor on achievement of
consideration in relation to the Reliance IT
earnout milestone (Trident Group)
acquisition
Issue of shares to the vendor as part
Balance at 30 June 2021
consideration in relation to the Intalock
acquisition
Issue of shares to the vendor as part
consideration in relation to the Nexgen
acquisition
Issue of shares to vendor on achievement of
earnout milestone (Trident Group)
-
-
1,157
1,157
Issued
capital
$'000
-
-
Reserves Accumulate
-
-
$'000
-
d losses
$'000
1,157
-
Total
equity
$'000
1,157
42,852
567
(5,355)
38,064
-
44,835
-
-
-
7,250
573
44,835
-
624
7,250
1,660
573
2,457
624
12,164
274
1,660
-
-
620
-
-
-
-
-
620
-
-
-
-
-
-
-
-
-
1,157
-
-
-
1,157
-
-
-
-
-
-
-
-
-
-
-
-
-
1,157
44,835
620
-
1,157
7,250
573
44,835
620
624
7,250
1,660
573
2,457
624
12,164
274
1,660
112,689
1,187
(4,198)
109,678
2,457
12,164
274
-
-
-
-
-
-
2,457
12,164
274
Balance at 30 June 2021
112,689
1,187
(4,198)
109,678
The above statement of changes in equity should be read in conjunction with the accompanying notes
28
The above statement of changes in equity should be read in conjunction with the accompanying notes
28
68
Annual Report 2021
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left blank.
Annual Report 2021
69
Statement of
Cash Flows
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Statement of cash flows
For the year ended 30 June 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
S T A T E M E N T O F C A S H F L O W S
Statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Government grants received
Payments to suppliers and employees (inclusive of GST)
Deposits (placed)/refunded
Interest received
Cash flows from operating activities
Interest and other finance costs paid
Receipts from customers (inclusive of GST)
Income taxes paid
Government grants received
Payments to suppliers and employees (inclusive of GST)
Net cash from operating activities
Deposits (placed)/refunded
Interest received
Interest and other finance costs paid
Cash flows from investing activities
Income taxes paid
Payments for property, plant and equipment
Payments for intangibles
Net cash from operating activities
Cash payments to acquire businesses, net of cash acquired
Acquired income tax liabilities paid
Business acquisition and integration costs
Cash flows from investing activities
Proceeds from disposal of assets & right of use
Payments for property, plant and equipment
Payments for intangibles
Net cash used in investing activities
Cash payments to acquire businesses, net of cash acquired
Acquired income tax liabilities paid
Business acquisition and integration costs
Cash flows from financing activities
Proceeds from disposal of assets & right of use
Proceeds from issue of shares
Share issue transaction costs
Net cash used in investing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Cash flows from financing activities
Proceeds from issue of shares
Net cash from financing activities
Share issue transaction costs
Proceeds from borrowings
Repayment of borrowings
Net increase in cash and cash equivalents
Repayment of lease liabilities
Cash and cash equivalents at the beginning of the financial year
Note
Consolidated
2021
$'000
2020
$'000
2021
$'000
110,058
Consolidated
83
(104,528)
(100)
3
(471)
110,058
-
83
(104,528)
5,045
(100)
3
(471)
-
(3,482)
(1,581)
5,045
(45,798)
(481)
(2,100)
541
(3,482)
(1,581)
(52,901)
(45,798)
(481)
(2,100)
541
47,042
(2,207)
(52,901)
9,732
(3,000)
(1,618)
41,891
992
2020
(38,218)
$'000
83
27
(285)
41,891
-
992
(38,218)
4,490
83
27
(285)
-
(5,826)
(1,103)
4,490
(6,779)
(145)
(640)
125
(5,826)
(1,103)
(14,368)
(6,779)
(145)
(640)
125
15,267
(691)
(14,368)
-
(932)
(743)
Note
40
40
37
37
28
28
47,042
49,949
(2,207)
9,732
(3,000)
2,093
(1,618)
6,400
49,949
8,493
15,267
12,901
(691)
-
(932)
3,023
(743)
3,377
12,901
6,400
Net cash from financing activities
Cash and cash equivalents at the end of the financial year
10
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
2,093
6,400
3,023
3,377
Cash and cash equivalents at the end of the financial year
10
8,493
6,400
The above statement of cash flows should be read in conjunction with the accompanying notes
29
The above statement of cash flows should be read in conjunction with the accompanying notes
29
Annual Report 2021
71
Notes to the
Financial Statements
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 1. General information
The financial statements cover Spirit Technology Solutions Ltd as a Consolidated Entity consisting
of Spirit Technology Solutions Ltd and the entities it controlled at the end of, or during, the year.
The financial statements are presented in Australian dollars which is Spirit Technology Solutions
Ltd's functional and presentation currency.
Spirit Technology Solutions Ltd is a listed public company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of business are:
Registered office
Principal place of business
Level 4, 100 Albert Road
South Melbourne Victoria 3205
Level 2, 19-25 Raglan Street
South Melbourne Victoria 3205
A description of the nature of the Consolidated Entity's operations and its principal activities are
included in the Directors' report which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on
24 August 2021. The Directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set
out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are
mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These
financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation
that the Consolidated Entity has adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis of accounting in
preparing the financial statements.
The Consolidated Entity has a net current liability position as at 30 June 2021 of $14,844,000 (30
June 2020 net current asset position: $2,382,000). This financial position needs to be considered
noting the following key factors:
§ The Consolidated Entity recorded a positive Net Profit After Tax and positive net Operating
Cashflow position for the year ended 30 June 2021.
§ Current liabilities includes deferred and contingent consideration payable of $17.7M. The
estimated cash component of this consideration totals $14.2M. The balance is to be settled in
equity. The Consolidated Entity has available cash and debt facilities to settle these cash
liabilities.
§ Current liabilities includes unearned revenue of $3.7M. This liability unwinds to revenue rather
than being a cash settled liability.
§ As outlined in note 9 the Consolidated Entity has announced its intention to divest its
consumer infrastructure assets and is well advanced in that process. A successful divestment
will yield additional working capital back into the Company.
§ The Consolidated Entity remains confident that it has the ability to request additional support
from existing shareholders if financial assistance is required.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the
Consolidated Entity's accounting policies. The areas involving a higher degree of judgement or
complexity or areas where assumptions and estimates are significant to the financial statements
are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
Consolidated Entity only. Supplementary information about the parent entity is disclosed in note
36.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
Spirit Technology Solutions Ltd ('Company' or 'parent entity') as at 30 June 2021 and the results of
all subsidiaries for the year then ended. Spirit Technology Solutions Ltd and its subsidiaries
together are referred to in these financial statements as the 'Consolidated Entity'.
Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated
Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Consolidated Entity. They are de-consolidated from the date
that control ceases.
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Spirit Technology Solutions Ltd
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Operating segments
Operating segments are presented using the 'management approach', where the information
presented is on the same basis as the internal reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments
and assessing their performance.
Revenue recognition
Revenue is recognised and measured in accordance with the principles of AASB 15 Revenue from
contracts with customers at the fair value of the consideration received or receivable, after taking
into account any trade discounts and volume rebates allowed, to the extent that it is probable that
economic benefit will flow to the Consolidated Entity and the revenue can be reliably measured.
Revenue from contracts with customers
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.
Variable consideration within the transaction price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds, any potential bonuses receivable from the
customer and any other contingent events. Such estimates are determined using either the
'expected value' or 'most likely amount' method. 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 recognised as a refund liability.
Recurring revenue
Internet access, equipment rentals, line rentals and managed IT services are recognised in the
period in which the service is provided. Where Income for services is invoiced in advance, the
amount is recorded as Unearned Income and recognition in the income statement is delayed until
the service has been provided.
Non-recurring revenue
Call charges, hardware sales and set-up charges are recognised in the period in which the services
or goods are delivered.
Grants
Grants received on the condition that specified services are delivered, or conditions are fulfilled,
are initially recognised as a liability, and revenue is recognised as services are performed or
conditions fulfilled. Grants related to assets are presented in the statement of financial position
either as deferred income or by deducting the relevant amount in determining the carrying
amount of the asset.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a
method of calculating the amortised cost of a financial asset and allocating the interest income
over the relevant period using the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to the net carrying
amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is
established.
Income tax
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 the changes in deferred
tax assets and liabilities attributable to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates
expected to be applied when the assets are recovered or liabilities are settled, based on those tax
rates that are enacted or substantively enacted, except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill
or an asset or liability in a transaction that is not a business combination and that, at the time
of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates
or joint ventures, and the timing of the reversal can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses
only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each
reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer
probable that future taxable profits will be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are recognised to the extent that it is probable that
there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset
current tax assets against current tax liabilities and deferred tax assets against deferred tax
liabilities; and they relate to the same taxable authority on either the same taxable entity or
different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Consolidated Entity's normal operating cycle; it is held primarily for the purpose
of trading; it is expected to be realised within 12 months after the reporting period; or the asset is
cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least 12 months after the reporting period. All other assets are classified as non-current.
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(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
A liability is classified as current when: it is either expected to be settled in the Consolidated Entity's
normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within
12 months after the reporting period; or there is no unconditional right to defer the settlement of
the liability for at least 12 months after the reporting period. All other liabilities are classified as non-
current.
Deferred tax assets and liabilities are always classified as non-current.
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.
Trade and other receivables
Trade receivables are initially recognised at fair value, less any provision for impairment. Trade
receivables are generally due for settlement within 30 days.
The Consolidated Entity has applied the simplified approach to measuring expected credit losses,
which uses a lifetime expected loss allowance. To measure the expected credit losses, trade
receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the Consolidated Entity has transferred goods or services to
the customer but where the Consolidated Entity is yet to establish an unconditional right to
consideration. Contract assets are treated as financial assets for impairment purposes.
The contract assets relate to costs incurred to both obtain or fulfil a contract with a customer. Costs
typically included sales commissions, customer contract buy-out costs and costs related directly
to fulfilling a customer contract such as direct labour. The contract assets are amortised to cost of
sales over the average contract life which is assessed to be in the range of 4 - 4.5 years. There are
management judgements required in assessing both the types of costs capitalised and
amortisation periods as outlined.
Inventories
Stock on hand is stated at the lower of cost and net realisable value. Cost comprises purchase and
delivery costs, net of rebates and discounts received or receivable.
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather than through continued
use. They are measured at the lower of their carrying amount and fair value less costs of disposal.
For non-current assets or assets of disposal groups to be classified as held for sale, they must be
available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets
and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any
subsequent increases in fair value less costs of disposal of a non-current assets and assets of
disposal groups, but not in excess of any cumulative impairment loss previously recognised.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Non-current assets are not depreciated or amortised while they are classified as held for sale.
Interest and other expenses attributable to the liabilities of assets held for sale continue to be
recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for
sale are presented separately on the face of the statement of financial position, in current assets.
The liabilities of disposal groups classified as held for sale are presented separately on the face of
the statement of financial position, in current liabilities.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit
or loss. Such assets are subsequently measured at either amortised cost or fair value depending
on their classification. Classification is determined based on both the business model within which
such assets are held and the contractual cash flow characteristics of the financial asset unless an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the Consolidated Entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset,
its carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i)
it is held within a business model whose objective is to hold assets in order to collect contractual
cash flows; and (ii) the contractual terms of the financial asset represent contractual cash flows
that are solely payments of principal and interest.
Impairment of financial assets
The Consolidated Entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income.
The measurement of the loss allowance depends upon the Consolidated Entity's assessment at
the end of each reporting period as to whether the financial instrument's credit risk has increased
significantly since initial recognition, based on reasonable and supportable information that is
available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition,
a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's
lifetime expected credit losses that is attributable to a default event that is possible within the next
12 months. Where a financial asset has become credit impaired or where it is determined that
credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the
probability weighted present value of anticipated cash shortfalls over the life of the instrument
discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the
loss allowance is recognised in other comprehensive income with a corresponding expense
through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with
a corresponding expense through profit or loss.
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(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation commences from the time the asset is available for its intended use.
Leasehold improvements are depreciated over the shorter of either the unexpired period of the
lease or the estimated useful lives of the improvements.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and
equipment over their expected useful lives as follows:
Leasehold improvements
Plant and equipment*
Motor vehicles
Furniture and fixtures
Right of use assets
7 – 10 years
2 – 10 years
4 – 5 years
2 – 10 years
1 – 5 years
* Plant and equipment includes network and customer infrastructure.
The residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each reporting date to ensure it is not in excess of the assets recoverable amount.
The recoverable amount is assessed on the basis of the expected net cash flows that will be
received from the asset’s employment and subsequent disposal. The expected net cash flows have
not been discounted in determining recoverable amounts.
An item of property, plant and equipment is derecognised upon disposal or when there is no future
economic benefit to the Consolidated Entity. Gains and losses between the carrying amount and
the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the
item disposed of is transferred directly to retained profits.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement date net of any lease
incentives received, any initial direct costs incurred, and, except where included in the cost of
inventories, an estimate of costs expected to be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease
or the estimated useful life of the asset, whichever is the shorter. Where the Consolidated Entity
expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is
over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any
remeasurement of lease liabilities.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially
measured at their fair value at the date of the acquisition. Intangible assets acquired separately
are initially recognised at cost. Indefinite life intangible assets are not amortised and are
subsequently measured at cost less any impairment. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment. The gains or losses recognised in profit or
loss arising from the de-recognition of intangible assets are measured as the difference between
net disposal proceeds and the carrying amount of the intangible asset. The method and useful
lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by changing the amortisation method
or period.
Goodwill
Goodwill is recorded at the amount by which the purchase price for a business combination
exceeds the fair value attributed to the interest in the net fair value of identifiable assets, liabilities
and contingent liabilities acquired at date of acquisition.
Goodwill is subsequently measured at cost less any impairment losses.
Goodwill is subject to impairment testing on an annual basis. Impairment losses are calculated
based on the Director’s assessment of the business’s recoverable amount. Recoverable amount is
assessed on the basis of the expected net cash flows that will be received from the asset’s
employment and subsequent disposal.
Directors'
Gains and losses on the disposal of a business include the carrying amount of goodwill relating to
the business sold.
Intellectual property
Significant costs associated with intellectual property are deferred and amortised on a straight-
line basis over the period of their expected benefit, being their finite life of 7 years.
Brand names
Acquired brand names are stated at cost less any impairment.
Brand names are subject to impairment testing on an annual basis. Impairment losses are
calculated based on the Director’s assessment of the business’s recoverable amount. Recoverable
amount is assessed on the basis of the expected net cash flows that will be received from the
asset’s employment and subsequent disposal.
Directors'
Gains and losses on the disposal of a business include the carrying amount of brand names relating
to the business sold.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis
over the period of their expected benefit, being their finite life of 10 years.
Customer contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over
the period of their expected benefit, being their finite life of 10 years.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over
the period of their expected benefit being their finite life of 3-5 years.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Other intangible assets
Other intangible assets that are acquired by the Consolidated Entity and have finite lives are stated
at cost less accumulated amortisation and any accumulated impairment losses.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use.
The value-in-use is the present value of the estimated future cash flows relating to the asset using
a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs.
Assets that do not have independent cash flows are grouped together to form a cash-generating
unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated Entity
prior to the end of the financial year and which are unpaid. Due to their short-term nature they are
measured at amortised cost and are not discounted. The amounts are unsecured and are usually
paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest
method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Consolidated Entity's incremental borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate,
amounts expected to be paid under residual value guarantees, exercise price of a purchase option
when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in
the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from
a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option
and termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Provisions
Provisions are recognised when the Consolidated Entity has a present (legal or constructive)
obligation as a result of a past event, it is probable the Consolidated Entity will be required to settle
the obligation, and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the
obligation. If the time value of money is material, provisions are discounted using a current pre-tax
rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service
leave expected to be settled wholly within 12 months of the reporting date are measured at the
amounts expected to be paid when the liabilities are settled.
Non-accumulating sick leave is expensed to profit or loss when incurred.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of
the reporting date are measured at the present value of expected future payments to be made in
respect of services provided by employees up to the reporting date using the projected unit credit
method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields
at the reporting date on high quality corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which
they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to
employees in exchange for the rendering of services. Cash-settled transactions are awards of cash
for the exchange of services, where the amount of cash is determined by reference to the share
price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using either the Binomial or Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Consolidated Entity receives the services that entitle the employees to
receive payment. No account is taken of any other vesting conditions.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
The cost of equity-settled transactions are recognised as an expense with a corresponding increase
in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the
grant date fair value of the award, the best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount recognised in profit or loss for the period
is the cumulative amount calculated at each reporting date less amounts already recognised in
previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards
subject to market conditions are considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the
modification has not been made. An additional expense is recognised, over the remaining vesting
period, for any modification that increases the total fair value of the share-based compensation
benefit as at the date of modification.
If the non-vesting condition is within the control of the Consolidated Entity or employee, the failure
to satisfy the condition is treated as a cancellation. If the condition is not within the control of the
Consolidated Entity or employee and is not satisfied during the vesting period, any remaining
expense for the award is recognised over the remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation,
and any remaining expense is recognised immediately. If a new replacement award is substituted
for the cancelled award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place either in the principal market;
or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing
the asset or liability assuming they act in their economic best interests. For non-financial assets,
the fair value measurement is based on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient data are available to measure fair value
are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of
whether equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets
transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of
the acquiree and the amount of any non-controlling interest in the acquiree. For each business
combination the non-controlling interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as
incurred to profit or loss.
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Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
On the acquisition of a business the Consolidated Entity assesses the financial assets acquired and
liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic conditions, the Consolidated Entity's operating or accounting
policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Consolidated Entity remeasures its
previously held equity interest in the acquiree at the acquisition-date fair value and the difference
between the fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date
fair value. Subsequent changes in the fair value of the contingent consideration classified as an
asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and
any non-controlling interest in the acquiree and the fair value of the consideration transferred and
the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the identifiable
net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment
of the identification and measurement of the net assets acquired, the non-controlling interest in
the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest
in the acquirer.
Business combinations are
initially accounted for on a provisional basis. The acquirer
retrospectively adjusts the provisional amounts recognised and also recognises additional assets
or liabilities during the measurement period, based on new information obtained about the facts
and circumstances that existed at the acquisition-date. The measurement period ends on either
the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Spirit
Technology Solutions Ltd, excluding any costs of servicing equity other than ordinary shares, by
the weighted average number of ordinary shares outstanding during the financial year, adjusted
for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per
share to take into account the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Basic and diluted earnings per share from operations has been presented in the statement of
profit or loss and other comprehensive income. Basic and diluted earnings is presented in note
41 to the financial statements.
84
Annual Report 2021
41
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the
GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the
cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from or payable to the tax authority is included in other receivables or
other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from or payable to the tax authority are
presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from or
payable to the tax authority.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have
been rounded off in accordance with that Corporations Instrument to the nearest,000 dollars, or
in certain cases, the nearest dollar.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on various other factors, including expectations of future
events management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
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 Consolidated Entity 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 Consolidated Entity operates. Refer note 2 Going
Concern and note 39 Events after the reporting period for additional information.
Revenue recognition
The Group’s contracts are recognised as and when performance obligations are met. Identifying
performance obligations, allocating the transaction price to performance obligations, and
determining the timing of revenue recognition of these contracts at times requires the application
of judgement due to the complexity and nature of the customer arrangements. The assumptions
made in the estimates are based on the information available to Management at the reporting
date. A change in the estimated stage of completion could have an impact on the timing of the
revenue recognition. Refer to note 2 for further information on revenue recognition.
Annual Report 2021
85
42
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and
judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and
makes assumptions to allocate an overall expected credit loss rate for each company. These
assumptions include recent sales experience and historical collection rates.
Estimation of useful lives of assets
The Consolidated Entity determines the estimated useful lives and related depreciation and
amortisation charges for its property, plant and equipment and finite life intangible assets. The
useful lives could change significantly as a result of technical innovations or other events. The
depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold
will be written off or impaired.
Goodwill and other indefinite life intangible assets
The Consolidated Entity tests annually, or more frequently if events or changes in circumstances
indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any
impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts
of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions, including estimated discount rates based on the
current cost of capital and growth rates of the estimated future cash flows.
Impairment of property, plant and equipment
The Consolidated Entity assesses impairment of property, plant and equipment at each reporting
date by evaluating conditions specific to the Consolidated Entity and to the particular asset that
may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is
determined.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Consolidated
Entity considers it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred and contingent consideration
The deferred and contingent consideration liabilities are the difference between the total purchase
consideration, usually on an acquisition of a business combination, and the amounts paid or
settled up to the reporting date, discounted to net present value. The Consolidated Entity applies
provisional accounting for any business combination. Any reassessment of the liability during the
earlier of the finalisation of the provisional accounting or 12 months from acquisition-date is
adjusted for retrospectively as part of the provisional accounting rules in accordance with AASB 3
'Business Combinations'. Thereafter, at each reporting date, a deferred and contingent
consideration liability is reassessed against revised estimates and any increase or decrease in the
net present value of the liability will result in a corresponding gain or loss to profit or loss. The
increase in the liability resulting from the passage of time is recognised as a finance cost.
Business combinations
As discussed in note 2, business combinations are initially accounted for on a provisional basis. The
fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by
the Consolidated Entity taking into consideration all available information at the reporting date.
Fair value adjustments on the finalisation of the business combination accounting is retrospective
where applicable, to the period the combination occurred and may have an impact on the assets
and liabilities, depreciation and amortisation reported.
86
Annual Report 2021
43
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 4. Operating segments
Identification of reportable operating segments
The Consolidated Entity is organised into one operating segment, being the provision of IT&T
services. This included the provision of Telecommunication services, Cloud services, Managed IT
services and Cyber Security services to small, medium and enterprise size businesses.
Major customers
During the year ended 30 June 2021 there are no individual customers which accounted for 5% or
more of sales.
Note 5. Revenue
Consolidated
2021
$'000
2020
$'000
Sales revenue
102,786
34,429
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major product lines
Managed services
Internet and data services
Security services
Voice services
Cloud services
Other
Geographical regions
Australia
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Consolidated
2021
$'000
2020
$'000
49,959
17,586
13,369
14,300
4,428
3,144
14,018
15,696
-
4,024
-
691
102,786
34,429
102,786
34,429
55,127
47,659
10,772
23,657
102,786
34,429
Annual Report 2021
87
44
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 6. Other income
Government infrastructure grants
Profit on sale of assets and right of use
Government subsidies
Miscellaneous income
Interest income
Other income
Consolidated
2021
$'000
2020
$'000
665
529
305
181
3
400
2
-
16
27
1,683
445
88
Annual Report 2021
45
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 7. Expenses
Profit/(loss) before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Motor vehicles
Furniture and fixtures
Total depreciation
Amortisation
Right-of-use assets
Customer relationships
Software and projects
Intellectual property
Total amortisation
Total depreciation and amortisation
Finance costs
Borrowings
Finance leases
Finance costs expensed
Superannuation expense
Defined contribution superannuation expense
Employee benefits expense excluding superannuation
Employee benefits expense excluding superannuation
Impairment of receivables
Bad and doubtful debts expense*
Consolidated
2021
$'000
2020
$'000
47
3,928
62
69
4
2,645
52
49
4,106
2,750
1,527
299
690
44
692
-
413
-
2,560
1,105
6,666
3,855
471
137
608
285
85
370
2,613
913
28,937
10,913
321
280
*The Consolidated Entity has recognised a loss of $321,000 in profit or loss in respect of impairment
of receivables for the year ended 30 June 2021 (2020: $280,000), including bad debts expense of
$221,000 (2020: $189,000).
Annual Report 2021
89
46
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 8. Income tax expense/(benefit)
Numerical reconciliation of income tax expense/(benefit) and tax at the
statutory rate
Profit/(loss) before income tax (expense)/benefit
Tax at the statutory tax rate of 30.0% (27.5% at 30 June 2020)
Tax effect amounts which are not deductible/(taxable) in calculating
taxable income:
Acquisition related
Share options and employee shares scheme
Impact of change in corporate tax rate
Other balances and permanent differences
Income tax expense/(benefit)
Consolidated
2021
$'000
2020
$'000
1,345
(2,043)
403
(562)
506
-
50
132
(99) -
(622)
(148)
188
(528)
Note 9. Divestment of consumer infrastructure assets’
On 18 March 2021, the Consolidated Entity announced its intention to divest its consumer
infrastructure assets.
The Consumer assets now account for a small amount of Spirit’s revenue compared to its B2B
portfolio of assets. Considering this focus, and that the Consumer offering represents a small
proportion of the customers utilising the underlying data and internet product lines operated by
Spirit, the product is not a component that historically or upon disposal comprises operations and
cash flows distinguishable, operationally and for financial reporting purposes, from Spirit’s single
CGU.
The divestment is in line with Spirit’s shift to focus on the business market, from SME to large
enterprise.
As of the date of adoption of the financial report multiple bids have been received with the due
diligence process well advanced.
Note 10. Current assets - cash and cash equivalents
Cash at bank
Consolidated
2021
$'000
2020
$'000
8,493
6,400
90
Annual Report 2021
47
Spirit Technology Solutions Ltd
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 11. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Consolidated
2021
$'000
2020
$'000
13,270
(487)
12,783
1
4,581
(176)
4,405
5
12,784
4,410
Allowance for expected credit losses
The Consolidated Entity retains a provision of $487,000 in respect of impairment of receivables for
the year ended 30 June 2021 (2020: $176,000).
The ageing of the receivables and allowance for expected credit losses provided for above are as
follows:
3 to 6 months overdue
Over 6 months overdue
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additions and releases
Closing balance
Note 12. Current assets - inventories
Stock on hand - at cost
Less: Provision for impairment
Consolidated
2021
$'000
2020
$'000
412
75
487
98
78
176
Consolidated
2021
$'000
2020
$'000
176
311
487
66
110
176
Consolidated
2021
$'000
2020
$'000
2,801
(224)
1,005
(55)
2,577
950
Annual Report 2021
91
48
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2021
Note 13. Current assets - other
Accrued revenue
Prepayments
Vendor loans
Other current assets
Note 14. Contract assets
Contract assets
Accumulated amortisation
Consolidated
2021
$'000
2020
$'000
2,513
1,079
532
6
244
587
-
7
4,130
838
Consolidated
2021
$'000
2020
$'000
1,881
(194)
1,687
-
-
-
-
-
-
-
-
-
-
The classification of contract assets into current and non-current is set out below:
Current
Non-current
Reconciliation of the written down values at the beginning and end of
the current and previous financial year are set out below:
Opening balance
Additions
Amortisation to the profit and loss
Closing balance
Consolidated
2021
$'000
2020
$'000
143
1,544
1,687
Consolidated
2021
$'000
2020
$'000
-
1,881
(194)
1,687
92
Annual Report 2021
49
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
30 June 2021
Note 15. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Furniture & Fixtures at Cost
Less: Accumulated depreciation
Work in progress
Reconciliations
Consolidated
2021
$'000
2020
$'000
599
(195)
404
103
(80)
23
22,010
(8,890)
13,120
21,027
(7,538)
13,489
854
(799)
55
820
(553)
267
294
(232)
62
592
(353)
239
49
8
13,895
13,821
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
Leasehold
improvement
s
Plant and
equipment
Motor
vehicles
Furniture &
Fixtures
Work in
progress
Total
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2019
Additions through business
combinations (note 37)
Additions/transfers
Disposals
Depreciation expense
Balance at 30 June 2020
Additions through business
combinations (note 37)
Transfers to held for sale
Additions/transfers
Disposals
Depreciation expense
-
9,448
23
4
-
(4)
264
6,454
(32)
(2,645)
23
13,489
85
35
17
(23)
(52)
62
233
29
126
(100)
(49)
239
415
1,462
- (1,301)
3,410
(12)
(3,928)
13
-
(47)
55
79
-
18
-
(69)
-
-
-
(62)
55
Balance at 30 June 2021
404
13,120
50
784
10,550
-
(775)
(1)
-
351
5,826
(156)
(2,750)
8
13,821
-
2,011
- (1,301)
41 3,482
(12)
(4,106)
-
-
267
49
13,895
Annual Report 2021
93
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2021
Note 16. Non-current assets - right-of-use assets
Right-of-use assets
Less: Accumulated amortisation
Consolidated
2021
$'000
2020
$'000
6,473
(2,582)
2,255
(692)
3,891
1,563
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
Balance at 1 July 2019
Adoption AASB 16
Leases
Additions
Amortisation expense
Balance at 30 June 2020
Net additions through
business combinations
(note 37)
Additions
Disposals
Amortisation expense
Balance at 30 June 2021
Total
$'000
-
2,255
-
(692)
1,563
3,473
416
(34)
(1,527)
3,891
94
Annual Report 2021
51
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Note 17. Non-current assets - intangibles (continued)
Note 17. Non-current assets - intangibles
Goodwill - at cost
Intellectual property - at cost
Less: Accumulated amortisation
Software
Less: Accumulated amortisation
Brand names - at cost
Customer relationships
Less: Accumulated amortisation
Consolidated
2021
$'000
2020
$'000
100,087
23,974
561
(44)
517
5,305
(2,254)
3,051
4,105
11,942
(299)
11,643
-
-
-
2,125
(740)
1,385
-
-
-
-
119,403
25,359
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Goodwill
Brand
names
Software &
projects
at cost
$'000
at cost
$'000
at cost
$'000
Customer
relationship
s
at cost
$'000
Intellectual
property
Indefinite
life
intangibles
Total
at cost
$'000
$'000
$'000
Consolidated
Balance at 1 July 2019
Reclassification
Additions through
business combinations
(note 37)
Additions
Amortisation expense
Balance at 30 June 2020
Additions through
business combinations
(note 37)
Additions
Amortisation expense
10,557
2,005
11,412
-
-
23,974
-
-
-
-
-
-
695
-
-
1,103
(413)
1,385
-
-
-
-
-
-
76,113
-
-
4,105
-
-
1,336
1,020
(690)
11,942
-
(299)
Balance at 30 June 2021
100,087
4,105
3,051
11,643
52
-
-
-
-
-
-
-
561
(44)
517
2,005
(2,005)
13,257
-
-
-
-
-
-
-
-
11,412
1,103
(413)
25,359
93,496
1,581
(1,033)
-
119,403
Annual Report 2021
95
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 17. Non-current assets - intangibles (continued)
Goodwill, Brand Names & Intangible Assets with Indefinite Lives
Goodwill, brand names and indefinite life intangibles, including those acquired during the year,
are allocated to a single cash-generating unit (CGU), that being the Consolidated Entity’s single
operating segment. The recoverable amount of the CGU is determined based on a value-in-use
model. The model uses a pre-tax discount of 13% (2020: 14%), cash flow projections based on the
financial budget for the 12 months immediately following reporting date, cash flows beyond 12
months extrapolated through a 4-5 year outlook utilising conservative growth rates, and a terminal
value growth rate of 3%.
Upon applying the test across both intangible assets, including goodwill, it is concluded that no
impairment has occurred.
Sensitivity analysis on the key assumptions employed in the value-in-use calculations has been
performed by Management. The sensitivities applied were decreasing sales and associated cost of
goods sold by 10% throughout the model period (whilst holding operating costs stable), increasing
the post-tax discount rate by 2- 3% percentage points and reducing the terminal value growth rate
by half.
These sensitivity tests did not result in the CGU’s carrying amounts exceeding their recoverable
amount, giving rise to impairment.
Note 18. Non-current assets - deferred tax
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
Expenses deductible in future periods
Other provisions/accruals
Tax credits from tax losses
Deferred tax asset
Consolidated
2021
$'000
2020
$'000
675
775
1,169
-
318
294
446
421
2,619
1,479
96
Annual Report 2021
53
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Limited
Notes to the financial statements
30 June 2021
Note 19. Current liabilities - trade and other payables
Trade payables
GST payable
Other payables
Refer to note 31 for further information on financial instruments.
Note 20. Current liabilities - lease liabilities
Lease liability
Refer to note 31 for further information on financial instruments.
Note 21. Current liabilities - provisions
Annual leave
Long service leave
Provision for income tax
Lease make good
Note 22. Current liabilities - deferred consideration
Deferred consideration
Refer to note 37 for further information on deferred consideration.
Consolidated
2021
$'000
2020
$'000
9,431
706
6,005
4,047
319
1,290
16,142
5,656
Consolidated
2021
$'000
2020
$'000
2,004
816
Consolidated
2021
$'000
2020
$'000
1,999
919
478
48
668
249
34
-
3,444
951
Consolidated
2021
$'000
2020
$'000
15,327
-
Annual Report 2021
97
54
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2021
Note 23. Non-current liabilities - borrowings
Bank loans
Refer to note 31 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank loans
Hire purchase
Assets pledged as security
Consolidated
2021
$'000
2020
$'000
10,000
3,268
Consolidated
2021
$'000
2020
$'000
10,000
-
3,268
20
10,000
3,288
The bank loan of $10M (2020: $3.3M) is a first ranking secured over the assets and undertakings of
Spirit Technology Solutions Ltd and its wholly owned subsidiaries.
Note 24. Non-current liabilities - lease liabilities
Lease liability
Refer to note 31 for further information on financial instruments.
Note 25. Non-current liabilities - deferred tax
Deferred tax liability comprises temporary differences attributable to:
Property, plant and equipment
Deferred tax liability
Consolidated
2021
$'000
2020
$'000
2,016
787
Consolidated
2021
$'000
2020
$'000
712
712
-
-
98
Annual Report 2021
55
Spirit Technology Solutions Limited
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 26. Non-current liabilities - provisions
Long service leave
Note 27. Unearned revenue
Customer contract unearned revenue
Government infrastructure grants
Consolidated
2021
$'000
2020
$'000
352
165
Consolidated
2021
$'000
2020
$'000
4,964
1,514
1,236
2,096
6,478
3,332
The Government infrastructure grant proceeds primarily related to Horsham and Morwell high
speed internet projects that will be recognised over a four-year period.
The classification of unearned revenue into current and non-current is set out below:
Current
Non-current
Consolidated
2021
$'000
2020
$'000
3,655
2,823
1,775
1,557
6,478
3,332
Annual Report 2021
99
56
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 27. Unearned revenue (continued)
Reconciliations
Reconciliations of the movements at the beginning and end of the current and previous financial
year are set out below:
Total
Customer
contract
unearned
revenue
Governm
ent
infrastruc
ture
grants
$'000
$'000
$'000
430
1,544
1,974
790
16
-
552
790
568
1,236
2,096
3,332
4,059
(331)
-
(582)
4,059
(913)
4,964
1,514
6,478
Consolidated
Balance at 1 July 2019
Additions through
business combinations
(note 37)
Net other movements
Balance at 30 June 2020
Additions through
business combinations
(note 37)
Net other movements
Balance at 30 June 2021
Note 28. Equity - issued capital
Ordinary shares - fully paid
652,292,046 430,909,320
112,689
42,852
Consolidated
2021
Shares
2020
Shares
2021
$'000
2020
$'000
100
Annual Report 2021
57
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Spirit Technology Solutions Ltd
Notes to the financial statements
(Formerly known as Spirit Telecom Limited)
30 June 2021
Notes to the financial statements
30 June 2021
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Note 28. Equity - issued capital (continued)
Note 28. Equity - issued capital (continued)
Movements in ordinary share capital
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
Issue price
Details
Balance
Exercise of ST1O listed options
Balance
Exercise of ST1O listed options
Exercise of ST1O listed options
Issue of shares to the vendor as part
Exercise of ST1O listed options
consideration in relation to the Arinda IT
Issue of shares to the vendor as part
acquisition
consideration in relation to the Arinda IT
Exercise of ST1O listed options
acquisition
Exercise of unlisted options
Exercise of ST1O listed options
Exercise of ST1O listed options
Exercise of unlisted options
Exercise of ST1O listed options
Exercise of ST1O listed options
Issue of shares to the vendor as part
Exercise of ST1O listed options
consideration in relation to the Phoenix Austec
Issue of shares to the vendor as part
Group acquisition
consideration in relation to the Phoenix Austec
Exercise of ST1O listed options
Group acquisition
Issue of shares pursuant to the underwriting
Exercise of ST1O listed options
arrangement for ST1O listed options
Issue of shares pursuant to the underwriting
Issue of shares to incentivise employees
arrangement for ST1O listed options
Exercise of unlisted options
Issue of shares to incentivise employees
Conversion of vested Performance Rights
Exercise of unlisted options
Issue of shares to the vendor as part
Conversion of vested Performance Rights
consideration in relation to the Cloud Business
Issue of shares to the vendor as part
Technology acquisition
consideration in relation to the Cloud Business
Issue of shares to the vendor as part
Technology acquisition
consideration in relation to the Trident & Neptune
Issue of shares to the vendor as part
Group acquisition
consideration in relation to the Trident & Neptune
Issue of Tranche 1 Placement shares
Group acquisition
Issue of Tranche 2 Placement shares
Issue of Tranche 1 Placement shares
Transfer from option reserve
Issue of Tranche 2 Placement shares
Cost of capital raising
Transfer from option reserve
Cost of capital raising
Balance
Issue of shares to the vendor as part
Balance
consideration in relation to the VPD Group
Issue of shares to the vendor as part
acquisition
consideration in relation to the VPD Group
Issue of Tranche 1 Placement shares
acquisition
Issue of shares to the vendor as part
Issue of Tranche 1 Placement shares
consideration in relation to the Ancore
Issue of shares to the vendor as part
acquisition
consideration in relation to the Ancore
Issue of shares to the vendor as part
acquisition
consideration in relation to the Beachhead
Issue of shares to the vendor as part
acquisition
consideration in relation to the Beachhead
Issue of shares to the vendor as part
acquisition
consideration in relation to the Reliance IT
Issue of shares to the vendor as part
acquisition
consideration in relation to the Reliance IT
Issue of shares in accordance with Share
acquisition
Purchase Plan
Issue of shares in accordance with Share
Issue of Tranche 2 Placement shares
Purchase Plan
Conversion of vested Performance Rights
Issue of Tranche 2 Placement shares
Issue of shares to the vendor as part
Conversion of vested Performance Rights
consideration in relation to the Intalock
Issue of shares to the vendor as part
acquisition
consideration in relation to the Intalock
Issue of shares to the vendor as part of
acquisition
contingent consideration in relation to the
Issue of shares to the vendor as part of
Trident acquisition upon achievement of earnout
contingent consideration in relation to the
target 1
Trident acquisition upon achievement of earnout
Spirit Technology Solutions Ltd
Issue of placement shares
target 1
(Formerly known as Spirit Telecom Limited)
Issue of shares to the vendor as part
Issue of placement shares
Notes to the financial statements
consideration in relation to the Nexgen
Issue of shares to the vendor as part
30 June 2021
acquisition
consideration in relation to the Nexgen
Cost of capital raising
acquisition
Cost of capital raising
Balance
Date
1 July 2019
4 July 2019
1 July 2019
10 July 2019
4 July 2019
10 July 2019
11 July 2019
16 July 2019
11 July 2019
17 July 2019
16 July 2019
25 July 2019
17 July 2019
26 July 2019
25 July 2019
26 July 2019
29 July 2019
2 August 2019
29 July 2019
2 August 2019
9 August 2019
16 September 2019
9 August 2019
22 November 2019
16 September 2019
20 December 2019
22 November 2019
20 December 2019
3 February 2020
3 February 2020
18 February 2020
20 April 2020
18 February 2020
1 June 2020
20 April 2020
1 June 2020
30 June 2020
30 June 2020
1 July 2020
27 August 2020
1 July 2020
27 August 2020
1 September 2020
1 September 2020
1 September 2020
1 September 2020
1 September 2020
1 September 2020
18 September 2020
22 October 2020
18 September 2020
22 October 2020
22 October 2020
22 October 2020
3 December 2020
3 December 2020
27 January 2021
8 April 2021
27 January 2021
8 April 2021
8 April 2021
8 April 2021
58
30 June 2021
58
Shares
305,723,988
1,508,509
305,723,988
13,326,593
1,508,509
13,326,593
2,380,952
3,233,587
2,380,952
1,250,000
3,233,587
742,906
1,250,000
158,806
742,906
158,806
1,333,333
8,137,215
1,333,333
8,137,215
1,624,640
88,480
1,624,640
1,250,000
88,480
332,084
1,250,000
332,084
700,000
700,000
5,818,750
78,754,022
5,818,750
4,545,455
78,754,022
-
4,545,455
-
-
-
430,909,320
430,909,320
29,000,000
55,881,401
29,000,000
55,881,401
1,592,988
1,592,988
1,734,888
1,734,888
4,612,204
4,612,204
15,624,581
1,125,000
15,624,581
189,320
1,125,000
189,320
5,921,053
5,921,053
703,366
72,121,213
703,366
72,121,213
32,876,712
-
32,876,712
-
652,292,046
$0.196
$0.196
$0.196
$0.196
$0.255
$0.196
$0.255
$0.190
$0.196
$0.196
$0.190
$0.196
$0.196
$0.196
$0.240
$0.196
$0.240
$0.196
$0.196
$0.226
$0.196
$0.190
$0.226
$0.000
$0.190
$0.000
$0.185
$0.185
$0.210
$0.110
$0.210
$0.110
$0.110
$0.000
$0.110
$0.000
$0.000
$0.000
$0.250
$0.320
$0.250
$0.320
$0.360
$0.360
$0.360
$0.360
$0.360
$0.360
$0.320
$0.320
$0.320
$0.000
$0.320
$0.000
$0.415
$0.415
$0.390
$0.330
$0.390
$0.330
$0.370
$0.000
$0.370
$0.000
$'000
25,512
297
25,512
2,624
297
2,624
607
636
607
237
636
146
237
31
146
31
320
1,602
320
1,602
320
20
320
238
20
-
238
-
130
130
1,222
8,663
1,222
500
8,663
275
500
(528)
275
(528)
42,852
42,852
7,250
17,882
7,250
17,882
573
573
624
624
1,660
1,660
5,000
360
5,000
-
360
-
2,457
2,457
274
23,800
274
23,800
12,164
(2,207)
12,164
(2,207)
112,689
Note 28. Equity - issued capital (continued)
Movements in unquoted options
Annual Report 2021
Details
Balance
Exercise of unlisted options
Exercise of unlisted options
Balance
Balance
Ordinary shares
Date
Options
$'000
101
1 July 2019
17 July 2019
22 November 2019
20,500,000
(1,250,000)
(1,250,000)
30 June 2020
18,000,000
30 June 2021
18,000,000
-
-
-
-
-
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up
of the Company in proportion to the number of and amounts paid on the shares held. The fully
paid ordinary shares have no par value and the Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Consolidated Entity's objectives when managing capital is to safeguard its ability to continue
as a going concern so that it can provide returns for shareholders and benefits for other
stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net
debt. Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to
reduce debt.
the investment.
The Consolidated Entity would look to raise capital when an opportunity to invest in a business or
company was seen as value adding relative to the current Company's share price at the time of
The Consolidated Entity is subject to certain financing arrangement covenants and meeting these
is given priority in all capital risk management decisions. There have been no events of default on
the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2020 Annual Report.
59
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Balance
30 June 2021
652,292,046
112,689
Note 28. Equity - issued capital (continued)
Movements in unquoted options
Details
Date
Options
$'000
Balance
Exercise of unlisted options
Exercise of unlisted options
Balance
Balance
Ordinary shares
1 July 2019
17 July 2019
22 November 2019
20,500,000
(1,250,000)
(1,250,000)
30 June 2020
18,000,000
30 June 2021
18,000,000
-
-
-
-
-
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up
of the Company in proportion to the number of and amounts paid on the shares held. The fully
paid ordinary shares have no par value and the Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Consolidated Entity's objectives when managing capital is to safeguard its ability to continue
as a going concern so that it can provide returns for shareholders and benefits for other
stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net
debt. Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to
reduce debt.
The Consolidated Entity would look to raise capital when an opportunity to invest in a business or
company was seen as value adding relative to the current Company's share price at the time of
the investment.
The Consolidated Entity is subject to certain financing arrangement covenants and meeting these
is given priority in all capital risk management decisions. There have been no events of default on
the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2020 Annual Report.
59
102
Annual Report 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 29. Equity - reserves
Share-based payments reserve (Note 42)
Capital reserve
Consolidated
2021
$'000
2020
$'000
1,181
6
561
6
1,187
567
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Directors
as part of their remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2019
Share-based payments expense
Transfers
Balance at 30 June 2020
Share-based payments expense (note 42)
Balance at 30 June 2021
Note 30. Equity - dividends
Share-
based
payments
reserve
$'000
Capital
reserve
$'000
Total
$'000
6
-
-
6
-
6
470
458
(367)
561
620
476
458
(367)
567
620
1,181
1,187
There were no dividends paid, recommended or declared during the current or previous financial
year.
Note 31. Financial instruments
Financial risk management objectives
The Consolidated Entity's activities expose it to a variety of financial risks as set out below.
Risk management is carried out by senior finance executives ('finance') under the guidance of the
Board of Directors ('the Board'). These policies include identification and analysis of the risk
exposure of the Consolidated Entity and appropriate procedures, controls and risk limits. Finance
identifies, evaluates and if required, hedges financial risks within the Consolidated Entity's
operating units. Finance reports to the Board on a monthly basis.
Annual Report 2021
103
60
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 31. Financial instruments (continued)
Market risk
Foreign currency risk
The Consolidated Entity undertakes transactions denominated in foreign currencies and therefore
has exposure to foreign currency risk. Offshore Customer Care, Service delivery and Finance teams
are located in Manilla and cost around $19,000 USD per week. The Consolidated Entity also sources
security based software products and spends approximately $4M USD per annum. Conversion is
at the applicable exchange rate at the time the transaction is authorised. No hedging activity is
undertaken to minimise currency fluctuations.
Price risk
The Consolidated Entity is not exposed to any significant price risk.
Interest rate risk
The Consolidated Entity's main interest rate risk arises from long-term borrowings. Borrowings
obtained at variable rates expose the Consolidated Entity to interest rate risk. Borrowings obtained
at fixed rates expose the Consolidated Entity to fair value interest rate risk. The entire Facility is
exposed to variable interest rates. The Consolidated Entity paid $471,000 in interest during the 2021
financial year (2020: $285,000).
The facility is structured such that a line fee is payable on the facility limit ($25M), a usage fee
payable on funds drawn and an interest charge based on BBSY plus 3.6%. As at the reporting date
the Consolidated Entity had the following variable rate borrowings. The net weighted average
interest rate detailed below is calculated on the aggregation of the usage fee and interest charge
over the average balance drawn down during the year ended 30 June 2021.
2021
2020
Consolidated
Bank loan
Weighted
average
interest
rate
%
Balance Weighted
average
interest
rate
%
$'000
Balance
$'000
2.0%
10,000
2.1%
3,268
Net exposure to cash flow interest rate risk
10,000
3,268
An analysis by remaining contractual maturities is shown in 'liquidity and interest rate risk
management' below.
For the Consolidated Entity the bank loans outstanding, totalling $10.0M (2020: $3.3M), are interest
bearing loans. On 20 August 2020, the Consolidated Entity announced an increase of $5M to $15.9M
and on 31 March 2021 announced a further increase to $25M.
104
Annual Report 2021
61
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 31. Financial instruments (continued)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Consolidated Entity. The Consolidated Entity has a strict code of credit and
follows a rigorous collection process. The maximum exposure to credit risk at the reporting date
to recognised financial assets is the carrying amount, net of any provisions for impairment of those
assets, as disclosed in the statement of financial position and notes to the financial statements.
The Consolidated Entity does not hold any collateral.
The Consolidated Entity has adopted a lifetime expected loss allowance in estimating expected
credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit
loss provisioning. The credit loss model takes into consideration the industry dynamics and
exposures of the customer base.
With regards to Debtors, amounts older than 90 days owing are reviewed and where appropriate
taken up as a provision for doubtful debts. This process is completed monthly. As at 30 June 2021
$487,000 was booked as an allowance for expected credit losses against the total amount owed
by debtors. There are no guarantees against this receivable but management closely monitors the
receivable balance on a monthly basis and is in regular contact with its customers to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery.
Indicators of this include the failure of a debtor to engage in a repayment plan, no active
enforcement activity and a failure to make contractual payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Consolidated Entity to maintain sufficient liquid
assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts
as and when they become due and payable.
The Consolidated Entity manages liquidity risk by maintaining adequate cash reserves and
available borrowing facilities by continuously monitoring actual and forecast cash flows and
matching the maturity profiles of financial assets and liabilities.
Annual Report 2021
105
62
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 31. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Consolidated Entity's remaining contractual maturity for its
financial instrument liabilities. The tables have been drawn up based on the undiscounted cash
flows of financial liabilities based on the earliest date on which the financial liabilities are required
to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the
statement of financial position.
Weighted
average
interest
rate
%
Consolidated - 2021
1 year or
less
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade and other payables
Contingent
consideration
Deferred consideration
Interest-bearing -
variable
Bank loan
Lease liability
-
-
-
16,142
2,399
15,327
-
3,603
-
-
-
-
2.00%
5.27%
-
2,004
10,000
368
-
1,648
Total non-derivatives
35,872
13,971
1,648
Weighted
average
interest
rate
%
Consolidated - 2020
1 year or
less
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Trade and other payables
Contingent
consideration
Interest-bearing -
variable
Bank loan
Lease liability
-
-
5,656
-
-
-
998
997
2.10%
5.27%
-
816
3,268
519
-
268
Total non-derivatives
6,472
4,785
1,265
Remaining
contractua
l
maturities
$'000
-
-
-
-
-
-
16,142
6,002
15,327
10,000
4,020
51,491
Remaining
contractua
l
maturities
$'000
-
-
-
-
-
5,656
1,995
3,268
1,603
12,522
Fair value of financial instruments
Unless otherwise stated the carrying amounts of financial instruments reflect their fair value.
106
Annual Report 2021
63
Spirit Technology Solutions Limited
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 32. Key management personnel disclosures
Directors
The following persons were Directors of Spirit Technology Solutions Ltd during the financial year:
Mr James Joughin (Non-Executive Chairman)
Mr Sol Lukatsky (Managing Director)
Mr Mark Dioguardi (Executive Director)
Mr Gregory Ridder (Non-Executive Director)
Ms Inese Kingsmill (Non-Executive Director)
(appointed on 1 July 2020)
Mr Terence Gray (Non-Executive Director)
(resigned on 7 July 2020)
Other key management personnel
The following person also had the authority and responsibility for planning, directing and
controlling the major activities of the Consolidated Entity, directly or indirectly, during the financial
year:
Paul Miller (Chief Financial Officer)
Compensation
The aggregate compensation made to Directors and other members of key management
personnel of the Consolidated Entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2021
$
2020
$
1,487,669
112,502
24,323
660,183
1,371,538
105,450
7,884
467,371
2,284,677 1,952,243
Annual Report 2021
107
64
Spirit Technology Solutions Limited
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 33. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PKF
Melbourne Audit & Assurance Pty Ltd, the auditor of the Company, and its related practices:
Consolidated
2021
$
2020
$
125,000
68,225
90,000
-
24,000
31,500
215,416
10,000
-
43,500
464,141
143,500
Audit and assurance services - PKF Melbourne Audit & Assurance Pty
Ltd
Audit or review of the financial statements
Assurance related services in respect of acquisition date accounting
Other services – PKF Melbourne
Tax compliance services
Tax due diligence services
Corporate advisory due diligence services
Note 34. Contingent liabilities
There were no contingent liabilities at 30 June 2021 and 30 June 2020.
Note 35. Related party transactions
Parent entity
Spirit Technology Solutions Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 38.
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration
report included in the Directors' report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and
previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
108
Annual Report 2021
65
Spirit Technology Solutions Limited
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 36. Legal parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves (Note 29)
Accumulated losses
Total equity
Parent
2021
$'000
2020
$'000
(17,348)
(17,348)
94
94
Parent
2021
$'000
2020
$'000
746
5,115
125,020
48,410
375
1,044
29,616
6,115
112,689
1,187
(18,472)
42,852
567
(1,124)
95,404
42,295
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The bank loan of $10M is secured first over the assets and undertakings of Spirit Technology
Solutions Ltd and its wholly owned subsidiaries.
The parent entity had no other guarantees in relation to the debts of its subsidiaries as at 30 June
2021 and 30 June 2020.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June
2021 and 30 June 2020.
Annual Report 2021
109
66
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 36. Legal parent entity information (continued)
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Consolidated Entity,
as disclosed in note 2, except for the following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and
its receipt may be an indicator of an impairment of the investment.
Note 37. Business combinations
Voice Print Data Group
The Company acquired 100% of Voice Print Data Group ("VPD"), with effective control on 1 July
2020. The acquisition has been accounted for as a Business Combination under AASB 3. VPD
becomes the new Wholesale Business arm for Spirit selling a range of Cloud, Internet and Voice
services via its channel partners.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade receivables
Vendor loan
Inventories
Prepayments
Property, plant and equipment
Right-of-use assets
GST payable
Trade and other payables
Provision for income tax
Employee benefits
Unearned revenue
Finance lease liabilities
Deferred tax liabilities
Net liabilities acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: shares issued by Company as part of consideration
Net cash used
67
Fair value
$'000
1,302
1,216
600
103
143
1,252
934
(136)
(2,007)
(125)
(480)
(2,717)
(934)
(239)
(1,088)
14,338
13,250
13,250
(7,250)
6,000
110
Annual Report 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
i. Consideration transferred
Acquisition-related costs amounting to $226,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$1,216,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
iii. Goodwill
Goodwill of $14,338,000 was primarily related to the Company’s growth expectations through
customer expansion.
The Consolidated Entity operates as one operating segment and goodwill was allocated to the IT&T
cash generating unit as at acquisition date. The goodwill that arose from this business
combination is not deductible for tax purposes.
iv. Contingent consideration
The acquisition of VPD included a contingent consideration element by way of an earn-out
structure in equal proportion based upon EBITDA performance over a 12 month period ended 30
June 2021 (FY21) and the 12 month period ended 30 June 2022 (FY22).
The earnout consideration was split in the proportion of cash (50%) and equity (50%). The earn-out
structure facilitated a scaled achievement against targets for FY21 and FY22 and the contingent
consideration was payable in a range exceeding 100% against the FY21 target and in a range
exceeding 110% of the FY22 target. At the date of acquisition, the Board and management assessed
the probability of achieving the relevant EBITDA performance targets and assessed the likelihood
to be at or below the minimum hurdles and accordingly no contingent consideration was
recognised. Subsequent to acquisition date, the Company and the vendors of VPD signed a
variation to the Share Purchase Agreement dated 21 June 2021, agreeing that there would be no
contingent consideration payable for FY21 or FY22.
v. Contribution to the Consolidated Entity’s results
VPD contributed revenues of $16,714,000 to the Consolidated Entity from the date of the
acquisition to 30 June 2021.
The Consolidated Entity’s business growth generates increased revenue opportunities across the
entire Group's portfolio, also being reflected in VPD's revenue performance.
VPD does not receive any allocations of acquisition costs, corporate overhead, listing or finance
costs, which are all absorbed by the Consolidated Entity’s core operations and accordingly it is
impractical to disclose VPD’s contribution to the Consolidated Entity's profit.
Annual Report 2021
111
68
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Acquisition of Altitude IT
The Company acquired 100% of Ancore Pty Ltd (trading as Altitude IT), with effective control on 1
September 2020. The acquisition has been accounted for on a provisional basis as a Business
Combination under AASB 3. Altitude IT is a Sydney based Managed IT Services Provider with a
diverse base of recurring revenue across the commercial & industrial sectors.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade receivables
Deposits
Inventories
Vendor loan
Property, plant and equipment
Trade and other payables
GST payable
Provision for income tax
Employee entitlements
Net assets acquired
Goodwill
Net fair value loss on remeasurement of financial liabilities
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
230
257
6
6
141
41
(140)
(50)
11
(93)
409
1,711
275
2,395
2,395
(275)
(573)
1,547
i. Consideration transferred
Acquisition-related costs amounting to $37,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$257,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
112
Annual Report 2021
69
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
iii. Goodwill
Goodwill of $1,711,000 was primarily related to the Company’s growth expectations through
customer expansion.
The Consolidated Entity operates as one operating segment and goodwill was allocated to the IT&T
cash generating unit as at acquisition date. The goodwill that arose from this business
combination is not deductible for tax purposes.
iv. Contingent consideration
The acquisition of Altitude IT included a contingent consideration element by way of an earn-out
structure based upon EBITDA performance over a 12 month period ended 30 June 2021 (FY21). The
earnout consideration is to be split in the same proportion of cash (70%) and equity (30%) as the
upfront consideration.
The earn-out structure facilitated a scaled achievement of the FY21 targets whereby the
contingent consideration is payable where FY21 EBITDA exceeds 110% of the agreed target EBITDA.
At the date of acquisition, the Board and management assessed the probability of achieving the
relevant EBITDA performance target and assessed the likelihood to be at or below the minimum
hurdle and accordingly no FY21 contingent consideration had been recognised. Subsequent to the
assessment date of 30 June 2021, the amount of contingent consideration payable where the FY21
EBITDA performance target has been exceeded has been estimated to be $275,000 (classified as
current).
v. Contribution to the Consolidated Entity’s results
Altitude IT contributed revenues of $2,354,000 to the Consolidated Entity from the date of
acquisition to 30 June 2021.
The Consolidated Entity’s business growth generates increased revenue opportunities across the
entire Group's portfolio, also being reflected in Altitude IT's revenue performance.
Altitude IT’s employees have been transferred to Spirit Telecom (Australia) Pty Ltd and the
Company does not receive any allocations of acquisition costs, corporate overhead, listing or
finance costs which are all absorbed by the Consolidated Entity’s core operations and accordingly
it is impractical to disclose Altitude IT's contribution to the Consolidated Entity's profit.
Annual Report 2021
113
70
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Beachhead Group
The Company acquired 100% of Beachhead Group Pty Ltd, with effective control on 1 September
2020. The acquisition has been accounted for on a provisional basis as a Business Combination
under AASB 3. Beachhead Group is a Sydney based Managed IT Services Provider, specialising in
Cloud and Infrastructure deployment to businesses and private schools.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade receivables
Deposit
Vendor loan
Prepayments
Right-of-use assets
Deferred tax asset
Trade payables
GST payables
Deferred revenue
Provision for income tax
Deferred tax liability
Employee entitlements
Make good provision
Lease liabilities
Net assets acquired
Goodwill
Net fair value gain on remeasurement of financial liabilities
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: deferred consideration
Less: contingent consideration
Less: shares issued by Company as consideration
Net cash used
Fair value
$'000
414
670
15
2
8
97
26
(247)
(20)
(142)
(173)
(2)
(99)
(1)
(98)
450
3,025
(267)
3,208
3,208
(1,190)
(64)
(624)
1,330
i. Consideration transferred
Acquisition-related costs amounting to $44,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$670,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
114
Annual Report 2021
71
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
iii. Goodwill
Goodwill of $3,025,000 was primarily related to the Company’s growth expectations through
customer expansion.
The Consolidated Entity operates as one operating segment and goodwill was allocated to the IT&T
cash generating unit as at acquisition date. The goodwill that arose from this business
combination is not deductible for tax purposes.
iv. Deferred consideration
The acquisition of Beachhead Group included a deferred consideration element of $1,190,000 that
is due and payable by 31 August 2021.The deferred consideration is to be split in the same
proportion of cash (65%) and equity (35%) as the upfront consideration.
v. Contingent consideration
The acquisition of Beachhead Group included a contingent consideration element by way of an
earn-out structure based upon EBITDA performance over a 12 month period ended 30 June 2021
(FY21). The earnout consideration is to be split in the same proportion of cash (65%) and equity
(35%) as the upfront consideration.
The earn-out structure facilitates a scaled achievement of the FY21 target whereby the contingent
consideration is payable in a range of 80% - 120% achievement against the FY21 target. At the date
of acquisition, the Board and management assessed the likelihood of achieving the relevant
EBITDA performance targets at the 100% level with $331,000 of contingent consideration
recognised. Subsequent to assessment date of 30 June 2021, the amount of contingent
consideration payable where the FY21 EBITDA performance target has been exceeded has been
estimated to be $64,000 (classified as current).
vi. Contribution to the Consolidated Entity’s results
Beachhead Group contributed revenues of $3,931,000 to the Consolidated Entity from the date of
the acquisition to 30 June 2021.
The Consolidated Entity’s business growth generates increased revenue opportunities across the
entire Group's portfolio, also being reflected in Beachhead Group's revenue performance.
Beachhead Group employees have been transferred to Spirit Telecom (Australia) Pty Ltd and the
Company does not receive any allocations of acquisition costs, corporate overhead, listing or
finance costs which are all absorbed by the Consolidated Entity’s core operations and accordingly
it is impractical to disclose Beachhead Group’s contribution to the Consolidated Entity's profit.
Annual Report 2021
115
72
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Reliance Technology
The Company acquired 100% of Reliance Technology Pty Ltd (“Reliance IT”), with effective control
on 1 September 2020. The acquisition has been accounted for on a provisional basis as a Business
Combination under AASB 3. Reliance IT is a Cloud Managed Services Provider based in Central
NSW and one of the largest providers of IT services in regional NSW.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade and other receivables
Inventories
Right-of-use assets
Trade payables
GST payables
Provision for income tax
Employee entitlements
Lease liabilities
Net assets acquired
Goodwill
Net fair value loss on remeasurement of financial liabilities
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
412
212
11
142
(42)
(67)
(146)
(134)
(142)
246
5,609
188
6,043
6,043
(913)
(1,660)
3,470
i. Consideration transferred
Acquisition-related costs amounting to $44,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$212,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
iii. Goodwill
Goodwill of $5,609,000 was primarily related to the Company’s growth expectations through
customer expansion.
The Consolidated Entity operates as one operating segment and goodwill was allocated to the IT&T
cash generating unit as at acquisition date. The goodwill that arose from this business
combination is not deductible for tax purposes.
73
116
Annual Report 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
iv. Contingent consideration
The acquisition of Reliance IT included a contingent consideration element by way of an earn-out
structure based upon EBITDA performance over a 12 month period ended 30 June 2021 (FY21). The
earnout consideration is split in the same proportion of cash (70%) and equity (30%) as the upfront
consideration.
The earn-out structure facilitates a scaled achievement of the FY21 target whereby the contingent
consideration is payable in a range exceeding 80% of the FY21 target. At the date of acquisition,
the Board and management assessed the likelihood of achieving the relevant EBITDA
performance targets at the 111% level with $725,000 of contingent consideration recognised.
Subsequent to assessment date of 30 June 2021, the amount of contingent consideration payable
where the FY21 EBITDA performance target has been exceeded has been estimated to be $913,000
(classified as current).
v. Contribution to the Consolidated Entity’s results
Reliance IT contributed revenues of $3,963,000 to the Consolidated Entity from the date of the
acquisition to 30 June 2021.
The Consolidated Entity’s business growth generates increased revenue opportunities across the
entire Group's portfolio, also being reflected in Reliance IT's revenue performance.
Reliance IT's employees have been transferred to Spirit Telecom (Australia) Pty Ltd and the
Company does not receive any allocations of acquisition costs, corporate overhead, listing or
finance costs which are all absorbed by the Consolidated Entity’s core operations and accordingly
it is impractical to disclose Reliance IT's contribution to the Consolidated Entity's profit.
Annual Report 2021
117
74
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Intalock Technologies
The Company acquired 100% of Intalock Technologies Pty Ltd (“Intalock”), with effective control on
1 December 2020. The acquisition has been accounted for on a provisional basis as a Business
Combination under AASB 3. Intalock is one of Australia’s leading cyber security services businesses
with a market leading and sophisticated full Security Operations Centre. This acquisition allows
Spirit to cross sell and deliver highly secure bundled Cyber Security Services with Data, Cloud and
Voice.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade and other receivables
Prepayments
Deposits
Plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Trade payables
GST payables
Unearned revenue
Provision for income tax
Employee entitlements
Make good provision
Lease liabilities
Net assets acquired
Goodwill
Net fair value gain on remeasurement of financial liabilities
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: deferred consideration
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
2,575
2,237
143
235
150
733
191
124
(2,194)
(56)
(1,200)
(279)
(275)
(45)
(755)
1,584
17,227
(177)
18,634
18,634
(3,000)
(623)
(2,457)
12,554
i. Consideration transferred
Acquisition-related costs amounting to $190,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
118
Annual Report 2021
75
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$2,237,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
iii. Goodwill
Goodwill of $17,227,000 was primarily related to the Company’s growth expectations through
customer expansion.
The Consolidated Entity operates as one operating segment and goodwill was allocated to the IT&T
cash generating unit as at acquisition date. The goodwill that arose from this business
combination is not deductible for tax purposes.
iv. Deferred consideration
The acquisition of Intalock included a deferred consideration element to be settled by 31 August
2021. The deferred consideration is to be settled 100% in cash capped at $3,000,000, classified as
current as at 30 June 2021.
v. Contingent consideration
The acquisition of Intalock included a contingent consideration element by way of an earn-out
structure based upon EBITDA performance over a 12 month period ended 30 June 2022 (FY22). The
earnout consideration is to be settled 100% in cash.
The FY22 earnout structure facilitates a scaled achievement of the FY22 target whereby the
contingent consideration is payable in a range exceeding 105% of the FY22 Target. At the date of
acquisition, the Board and management assessed the likelihood of achieving the relevant EBITDA
performance targets at the 105% level with $800,000 of contingent consideration recognised.
Subsequent to the assessment date of 30 June 2021, the amount of contingent consideration
payable where the FY22 EBITDA is likely to exceed the performance target has been estimated to
be $623,000 (classified as non-current).
Any contingent consideration payable where the performance targets for FY22 are exceeded is
capped to an amount whereby the total purchase price including the upfront consideration, the
deferred consideration and the contingent consideration cannot exceed $22.5M.
vi. Contribution to the Consolidated Entity’s results
Intalock contributed revenues of $13,369,000 to the Consolidated Entity from the date of the
acquisition to 30 June 2021.
Intalock does not receive any allocations of acquisition costs, corporate overhead, listing or finance
costs which are all absorbed by the Consolidated Entity’s core operations and accordingly it is
impractical to disclose Intalock's contribution to the Consolidated Entity's profit.
Annual Report 2021
119
76
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Acquisition of Nexgen
The Company acquired 100% of Nexgen Australia Group Pty Ltd (“Nexgen"), with effective control
on 1 April 2021. The acquisition has been accounted for on a provisional basis as a Business
Combination under AASB 3.
Nexgen sells a range of high growth Data, Security & Voice products. The acquisition brings over
5,000 new B2B clients and one hundred new sales people to Spirit to drive organic growth,
complementary products and scale.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade and other receivables
Inventories
Accrued revenue
Deposits
Property, plant and equipment
Deferred tax assets
Right-of-use assets
Brand names
Customer Relationships
Other intangible assets
Trade and other payables
GST payables
Provision for income tax
Employee benefits
Lease liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: deferred consideration
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
20
271
681
1,713
148
567
382
1,567
4,105
11,942
1,145
(2,934)
(106)
(167)
(730)
(1,567)
17,037
34,203
51,240
51,240
(11,137)
(2,980)
(12,164)
24,959
i. Consideration transferred
Acquisition-related costs amounting to $423,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
120
Annual Report 2021
77
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$271,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
iii. Goodwill
Goodwill of $34,203,000 was primarily related to the Company’s growth expectations through
customer expansion.
The Consolidated Entity operates as one operating segment and goodwill was allocated to the IT&T
cash generating unit as at acquisition date. The goodwill that arose from this business
combination is not deductible for tax purposes.
iv. Deferred consideration
The acquisition of Nexgen included a deferred consideration of $11,137,000 to be settled in the
second half of 2021. The net debt working capital component of the deferred consideration
totalling $2,884,000 estimated at completion is to be settled 100% in cash. The remaining
component of deferred consideration totalling $8,253,000 is to be settled 30% in shares of the
Company and 70% in cash and is capped at $10,000,000, classified as current as at 30 June 2021.
v. Contingent consideration
The acquisition of Nexgen included a contingent consideration element by way of an earn-out
structure based upon Milestone Incentives available based on performance targets for FY22 and
FY23. The earnout consideration is to be settled 30% in shares of the Company and 70% in cash.
The earnout structure facilitates a scaled achievement of the FY22 and FY23 targets whereby the
contingent consideration is payable based on the achievement of the relevant EBTDA
performance targets. At the date of acquisition, the Board and management assessed the
likelihood of achieving the relevant EBITDA performance targets and accordingly recognised total
contingent consideration of $2,980,000, all of which is classified as non-current.
Any contingent consideration payable is not capped.
iv. Contribution to the Consolidated Entity’s results
Nexgen contributed revenues of $10,386,000 to the Consolidated Entity from the date of the
acquisition to 30 June 2021.
Nexgen does not receive any allocations of acquisition costs, corporate overhead, listing or finance
costs which are all absorbed by the Consolidated Entity’s core operations and accordingly it is
impractical to disclose Nexgen's contribution to the Consolidated Entity's profit.
Annual Report 2021
121
78
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Acquisition of Arinda IT during the previous financial year
The Company acquired 100% of Bigscreensound Pty Ltd, trading as Arinda IT, with effective control
on 1 July 2019. The acquisition has been accounted as a Business Combination under AASB 3.
Arinda IT was a long-term partner of Spirit’s having worked together on mutual customers and the
acquisition was undertaken by the Company to expand its product offering and the flagship entry
into the Managed Service Provider sector.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade receivables
Prepayments
Deposits
Property, plant and equipment
Trade and other payables
Provision for income tax
Employee benefits
Unearned revenue
Finance leases
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
163
415
129
13
33
(355)
(40)
(66)
(171)
(27)
94
2,732
2,826
2,826
(607)
2,219
i. Consideration transferred
Acquisition-related costs amounting to $41,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$415,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
iii. Goodwill
Goodwill of $2,732,000 was primarily related to the Company’s growth expectations through
customer expansion. The consolidated entity operates as one operating segment and goodwill
was allocated to the IT&T cash generating unit as at acquisition date. The goodwill that arose from
this business combination is not deductible for tax purposes.
122
Annual Report 2021
79
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
iv. Contribution to the Consolidated Entity’s results
Arinda IT’s operations were fully absorbed into the Consolidated Entity during the course of the
2020 financial year. Accordingly, separate disclosure of revenues and EBITDA directly attributable
to this operation as a stand alone entity is not achievable.
Acquisition of Phoenix Austec Group Pty Ltd during the previous financial year
The Company acquired 100% of Phoenix Austec Group Pty Ltd, trading as 'Phoenix Austec'
(Phoenix), with effective control on 1 July 2019. The acquisition has been accounted as a Business
Combination under AASB 3.
Phoenix had been operating since 2007 providing Small-Medium Enterprise's (SME) with
managed IT support, IT security and consulting services. The acquisition was undertaken by the
Company to expand and strengthen Spirit's entry into the Managed Service Provider sector for
SMEs.
The fair values of the identifiable net assets acquired are detailed below:
Cash and cash equivalents
Trade receivables
Trade and other payables
Provision for income tax
Employee benefits
Net liabilities acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
171
75
(220)
(47)
(67)
(88)
1,634
1,546
1,546
(320)
1,226
i. Consideration transferred
Acquisition-related costs amounting to $39,000 are not included as part of the consideration for
the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$75,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
iii. Goodwill
Goodwill of $1,634,000 was primarily related to the Company’s growth expectations through
customer expansion. The consolidated entity operates as one operating segment and goodwill
was allocated to the IT&T cash generating unit as at acquisition date. The goodwill that arose from
this business combination is not deductible for tax purposes.
80
Annual Report 2021
123
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
iv. Contribution to the Consolidated Entity’s results
Phoenix’s operations were fully absorbed into the Consolidated Entity during the course of the
2020 financial year. Accordingly, separate disclosure of revenues and EBITDA directly attributable
to this operation as a stand alone entity is not achievable.
Acquisition of Cloud Business Technology during the previous financial year
The Company acquired the business assets and liabilities of Cloud Business Technology ("Cloud
BT"), with effective control on 1 February 2020. The acquisition has been accounted for as a
Business Combination under AASB 3.
This acquisition provides growth and expansion of Internet, Cloud and Managed IT services in the
Sydney market.
Details of the acquisition are as follows:
Employee benefits
Net liabilities acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
(26)
(26)
690
664
664
(130)
534
i. Consideration transferred
Acquisition-related legal costs amounting to $15,000 are not included as part of the consideration
for the acquisition and have been recognised as transaction costs in the profit and loss statement.
ii. Identifiable net assets
As of the acquisition date, the Company acquired only the employee benefits.
iii. Goodwill
Goodwill of $690,000 was primarily related to the Company’s growth expectations through
customer expansion. The consolidated entity operates as one operating segment and goodwill
was allocated to the IT&T cash generating unit as at acquisition date. The goodwill that arose from
this business combination is not deductible for tax purposes.
iv. Contribution to the Consolidated Entity’s results
Cloud BT’s operations were fully absorbed into the Consolidated Entity from the date of acquisition.
Accordingly, separate disclosure of revenues and EBITDA directly attributable to this operation as
a stand alone operation is not achievable.
124
Annual Report 2021
81
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
Acquisition of Trident & Neptune Group during the previous financial year
The Company acquired 100% of Trident Computer Services Pty Ltd and Neptune Managed Services
Pty Ltd referred to as ("Trident Technology Solutions or TTS’’), with effective control on 1 February
2020. The acquisition has been accounted as a Business Combination under AASB 3.
TTS is an established Managed IT services and security business. This highly strategic move created
a new business division, Trident Technology Solutions. Spirit’s new division will focus on delivering
custom designed cloud-based IT & Internet solutions for high growth verticals such as Schools,
Hospitals, Aged Care and Medium sized businesses. These types of clients are moving through a
major generational technology change as they migrate to the cloud and require high speed
Internet and specialised IT services which Spirit can now provide nationally.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Other receivables
Prepayments
Deposits
Inventories
Property, plant and equipment
Trade and other payables
GST payables
Unearned revenue
Provision for income tax
Employee benefits
Net assets acquired
Goodwill
Net fair value loss on remeasurement of financial liabilities
Acquisition-date fair value of the total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
104
7,470
5
64
45
900
318
(7,122)
(414)
(619)
(138)
(544)
69
6,573
149
6,791
6,791
(2,144)
(1,222)
3,425
i. Consideration transferred
Acquisition-related legal costs amounting to $58,000 are not included as part of the consideration
for the acquisition and have been recognised as transaction costs in the profit and loss statement.
Annual Report 2021
125
82
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 37. Business combinations (continued)
ii. Identifiable net assets
The fair value of the trade receivables acquired as part of the business combination amounted to
$7,470,000. As of the acquisition date, the Company’s best estimate is that all cash will be collected.
The fair value of the acquired identifiable net assets decreased by $49,000 following completion of
the acquired entity’s tax returns.
iii. Goodwill
Goodwill of $6,573,000 was primarily related to the Company’s growth expectations through
customer expansion. The consolidated entity operates as one operating segment and goodwill
was allocated to the IT&T cash generating unit as at acquisition date. The goodwill that arose from
this business combination is not deductible for tax purposes.
v. Contingent consideration
The acquisition of TTS included a contingent consideration element by way of an earn-out
structure based upon EBITDA performance over a 12 month period ended ended 30 November
2020 (Target 1) and a subsequent period ended 30 June 2022 (Target 2).
The earnout consideration is split in the proportion of cash (75%) and equity (25%). The earn-out
structure facilitates a scaled achievement against Target 1 and Target 2. The contingent
consideration is payable in the range of 80% - 120% achievement against Target 1 and a range of
90% - 115% achievement against Target 2. At the date of acquisition, the Board and management
assessed the likelihood of achieving the relevant EBITDA performance targets at the 100% level for
both Target 1 and Target 2 with $997,500 of contingent consideration recognised for Target 1 and
$997,500 recognised for Target 2.
Subsequent to the acquisition date, the amount of contingent consideration paid where the
Target 1 EBITDA performance was exceeded amounted $997,251. The amount of contingent
consideration payable where the Target 2 EBITDA performance target has been exceeded has
been calculated to be $1,147,125 (classified as current).
v. Contribution to the Consolidated Entity’s results
TTS contributed revenues of $9,857,000 to the Consolidated Entity from the date of the acquisition
to 30 June 2020.
TTS does not receive any allocations of acquisition costs, corporate overhead, listing, finance, or
other overhead costs which is all absorbed by Spirit’s core operations. Spirit’s business growth
generates increased revenue opportunities across the entire Spirit network which are also
reflected in the revenue performance of TTS.
126
Annual Report 2021
83
Spirit Technology Solutions Limited
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 38. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in note 2:
Name
Ownership interest
Principal place of business
/
Country of incorporation
2021
%
2020
%
Spirit Telecom (Australia) Pty Ltd
Phone Name Marketing Australia Pty Ltd
World Without Wires Pty Ltd
Anttel Communications Group Pty Ltd
Ignite Broadband Pty Ltd
LinkOne Pty Ltd
Wells Research Pty Ltd
Building Connect Pty Ltd
Bigscreensound Pty Ltd, trading as Arinda
IT
Phoenix Austec Group Pty Ltd
Trident Computer Services Pty Ltd
Neptune Managed Services Pty Ltd
VPDA Group Holdings Limited
Voice Print and Data Australia Pty Ltd
Live Call Pty Ltd
Now IT Solutions Pty Ltd
Ancore Pty Ltd, trading as Altitude IT
Beachhead Group Pty Ltd
Reliance Technology Pty Ltd
Intalock Technologies Pty Ltd
Nexgen Capital Pty Ltd
Nexgen Investment Group Pty Ltd
Business Telecom Australia Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
For the purposes of this note the parent entity has been deemed as the legal parent entity Spirit
Technology Solutions Ltd.
Annual Report 2021
127
84
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
Notes to the financial statements
30 June 2021
Note 39. Events after the reporting period
The Consolidated Entity navigated the business disruptions related to COVID-19 during the
financial year ended 30 June 2021 and was not materially impacted. The Consolidated Entity did
not receive any Government subsidies by way of Job Keeper.
In July and August 2021, the Australian economy has experienced disruption related to COVID-19
triggered State wide lockdowns across all major markets. These lockdowns have caused disruption
to the broader business community and Spirit’s operations have not been immune. The Company
continues to manage its operations to navigate through the uncertainty and impacts that these
lockdowns create and more broadly assist its customer base respond and adapt.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or
may significantly affect the Consolidated Entity's operations, the results of those operations, or the
Consolidated Entity's state of affairs in future financial years.
Note 40. Reconciliation of profit/(loss) after income tax to net cash from operating activities
Profit/(loss) after income tax (expense)/benefit for the year
1,157
(1,515)
Consolidated
2021
$'000
2020
$'000
Adjustments for:
Depreciation and amortisation
Net gain on disposal of property, plant and equipment
Share-based payments
Business acquisition and integration investing costs
Net fair value loss on remeasurement of financial liabilities
Capital raise fees tax impact
Interest and other finance costs paid
Change in operating assets and liabilities:
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in inventories
(Increase)/Decrease in other current assets
(Increase)/Decrease in contract assets
(Increase) in deferred tax assets (net)
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in employee benefit
Other
Net cash from operating activities
6,666
(529)
620
2,100
168
-
137
3,855
(2)
479
640
-
190
85
(3,481)
3,998
(827)
950
(732) 174
-
(728)
(3,473)
(128)
(35)
(1,687)
(138)
1,213
378
-
5,045
4,490
128
Annual Report 2021
85
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
30 June 2021
Note 41. Earnings per share
Weighted average number of ordinary shares used in calculating basic
earnings per share
554,674,861
357,066,698
Weighted average number of ordinary shares used in calculating diluted
earnings per share
554,674,861
357,066,698
Number Number
Profit/(loss) attributable to
the owners of Spirit
Technology Solutions Ltd
Basic earnings per share
Diluted earnings per share
Note 42. Share-based payments
2021
Total
$'000
2020
Total
$'000
1,157
(1,515)
2021
Total
Cents
2020
Total
Cents
0.21
0.21
(0.42)
(0.42)
During the financial year ended 30 June 2021, 2,038,800 Performance Rights were granted by the
Company to key management personnel and certain employees with a vesting period ending 30
June 2023, of which 1,019,400 Performance Rights have a Total Shareholder Return ("TSR")
performance hurdle and 1,019,400 have a performance hurdle linked to return on invested capital
("ROIC'").
Furthermore, during the financial year ended 30 June 2021, 814,272 Performance Rights were
granted to certain employees with a vesting period ending 1 July 2023 with a performance hurdle
linked to attaining a share price of $0.30 at any time prior to 1 July 2023, which has already been
achieved, and continued employment up until 1 July 2023.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
independently determined using either the Binomial or Black-Scholes option pricing model that
takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Consolidated Entity receives the services that entitle the employees to
receive payment. No account is taken of any other vesting conditions.
86
Annual Report 2021
129
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 42. Share-based payments (continued)
Set out below are summaries of options granted under the Spirit Technology Solutions
2020
Ltd Long Term Incentive Plan:
Grant date
Expiry date
Balance at Granted Exercised Forfeited Balance at
the start
2021
of
Grant date Expiry date Exercise Balance at Granted Exercised Expired/ Balance at
the year
forfeited/ the end of
price
the end of
the year
24/11/2016
12/09/2018
14/05/2019 01/07/2023
20/11/2018
14/05/2019 01/07/2023
18/02/2019
14/05/2019 01/07/2023
22/04/2020
24/11/2019
12/09/2021
20/11/2020
18/02/2023
22/04/2023
770,000
1,239,598
512,820
520,000
-
3,042,418
$0.150 6,000,000
$0.180 6,000,000
$0.215 6,000,000
18,000,000
-
-
-
-
-
-
-
653,943
-
653,943
other
(332,084)
-
-
-
-
the year
(437,916)
(992,539)
- 6,000,000
-
-
- 6,000,000
-
-
- 6,000,000
-
-
- 18,000,000
-
(332,084) (1,430,455)
-
247,059
512,820
520,000
653,943
1,933,822
the start of
the year
The weighted average remaining contractual life of Performance Rights outstanding at the end of
2020
the financial year was 1.98 years (2020: 1.92 years).
Grant date
For the Performance Rights granted during the current financial year, the valuation model inputs
used to determine the fair value at the grant date, are as follows:
Expired/
Balance at
forfeited/ the end of
Balance at
the start of
the year
Exercise
price
Expiry
date
the year
Exercised
Granted
other
date
Expiry date
$0.190 2,500,000
$0.150 6,000,000
$0.180 6,000,000
$0.215 6,000,000
20,500,000
Grant date
24/11/2016 24/11/2019
14/05/2019 01/07/2023
14/05/2019 01/07/2023
14/05/2019 01/07/2023
13/10/2020
13/10/2020
13/10/2020
Weighted average exercise price
11/06/2021
11/06/2021
The weighted average remaining contractual life of options outstanding at the end of the
financial year was 2 years (2020: 3 years).
Share price Expected Dividend Risk-free Fair value
- (2,500,000)
at grant
at grant
-
-
volatility
yield
-
-
-
-
60.00%
- (2,500,000)
60.00%
60.00%
-
60.00%
60.00%
-
-
interest
- 6,000,000
rate
- 6,000,000
- 6,000,000
0.15%
- 18,000,000
0.15%
0.15%
0.09%
0.09%
12/11/2023
12/11/2023
12/11/2023
11/06/2024
11/06/2024
$0.370
$0.370
$0.370
$0.305
$0.305
$0.3417
$0.3661
$0.3700
$0.1815
$0.2800
$0.190
-
-
-
-
-
$0.183
$0.182
date
-
Consolidated
2021
$
2020
$
Set out below are summaries of Performance Rights granted under the plan:
2021
Share-based payments expense reconciliation
Issue of share options to Directors and employees under incentive option
Grant date
scheme
Issue of Performance Rights to Directors and employees under
Performance Rights plan
Issue of shares to employees
Balance
at
the start
of
the year
Expiry date
Exercised
Granted
Forfeited
Balance
at
396
the end
of
224
the year
-
12/09/2018
Total share-based payments expense reconciliation
20/11/2018
18/02/2019
22/04/2020
13/10/2020
11/06/2021
12/09/2021
20/11/2020
18/02/2023
22/04/2023
12/11/2023
11/06/2024
247,059
512,820
520,000
653,943
-
-
-
-
-
-
2,232,387
620,685
1,933,822 2,853,072
-
(189,320) (323,500)
- 247,059
620
-
- 520,000
- 653,943
- 2,232,387
- 620,685
(189,320) (323,500) 4,274,074
-
-
-
-
397
61
20
478
130
Annual Report 2021
88
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Notes to the financial statements
30 June 2021
Note 42. Share-based payments (continued)
2020
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
30 June 2021
Note 42. Share-based payments (continued)
Grant date
Expiry date
Balance at Granted Exercised Forfeited Balance at
24/11/2016
12/09/2018
20/11/2018
18/02/2019
22/04/2020
24/11/2019
12/09/2021
20/11/2020
18/02/2023
22/04/2023
the start
of
the year
770,000
1,239,598
512,820
520,000
-
-
-
-
-
653,943
the end of
the year
-
247,059
512,820
520,000
653,943
-
-
-
(332,084)
(437,916)
(992,539)
-
-
-
-
3,042,418
653,943
(332,084) (1,430,455)
1,933,822
2020
Grant date
Expiry date
Balance at Granted Exercised Forfeited Balance at
the start
24/11/2016
12/09/2018
20/11/2018
18/02/2019
22/04/2020
24/11/2019
12/09/2021
20/11/2020
18/02/2023
22/04/2023
of
the year
770,000
1,239,598
512,820
520,000
-
3,042,418
the end of
the year
-
-
-
-
653,943
653,943
(332,084)
-
-
-
-
(437,916)
(992,539)
-
-
-
(332,084) (1,430,455)
-
247,059
512,820
520,000
653,943
1,933,822
The weighted average remaining contractual life of Performance Rights outstanding at the end of
the financial year was 1.98 years (2020: 1.92 years).
The weighted average remaining contractual life of Performance Rights outstanding at the end of
the financial year was 1.98 years (2020: 1.92 years).
For the Performance Rights granted during the current financial year, the valuation model inputs
used to determine the fair value at the grant date, are as follows:
For the Performance Rights granted during the current financial year, the valuation model inputs
used to determine the fair value at the grant date, are as follows:
Grant date
Expiry date
Share price Expected Dividend Risk-free Fair value
Grant date
Expiry date
at grant
interest
at grant
date
volatility
yield
rate
date
Share price Expected Dividend Risk-free Fair value
at grant
at grant
interest
rate
date
date
volatility
yield
13/10/2020
13/10/2020
13/10/2020
11/06/2021
11/06/2021
12/11/2023
12/11/2023
12/11/2023
11/06/2024
11/06/2024
$0.370
$0.370
$0.370
$0.305
$0.305
60.00%
60.00%
60.00%
60.00%
60.00%
-
-
-
-
-
0.15%
0.15%
0.15%
0.09%
0.09%
$0.3417
$0.3661
$0.3700
$0.1815
$0.2800
13/10/2020
13/10/2020
13/10/2020
11/06/2021
11/06/2021
12/11/2023
12/11/2023
12/11/2023
11/06/2024
11/06/2024
$0.370
$0.370
$0.370
$0.305
$0.305
60.00%
60.00%
60.00%
60.00%
60.00%
-
-
-
-
-
0.15%
0.15%
0.15%
0.09%
0.09%
$0.3417
$0.3661
$0.3700
$0.1815
$0.2800
Share-based payments expense reconciliation
Issue of share options to Directors and employees under incentive option
Issue of Performance Rights to Directors and employees under
scheme
Performance Rights plan
Issue of shares to employees
Share-based payments expense reconciliation
Issue of share options to Directors and employees under incentive option
scheme
Issue of Performance Rights to Directors and employees under
Performance Rights plan
Issue of shares to employees
Total share-based payments expense reconciliation
620
478
Total share-based payments expense reconciliation
Consolidated
2021
$
2020
$
396
397
224
-
61
20
Consolidated
2021
$
2020
$
396
397
224
-
61
20
620
478
88
88
Annual Report 2021
131
Directors' Declaration
132
Annual Report 2021
Spirit Technology Solutions Ltd
(Formerly known as Spirit Telecom Limited)
Directors' declaration
30 June 2021
D I R E C T O R S' D E C L A R A T I O N
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
the attached financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 2
to the financial statements;
the attached financial statements and notes give a true and fair view of the Consolidated
Entity's financial position as at 30 June 2021 and of its performance for the financial year ended
on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act
2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the Directors
___________________________
James Joughin
Non-Executive Chairman
24 August 2021
Annual Report 2021
133
89
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
Report on the Financial Report
Auditor’s Opinion
Report on the Financial Report
We have audited the accompanying financial report of Spirit Technology Solutions Ltd (the Company) and its controlled
Auditor’s Opinion
entities (collectively 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, the consolidated statement of changes
We have audited the accompanying financial report of Spirit Technology Solutions Ltd (the Company) and its controlled
in equity, and the consolidated statement of cash flows for the year then ended, notes comprising a summary of
entities (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021,
significant accounting policies and other explanatory information, and the Directors’ Declaration of the Company and
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes
of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the
in equity, and the consolidated statement of cash flows for the year then ended, notes comprising a summary of
financial year.
significant accounting policies and other explanatory information, and the Directors’ Declaration of the Company and
of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the
In our opinion, the financial report of Spirit Technology Solutions Ltd is in accordance with the Corporations Act 2001,
financial year.
including:
including:
the year ended on that date; and
Basis for Opinion
the year ended on that date; and
In our opinion, the financial report of Spirit Technology Solutions Ltd is in accordance with the Corporations Act 2001,
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
Basis for Opinion
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.
2001 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
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
2001 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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Key Audit Matters
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. For each
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
matter below, our description of how our audit addressed the matter is provided in that context.
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. For each
Key audit matter – Business combinations
matter below, our description of how our audit addressed the matter is provided in that context.
How our audit addressed this matter
As described in note 37, the Company entered into
Key audit matter – Business combinations
agreements to acquire 100% of the equity of the following
entities: Voice Print Data Group (‘VPD’) on 1 July 2020,
As described in note 37, the Company entered into
Ancore Pty Ltd (‘Altitude IT’), Beachhead Group Pty Ltd
agreements to acquire 100% of the equity of the following
(‘Beachhead’), Reliance Technology Pty Ltd (‘Reliance IT’),
entities: Voice Print Data Group (‘VPD’) on 1 July 2020,
each on 1 September 2020, Intalock Technologies Pty Ltd
Ancore Pty Ltd (‘Altitude IT’), Beachhead Group Pty Ltd
(‘Intalock’) on 1 December 2020, and Nexgen Investment
(‘Beachhead’), Reliance Technology Pty Ltd (‘Reliance IT’),
Group Pty Ltd (‘Nexgen’) on 1 April 2021.
each on 1 September 2020, Intalock Technologies Pty Ltd
(‘Intalock’) on 1 December 2020, and Nexgen Investment
The acquisitions were accounted in accordance with AASB
Group Pty Ltd (‘Nexgen’) on 1 April 2021.
3 Business Combinations.
The acquisitions were accounted in accordance with AASB
The acquisition-date fair value of the total consideration
3 Business Combinations.
transferred in respect of each acquisition amounted to:
The acquisition-date fair value of the total consideration
$’000
transferred in respect of each acquisition amounted to:
• VPD
• Altitude IT
• Beachhead
• VPD
• Reliance IT
• Altitude IT
•
• Beachhead
Intalock
• Nexgen
• Reliance IT
•
Intalock
• Nexgen
13,250
$’000
2,395
13,250
3,208
6,043
2,395
18,634
3,208
51,240
6,043
18,634
51,240
Our procedures included, but were not limited to, the
How our audit addressed this matter
following:
Our procedures included, but were not limited to, the
evaluating the Group’s accounting treatment against
•
following:
the requirements of AASB 3, key transaction
agreements, our understanding of each business
evaluating the Group’s accounting treatment against
acquired and its industry;
the requirements of AASB 3, key transaction
agreements, our understanding of each business
assessing the methodology applied to recognise the
acquired and its industry;
fair value of identifiable assets and liabilities;
assessing the methodology applied to recognise the
validating inputs of the components of the business
fair value of identifiable assets and liabilities;
to underlying
combinations
support
including
settlement contracts;
validating inputs of the components of the business
combinations
assessing Management’s determination of the point at
to underlying
including
support
settlement contracts;
which control was gained of each acquiree;
assessing Management’s determination of the point at
calculation of
contingent
assessing
the
the
which control was gained of each acquiree;
consideration and its accuracy in accordance with the
contractual arrangements and relevant accounting
calculation of
contingent
assessing
the
the
standards;
consideration and its accuracy in accordance with the
contractual arrangements and relevant accounting
reviewing the accounting entries associated with the
standards;
business combinations; and
reviewing the accounting entries associated with the
business combinations; and
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Liability limited by a scheme approved under Professional Standards Legislation
Level 12, 440 Collins Street, Melbourne, Victoria 3000
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
•
•
•
•
•
•
•
•
•
•
•
84
84
Independent
Auditor’s Report
134
Annual Report 2021
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
the year ended on that date; and
Report on the Financial Report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SPIRIT TECHNOLOGY SOLUTIONS LTD
Auditor’s Opinion
Report on the Financial Report
We have audited the accompanying financial report of Spirit Technology Solutions Ltd (the Company) and its controlled
Auditor’s Opinion
entities (collectively 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, the consolidated statement of changes
We have audited the accompanying financial report of Spirit Technology Solutions Ltd (the Company) and its controlled
in equity, and the consolidated statement of cash flows for the year then ended, notes comprising a summary of
entities (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021,
significant accounting policies and other explanatory information, and the Directors’ Declaration of the Company and
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes
of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the
in equity, and the consolidated statement of cash flows for the year then ended, notes comprising a summary of
financial year.
significant accounting policies and other explanatory information, and the Directors’ Declaration of the Company and
of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the
In our opinion, the financial report of Spirit Technology Solutions Ltd is in accordance with the Corporations Act 2001,
financial year.
including:
In our opinion, the financial report of Spirit Technology Solutions Ltd is in accordance with the Corporations Act 2001,
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for
including:
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for
Basis for Opinion
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
Basis for Opinion
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.
2001 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
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
2001 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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matters
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Key Audit Matters
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. For each
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
matter below, our description of how our audit addressed the matter is provided in that context.
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. For each
How our audit addressed this matter
Key audit matter – Business combinations
matter below, our description of how our audit addressed the matter is provided in that context.
the year ended on that date; and
As described in note 37, the Company entered into
Key audit matter – Business combinations
agreements to acquire 100% of the equity of the following
entities: Voice Print Data Group (‘VPD’) on 1 July 2020,
As described in note 37, the Company entered into
Ancore Pty Ltd (‘Altitude IT’), Beachhead Group Pty Ltd
agreements to acquire 100% of the equity of the following
(‘Beachhead’), Reliance Technology Pty Ltd (‘Reliance IT’),
entities: Voice Print Data Group (‘VPD’) on 1 July 2020,
each on 1 September 2020, Intalock Technologies Pty Ltd
Ancore Pty Ltd (‘Altitude IT’), Beachhead Group Pty Ltd
(‘Intalock’) on 1 December 2020, and Nexgen Investment
(‘Beachhead’), Reliance Technology Pty Ltd (‘Reliance IT’),
Group Pty Ltd (‘Nexgen’) on 1 April 2021.
each on 1 September 2020, Intalock Technologies Pty Ltd
(‘Intalock’) on 1 December 2020, and Nexgen Investment
The acquisitions were accounted in accordance with AASB
Group Pty Ltd (‘Nexgen’) on 1 April 2021.
3 Business Combinations.
The acquisitions were accounted in accordance with AASB
The acquisition-date fair value of the total consideration
3 Business Combinations.
transferred in respect of each acquisition amounted to:
The acquisition-date fair value of the total consideration
transferred in respect of each acquisition amounted to:
• VPD
• Altitude IT
• Beachhead
• VPD
• Reliance IT
• Altitude IT
•
• Beachhead
Intalock
• Nexgen
• Reliance IT
•
Intalock
• Nexgen
$’000
13,250
$’000
2,395
3,208
13,250
6,043
2,395
18,634
3,208
51,240
6,043
18,634
51,240
•
•
•
Our procedures included, but were not limited to, the
How our audit addressed this matter
following:
Our procedures included, but were not limited to, the
evaluating the Group’s accounting treatment against
•
following:
the requirements of AASB 3, key transaction
agreements, our understanding of each business
evaluating the Group’s accounting treatment against
•
acquired and its industry;
the requirements of AASB 3, key transaction
agreements, our understanding of each business
assessing the methodology applied to recognise the
acquired and its industry;
fair value of identifiable assets and liabilities;
assessing the methodology applied to recognise the
validating inputs of the components of the business
fair value of identifiable assets and liabilities;
including
combinations
settlement contracts;
validating inputs of the components of the business
combinations
including
support
assessing Management’s determination of the point at
settlement contracts;
which control was gained of each acquiree;
assessing Management’s determination of the point at
contingent
calculation of
assessing
which control was gained of each acquiree;
consideration and its accuracy in accordance with the
contractual arrangements and relevant accounting
contingent
calculation of
assessing
standards;
consideration and its accuracy in accordance with the
contractual arrangements and relevant accounting
reviewing the accounting entries associated with the
standards;
business combinations; and
reviewing the accounting entries associated with the
business combinations; and
to underlying
to underlying
support
the
the
the
the
•
•
•
•
•
•
•
84
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Liability limited by a scheme approved under Professional Standards Legislation
Level 12, 440 Collins Street, Melbourne, Victoria 3000
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
84
Annual Report 2021
135
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
Key audit matter – Business combinations (continued)
How our audit addressed this matter (continued)
Significant judgements were formed by Management in
valuing the acquired identifiable assets and allocation to
goodwill. Based on this we have considered resultant
business combinations to be a Key Audit Matter.
•
reviewing the related financial statement disclosures
for the acquisitions for consistency with the relevant
financial reporting standards.
Key audit matter – Impairment of goodwill and
indefinite life intangibles
How our audit addressed this matter
As at 30 June 2021, the carrying value of goodwill and
indefinite life intangibles totalled $104,192,000 (2020:
$23,974,000), as disclosed in note 17 of the financial
report. The accounting policy in respect of these assets is
outlined in note 2 Intangibles.
An annual impairment test for goodwill and other
indefinite life intangibles is required under AASB 136
Impairment of Assets. Management’s testing has been
performed using a discounted cash
flow model
(Impairment Model) to estimate the value-in-use of the
Cash Generating Unit (CGU) to which the intangible assets
have been allocated.
The evaluation of the recoverable amount requires the
Group to exercise significant judgement in determining
key assumptions, which include:
•
•
•
The outcome of the impairment assessment could vary if
different assumptions were applied. As a result, the
evaluation of the recoverable amount of intangibles is an
area of
significant Management estimation and
judgement, and a Key Audit Matter.
5-year cash flow forecast;
growth rate and terminal growth factor; and
discount rate.
Our procedures included, but were not limited to, assessing
and challenging:
•
•
•
•
•
•
the appropriateness of Management’s determination
of the CGU to which goodwill and indefinite life
intangibles are allocated;
the application of an indefinite useful life to these
intangible assets;
the reasonableness of the financial year 2022 budget
approved by the Directors, comparing to current
actual results, and considering trends, strategies and
outlooks;
the testing of inputs used in the Impairment Model,
including the approved budget;
the determination of the discount rate applied in the
Impairment Model, comparing to available industry
data;
the short to medium term growth rates applied in the
forecast cash flow, considering historical results and
available industry data;
the arithmetic accuracy of the Impairment Model;
•
• Management’s sensitivity analysis around the key
drivers of the cash flow projections, to consider the
likelihood of such movements occurring sufficient to
give rise to an impairment; and
•
the appropriateness of the disclosures including those
relating to sensitivities in assumptions used in note 17.
Key audit matter – Revenue recognition
How our audit addressed this matter
The Group’s sales revenue amounted to $102,786,000
during the year (2020: $34,429,000). Note 2 Revenue
Recognition describes the following accounting policies
applicable to distinct revenue streams in accordance with
AASB 15 Revenue from Contracts with Customers:
•
Recurring revenue - Internet access, equipment
rentals, line rentals and managed IT services are
recognised in the period in which the service is
provided. Where income for services is invoiced in
is recorded as unearned
advance, the amount
income and recognition is delayed until the service
has been provided.
• Non-recurring revenue - Call charges, hardware sales
and set-up charges are recognised in the period in
which the services or goods are delivered.
Our procedures included, but were not limited to, the
following:
•
assessing Management’s alignment of the Group
accounting policy with the requirements of AASB 15
and application of the policy to the revenue
recognition processes, focusing on key areas of risk in
respect of Management’s determination of:
-
-
-
-
assessing
including
implementation of Group processes to acquired
businesses from the date of acquisition;
performance obligations
recognition at point of time or over time
significant judgements and estimates, and
the impacts of business combinations;
the design of
controls,
•
136
Annual Report 2021
85
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
Key audit matter – Revenue recognition (continued)
How our audit addressed this matter (continued)
The recognition of revenue and associated unearned
revenue is considered a Key Audit Matter due to the
varied timing of revenue recognition relative to the
different revenue streams, consideration of business
combinations, and the relative complexity of processes
supporting the accounting for each.
•
testing the consistent operation of the processes
designed to account for the recognition of revenue
and related costs of sale, against the design of the
Group’s accounting policies, using the following
techniques:
-
the
for a sample of contracts across each revenue
stream, evaluating the contracts and agreeing
recognised revenue to the records accumulated
as inputs to the financial statements, while also
assessing the timing of revenue recognition
against
satisfaction of performance
obligations, whether related to product delivery
or period of service provision,
assessing the accuracy of revenue and related
costs cut off, the accuracy of accrued revenue,
and completeness of deferred revenue,
utilising analytical
to assess
reasonableness of tested revenue streams.
review
the
-
-
Other Information
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, accordingly, we do not express an audit
opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the other information and in doing so,
we 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 information, we are
required to report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the 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.
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 and 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 Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individual or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may
intentional omissions,
misrepresentations, or the override of internal control.
involve collusion, forgery,
Annual Report 2021
137
86.
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and other
related disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the group financial report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Auditor’s Opinion
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of the Company for the year ended 30 June 2021, complies with section 300A
of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
PKF
Melbourne, 24 August 2021
Steven Bradby
Partner
138
87
Annual Report 2021
I N D E P E N D E N T A U D I T O R ’ S R E P O R T
This page is intentionally
left blank.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and other
related disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
continue as a going concern.
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the group financial report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Auditor’s Opinion
of the Corporations Act 2001.
Responsibilities
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of the Company for the year ended 30 June 2021, complies with section 300A
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
PKF
Melbourne, 24 August 2021
Steven Bradby
Partner
87
Annual Report 2021
139
Shareholder
Information
140
Annual Report 2021
Spirit Technology Solutions Ltd
Shareholder information
30 June 2021
S H A R E H O L D E R I N F O R M A T I O N
The shareholder information set out below was applicable as at 21 September 2021.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
of holders
of
ordinary
shares
Number of
ordinary
shares
% of
ordinary
shares
Number
of holders
of
unquoted
options
Number of
unquoted
options
% of
unquoted
options
Number of
holders of
performance
rights
Number of
performance
rights
% of
Performance
rights
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
171
1,156
718
24,508
3,432,420
5,694,782
1,277 44,973,833
309 602,275,014
3,631 656,400,557
0.00%
0.52%
0.87%
6.85%
91.76%
100.00%
-
-
-
-
-
-
-
-
2 18,000,000 100.00%
2 18,000,000 100.00%
-
-
-
-
Holding less than a
marketable parcel
569
680,452
0.10%
-
-
-
-
-
-
-
4
4
-
-
-
-
-
3,610,859
3,610,859
-
-
-
-
100.00%
100.00%
-
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
Number
held
shares
issued
UBS NOMINEES PTY LTD
CRAZY DIAMOND PTY LTD
MR PETER DIAMOND & MRS DIANA DIAMOND
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
CS THIRD NOMINEES PTY LIMITED
MARQUEE HOLDINGS PTY LTD
HARB HOLDINGS PTY LTD
CS FOURTH NOMINEES PTY LIMITED
BRIGGS GROUP CONSULTING PTY LTD
WADE TECHNOLOGIES PTY LTD
BRISPOT NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
THE BENTLEY GROUP (AUST) PTY LTD
MR TODD ALLEN MAUNDER
NIKALA HABER
LPB CORPORATE PTY LTD
SEABIRD INVESTMENTS (WA) PTY LTD
MDJD PTY LTD
84,931,141
54,000,000
52,000,000
44,452,814
32,218,367
25,440,065
17,790,838
16,438,356
16,438,356
15,079,470
12,606,789
12,578,750
12,049,604
8,824,732
7,546,334
5,800,000
5,693,092
5,683,244
5,500,000
5,000,000
12.94
8.23
7.92
6.77
4.91
3.88
2.71
2.50
2.50
2.30
1.92
1.92
1.84
1.34
1.15
0.88
0.87
0.87
0.84
0.76
440,071,952
67.05
Annual Report 2021
141
Spirit Technology Solutions Ltd
Shareholder information
30 June 2021
Unquoted equity securities
S H A R E H O L D E R I N F O R M A T I O N
Unquoted options over ordinary shares on issue
Performance rights over ordinary shares on issue
Number
Number
on issue of holders
18,000,000
3,610,859
2
4
Substantial holders
Substantial holders in the Company, as disclosed in substantial holding notices given to the Company, are set
out below:
Ordinary shares
% of total
shares
Number
held
issued
CRAZY DIAMOND PTY LTD / PETER + DIANA DIAMOND ATF (PETER + DIANA
DIAMOND SUPER FUND)
REGAL FUNDS MANAGEMENT PTY LTD
TIGA TRADING PTY LTD
THORNEY OPPORTUNITIES LTD
THORNEY TECHNOLOGIES LTD
107,000,000
61,396,909
42,616,596
42,616,596
42,616,596
16.50
11.22
6.60
6.60
6.60
Voting rights
The voting rights attached to each class of equity security are set out below:
Ordinary shares
All issued shares carrying voting rights on a one-for-one basis.
Unquoted options
There are no voting rights attached to unquoted options.
Performance rights
There are no voting rights attached to performance rights.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Ordinary fully paid shares
Ordinary fully paid shares
Expiry date
3 December 2021
8 April 2022
Number
of shares
5,921,053
32,876,712
38,797,765
Corporate Governance Statement
The Company’s 2021 Corporate Governance Statement is available on the Company’s website at:
https://www.spirit.com.au/investor-centre/
Annual General Meeting
Spirit Technology Solutions Ltd advises that its Annual General Meeting will be held on Monday, 29 November
2021. The time and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all
shareholders and released to ASX in due course. In accordance with ASX Listing Rules and the Company’s
142
Annual Report 2021
Spirit Technology Solutions Ltd
Shareholder information
30 June 2021
Unquoted equity securities
Unquoted options over ordinary shares on issue
Performance rights over ordinary shares on issue
Substantial holders in the Company, as disclosed in substantial holding notices given to the Company, are set
Substantial holders
out below:
Number
Number
on issue of holders
18,000,000
3,610,859
2
4
Ordinary shares
% of total
shares
Number
held
issued
107,000,000
61,396,909
42,616,596
42,616,596
42,616,596
16.50
11.22
6.60
6.60
6.60
Number
of shares
5,921,053
32,876,712
38,797,765
CRAZY DIAMOND PTY LTD / PETER + DIANA DIAMOND ATF (PETER + DIANA
The voting rights attached to each class of equity security are set out below:
DIAMOND SUPER FUND)
REGAL FUNDS MANAGEMENT PTY LTD
TIGA TRADING PTY LTD
THORNEY OPPORTUNITIES LTD
THORNEY TECHNOLOGIES LTD
Voting rights
Ordinary shares
All issued shares carrying voting rights on a one-for-one basis.
Unquoted options
There are no voting rights attached to unquoted options.
Performance rights
There are no voting rights attached to performance rights.
There are no other classes of equity securities.
Securities subject to voluntary escrow
Class
Ordinary fully paid shares
Ordinary fully paid shares
Expiry date
3 December 2021
8 April 2022
Corporate Governance Statement
S H A R E H O L D E R I N F O R M A T I O N
The Company’s 2021 Corporate Governance Statement is available on the Company’s website at:
https://www.spirit.com.au/investor-centre/
Annual General Meeting
Spirit Technology Solutions Ltd
Spirit Technology Solutions Ltd advises that its Annual General Meeting will be held on Monday, 29 November
Shareholder information
2021. The time and other details relating to the meeting will be advised in the Notice of Meeting to be sent to all
30 June 2021
shareholders and released to ASX in due course. In accordance with ASX Listing Rules and the Company’s
Constitution, the closing date for receipt of nominations for the position of Director are required to be lodged at
the registered office of the Company by 5.00pm (AEDT) on 18 October 2021.
Annual Report 2021
143
Corporate Directory
Auditor
PKF Melbourne Audit & Assurance Pty Ltd
Level 12, 440 Collins Street
Melbourne, Victoria 3000
Stock exchange listing
Spirit Technology Solutions Ltd securities are
listed on the Australian Securities Exchange
(ASX code: ST1)
ACN 089 224 402
Website
spirit.com.au
Directors
James Joughin (Non-Executive Chairman)
James Joughin (Non-Executive Chairman)
Sol Lukatsky (Managing Director)
Sol Lukatsky (Managing Director)
Mark Dioguardi (Executive Director)
Mark Dioguardi (Executive Director)
Gregory Ridder (Non-Executive Director)
Gregory Ridder (Non-Executive Director)
Inese Kingsmill (Non-Executive Director)
Inese Kingsmill (Non-Executive Director)
Company secretary
Melanie Leydin
Registered office
Level 4, 100 Albert Road
South Melbourne, Victoria 3205
Phone: 03 9692 7222
Principal place of business
Level 2, 19-25 Raglan Street
South Melbourne, Victoria 3205
Phone: 1300 007 001
Share register
Automic Group
Level 5, 126 Phillip Street
Sydney, New South Wales 2000
Phone: 1300 288 664 (within Australia)
+61 (0) 2 9698 5414 (International)
144
Annual Report 2021
Thanks for reading.
Annual Report 2021
145
Locations
Queensland
Level 7,
60 Edward Street,
Brisbane City
qLD 4000
5 Cribb Street,
Milton
qLD 4064
5 Commercial Dr,
Ashmore
qLD 4214
Victoria
19-25 Raglan Street,
South Melbourne
VIC 3025
Level 11,
14 - 16 Mason Street,
Dandenong
VIC 3175
Western Australia
1st Floor,
27 Teddington Road,
Burswood
WA 6100
New South Wales
Unit C14,
74 Mileham Street,
South Windsor
NSW 2756
Suite 510,
46 Kippax Street,
Surry Hills
NSW 2010
Level 14,
130 Pitt Street,
Sydney
NSW 2000
Level 6,
379 Kent Street,
Sydney
NSW 2000
46A Bultje Street,
Dubbo
NSW 2830
Level 4,
460 Church Street,
Parramatta
NSW 2150
P 1800 Spirit E Investor@Spirit.com.au W Spirit.com.au/Investor-Centre